A contingency fee is a method of billing agreed upon between the client and attorney that becomes payable upon the settlement or win of the case at trial. In other terms – a contingency fee affords no payment to the attorney at the beginning or end of the case unless it has been successful.
In contingency fee cases civil litigation attorneys make an agreement of the percentage of recovery from the case, often being 1/3 or 33% if the case settles without filing a lawsuit and 40% if a lawsuit is filed.
Many civil litigation attorney’s are not interested in contingency fee arrangements because of the amount of work invested with the likelihood of no pay or the extended time frame before the payment is made available. Also, attorneys can become more selective when dealing with cases on contingency basis because they may see it as too “risky” – not an easy win, thus negotiating higher fee percentages upon case settlement.
Areas of Law and Contingency
Generally, areas of the law referred to as personal injury are the most popular to accommodate contingency fee cases. Prevalent case types would include but not be limited to:
- Debt collection
- Product liability
- Automobile and trucking accidents
- Nursing home claims
- Tobacco litigation
- Premises liability
- Uninsured motorist claims
- Wrongful death
- Workers compensation
- Employment discrimination
- Sexual harassment
- Medical malpractice
Contingency fees are solely for civil litigation cases. In family or criminal law cases, professional ethics prohibits attorneys from working in contingency based agreements in an effort to dismiss the appearance of encouraging divorce or criminal activity. Immigration, bankruptcy, possible contract drafting, wills and trust are also areas of law, based on the state, that contingency fees are prohibited.
The truth is the client is still responsible for certain fees of the case as it progresses whether or not the attorney wins or loses the cases. These possible fees are labeled as litigation costs which include:
- Court filing fees
- Discovery cost
- Expert witness
- Other service fees
Can the judge alter the contingency fee?
The client and the attorney have the right to generate and come to an agreement on fees. Where the court finds that the fees agreed on by both parties was unreasonable, the court may amend contingency fees where necessary paying attention to the following aspects:
- Time spent by attorney
- The amount of cases dismissed by attorney to accommodate current case
- Attorney fees for similar cases
- Attorney’s ability
- Possible success of the case
Can an Attorney alter the contingency fee without client’s approval?
It is unethical for an attorney to decide to change the contingency fee arrangement without your consent. If the client is considering to make changes to the agreement, an independent attorney should be contacted to ensure that any amendment made is to his or her best interest.