Contingency Fee

Legal jargon can be unnecessarily confusing. To help, Andrew Kryder, Esq., founding partner of our personal injury law firm, created this glossary to simplify complex terms. This article explains what a contingency fee is and how it works in practice.

What Is a Contingency Fee Agreement?

Dealing with an injury is stressful enough without worrying about affording legal costs. A contingency fee arrangement makes legal help accessible, no matter your financial situation.

The concept is simple: there is no fee unless we win your case. This is called a contingency fee, where payment is a pre-agreed percentage of your settlement or verdict. For most cases, the percentage is 33%—except for the most complex cases that require litigation. If you don’t win, you owe no legal fees.

The contingent fee arrangement aligns your interests with your lawyer’s, as we are motivated to secure the highest possible compensation for you. It allows you to pursue justice without any upfront financial risk.

Real-World Examples

Here’s a hypothetical situation to illustrate how contingency fees work. Note that these numbers are just for demonstration, as your particular case’s circumstances may vary.

Imagine you’re in a car accident, and the at-fault driver’s insurance offers a $20,000 settlement. While this seems like a lot of money, it might not cover all your expenses, like medical bills, lost wages, and pain and suffering. You decide to hire a personal injury lawyer on a contingency basis.

Your lawyer investigates the accident, gathers evidence, and negotiates with the insurance company. Through their efforts, they secure a settlement of $190,000 for you.

Here’s how the payment would break down:

• Total settlement: $190,000
• Contingency fee (33%): $62,700 for legal fees
• Your take-home amount: $127,300 (before any case costs are deducted)

In this case, hiring an attorney secured a significantly larger settlement. Even after the contingency fee, you walk away with $127,300—far more than the insurance company’s initial lowball offer.

The Difference Between Legal Fees and Costs

It’s important to understand the distinction between legal fees and case costs, as these are two separate things.

• Legal fees: This is what your lawyer receives for their time, experience, and work on your case. The contingency fee is the legal fee.
• Case costs: These are additional costs and out-of-pocket expenses required to build and pursue the client’s case. Costs can include legal services like court filing fees, fees for obtaining medical records, payments for expert witnesses, postage, and deposition expenses.

Most firms advance these case costs, so you don’t pay out of pocket while the case is active. Once your case is resolved, these expenses are deducted from your settlement. Your contract will specify if the legal fee is calculated before or after costs. We prioritize transparency and will walk you through every line item, so you understand exactly how your settlement is distributed.

Ultimately, the contingency fee model is designed to eliminate your financial anxiety—there are no hourly fees. It provides access to skilled legal representation without upfront costs or a down payment, ensuring that your ability to seek justice for your civil case isn’t limited by your bank account.

Discuss Contingency Fee Agreements During a Free Consultation

If you have questions about contingency fee agreements, a free consultation is the perfect time to ask. Every law firm handles these fees differently, so here are some key questions to ask:

• What services will your firm provide for my case?
• How does your contingency fee work, what percentage do you charge, and is there a sliding scale?
• Are there other costs I should know about?
• What can I do to help my case go smoothly?
• What should I do if the insurance company contacts me?
• Can you meet me at home or in the hospital, or do I need to visit your office?
• How often will I get updates about my case?
• How long will it take my claim to settle?
• Can you make a reasonable estimate about how much my case might be worth?
• What are the next steps if I choose to move forward?