If you’re ever wondered what a contingency fee is, you’re not alone. Even more confusing is that contingency fees can vary for different types of cases. Making sense of it can be a challenge for the layperson who just wants to know how much it might cost. Below, we’ll explain what to expect and the costs associated with hiring contingency lawyers.
What Is a Contingency Fee?
A contingency fee basically means that an attorney will not charge you a retainer before working on your case. A retainer is a lot like making a down payment for the lawyer to start working on your claim. You provide a lump sum, and the attorney deducts fees and costs from that amount until the money you paid up front runs out. Rather than quoting you an hourly rate and billing for every minute spent on your claim, contingency lawyers instead take a certain percentage of your settlement award as payment. If you don’t win a settlement award, then you pay $0 to contingency lawyers for working on your case.
How much that fee percentage is varies depending on a number of variables. First, what kind of case are you asking the lawyer to represent? A contingency fee for a medical malpractice lawyer, for example, might be different than what nursing home neglect lawyers might charge.
Like all things, there are advantages and disadvantages to you as a litigant when deciding to work with contingency lawyers. Let’s break those down.
Are Contingency Lawyers Different from Those That Charge by the Hour?
One major advantage of a contingency agreement is that you don’t have to pay up front for an attorney to accept your case. Lawyers who charge by the hour typically require a retainer fee, which is kind of like a savings account they draw from while working your case. As your lawyer and their staff bill you for every minute they work, they deduct money from your retainer to cover an hourly rate. As your retainer amount shrinks, you typically have to add more funds before the law firm continues working.
Lawyers who work on a contingency basis, however, do so without requiring any advance payment. They will likely still track their time, and they will absolutely keep track of any expenditures made on your behalf. But because they receive payment only when you do at the end of your case, there is no “savings account” to draw from.
An important advantage of hiring an attorney on a contingency basis is that you pay them nothing until your case wins. If your case loses, contingency lawyers receive no payment at all. This means that contingency lawyers must see potential in your case to accept you as a client. Then, they have to work hard enough to win. Otherwise, they worked on your case for free.
Contingency Fees: What’s Included?
There are two types of expenses involved when you hire an attorney: fees and costs.
Fees refer to what the lawyer charges for they as well as their staff’s time and expertise. This might include paralegals or administrative professionals.
Costs are different than fees. Costs are third-party charges lawyers must pay to effectively file and prove your case. A few examples of what expenses go under the “costs” category might include:
- Court filing fees
- Expert witness fees
- Administrative expenses, such as photocopying, postage, and travel costs
When attorneys work on contingency, it doesn’t mean they absorb those costs. Attorneys and law firms handle these costs in different ways, depending on your case. Some might require you to pay these costs upfront. Others, however, may keep a running tab of those costs and collect reimbursement when your case concludes. Having a frank discussion with your attorney can help you understand if you’re responsible for any costs up front.
What Types of Cases Do Lawyers Usually Represent on Contingency?
Traditionally, attorneys accept cases that fall under the umbrella of personal injury on a contingency basis. Here are just a few examples of practice areas that personal injury lawyers often specialize in:
- Social Security disability
- Auto accidents
- Medical malpractice
- Birth injuries
- Veterans’ benefits
- Nursing home neglect
- Workers’ compensation
- Employment law
The amount that contingency lawyers will charge you varies by practice area and other variables. But generally speaking, an attorney will usually take anywhere from 33% to 40% of your award. Typically, a workers’ compensation lawyer charges the lowest contingency fee at 10%-15%, on average. For a Social Security disability case, federal law caps the amount an attorney can collect at no more than 25% of your backpay award. Contingency fees for other types of personal injury cases are usually closer to 30%-40% of your total award.
But remember, this is only if you win your case. If you lose, neither you or your attorney get anything. In that situation, you will have to pay whatever costs your attorney covered out of pocket for your case. However, that attorney may not charge you any legal fees simply for representing your claim.
Should I Use an Attorney Who Works on Contingency?
Talking to an attorney can help you better understand the nuances of your case. This includes any fees you might owe if you choose to pursue your case in court. Every lawyer we can match you with gives free, no-obligation claim reviews. Why not sign up for a free phone call to discuss your potential case with a local advocate today?
Lisa Allen is a writer and editor who lives in suburban Kansas City. She holds MFAs in Creative Nonfiction and Poetry, both from the Solstice Low-Residency Program in Creative Writing at Pine Manor College. Prior to becoming a writer, Lisa worked as a paralegal, where she specialized in real estate in and around Chicago.