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Contingency Fee Agreement – What You Need to Know



You may be surprised that at the conclusion at your first meeting, the attorney may ask you to sign a contingency fee agreement before leaving the office.

If you have never had to hire a personal injury attorney to represent you before, then you are probably wondering exactly what a contingency fee agreement is.

As a personal injury attorney with more than 25 years of experience, I would like to share a few things I think you should know before signing such an agreement.

1. What is a contingency fee agreement?

A contingency fee typically refers to a fee agreement where the attorney agrees to represent a client for a percent of the money recovered for the client. Thus in a contingency fee agreement, the attorney does not get paid for his work unless he is able to recover (get money) for the client. Contingency fee arrangements are common in automobile accident cases and other personal injury cases. I have always offered a contingency fee arrangement to my clients.

2. Is there any advantage to a contingency fee agreement?

One major advantage of a contingency fee arrangement is that if the attorney loses the case, then the client does not owe the attorney a fee. By contrast in the typical fee arrangement where you hire an attorney based on an hourly rate, you would be obligated to pay the attorney for his time regardless of the outcome. And, in most hourly fee arrangements, you are obligated to pay the attorney for his services on a monthly basis.

3. What percentage is typical in a contingency fee agreement?

The percent that an attorney will charge varies depending upon the nature of the case and the likelihood of prevailing. Complex and difficult cases often lead to a higher percentage being charged. The percentage charged can also vary from law firm to law firm. It is not uncommon to see percentages from 33 1/3% to as high as 50%. Keep in mind that there are other important factors to consider in choosing an attorney/law firm besides the percentage that they will charge you. Does the attorney have time to devote to your case? If the attorney is too busy with other cases, you may get passed off to an inexperienced attorney. Also does the attorney have significant experience with your type of personal injury case?

4. How are the costs associated with a personal injury case handled?

What are “Costs Advanced”?

In addition to the attorney fees for handling your case, there will also be costs associated with your case. For example there may be the costs of hiring experts, getting medical records, taking photographs, court filing fees, etc. Some, but not all personal injury attorneys will advance costs. This means the attorney will pay the costs as incurred while handling your case, but will require you to reimburse these costs at the conclusion of your case. This reimbursement is in addition to the attorney fees and are usually taken out of the monies recovered for the client.

However, some attorneys will require you to give them money in advance to pay the costs associated with your case or that you pay these costs at the time they are incurred.

I have always made a contingency fee arrangement available to my clients and have advanced the costs associated with their cases. Can you imagine how difficult it would be for an accident victim who is unable to work as a result of his or her injuries to pay an attorney for his or her services at the end of each month. Be sure that you fully understand the fee arrangement before you hire an attorney.