What Is a Contingency Fee?
A contingency fee, as the name suggests, is a fee that is contingent upon recovery. In other words, whether or not the attorney gets paid is contingent upon the outcome of the injury claim or lawsuit. The contingency fee will typically vary, based upon the effort required to obtain a recovery, whether it's a settlement or a jury verdict. For example, a contingency fee is typically lower where the case is settled before litigation. However, if a lawsuit is required, the contingency fee will typically be higher than if the case settled pre-suit.
The other common cost structure in the legal field is the billable hour. Whereas the contingency fee structure requires no money up front, an attorney charging by the hour for legal services will typically want a large chunk of money up front, often $5,000 to $10,000. The lawyer will usually put that retainer in escrow and then draw from the retainer as the lawyer bills hours. So, if the attorney bills out at $400 per hour, then the attorney will draw down a $10,000 retainer after 25 billable hours of work (25 hours x $400 per hour = $10,000). When the retainer gets low, the attorney will ask for more money to put in escrow to cover future hours of billed work.
In summary, a contingency fee is simply an attorney’s fee that is contingent upon the outcome of the case, as opposed to the billable hour model, where the client gives the attorney $5,000 or $10,000 up front, and the attorney bills from that pool of money on a per-hour cost structure.
What is the Standard Contingency Fee for an Attorney?
Many people ask us this question: What is the standard contingency fee for an attorney? In Florida, Georgia, South Carolina, and North Carolina, and I’m sure it’s this way in other states, the typical contingency fee will be one-third of the recovery (33.33%) pre-suit and 40% in suit. In other words, the attorney fees are typically less when the case is settled before an actual lawsuit is initiated.
The contingency fee typically increases once the attorney initiates the lawsuit because the case gets much more expensive once it goes to the discovery phase and starts toward trial. For example, once a case is in discovery, attorneys must take depositions and pay a court reporter and a videographer. Also, during the discovery phase, attorneys have to go dig through piles of documents, photos, and evidence. Additionally, sometimes attorneys must file motions and responses, which can require serious time and effort. So, as you’ve probably already guessed, it's better for the client, the attorney, and our court system if the parties can come to a resolution without proceeding with litigation.
Why Are Contingency Fees Helpful for Injured People?
Contingency fees help people obtain legal representation. Without contingency fees, only the super wealthy could afford legal representation. That’s because contingency fees transfer the cost and the risk to the attorneys and the law firms. Let’s talk more about these two points.
COST: Without contingency fees, it costs serious money to get legal representation.
After an accident, people often have thousands of dollars of medical bills. They’re missing work, and they’re financially strapped. In this horrible situation, most people can’t pay a lawyer a $5,000 or $10,000 retainer. Also, in many personal injury cases, $5,000 would be just enough money to get started on the case. Additionally, a personal injury case may require thousands of dollars in expert witness reports and expert witness testimony for depositions and trial. This is especially true for semi-truck accident cases, serious auto accident cases, medical malpractice cases, dental malpractice cases, and any other personal injury case that necessitates the opinion of an expert. We haven’t even talked about the costs of filing documents with the court and other administrative expenses associated with litigation. Therefore, the contingency fee structure allows someone to get an attorney to help them without having to pay out of pocket. As a result, more people get access to a lawyer, not just the super-rich. Overall, the contingency fee structure gives people a chance to fight back.
RISK: There is no guarantee of recovery, so personal injury cases can be risky.
In addition to the high costs of legal representation, personal injury cases can be very risky. In other words, you’re not guaranteed to get any money. If your case doesn’t settle and you end up in front of the wrong jury that doesn’t like you or believe your version of the facts, you could come home with nothing. In that situation, not only would you get no money for your case, but you could also end up owing an attorney thousands of dollars. Therefore, the contingency fee structure shifts the risk from the injured person to the lawyer or law firm.
Contingency Fees Work the same way in most states
Now, I know you’re probably wondering if this content will be relevant to you and the laws of the state where you live or where you were injured. Well, the good news for you is that contingency fees work pretty much the same way in most states. The differences between the states will typically be in the amount of fees. For example, Florida reduces the amount of attorney fees after a certain amount of money is recovered, and South Carolina limits or “caps” pain and suffering awards in medical malpractice cases. These are just a few examples of how each state might limit attorney fees. Overall, the contingency fee laws across states are very similar.
What Types of Cases Does Your Law Firm Take on a Contingency Fee Basis?
At our firm, we primarily do personal injury and wrongful death cases, we take all types of these cases on a contingency fee basis. Below are some of the more common types of cases we take on contingency:
- Slip and fall accidents;
- Trip and fall accidents;
- Accidents at amusement parks or theme parks;
- Car accidents;
- Semi-Truck and 18-wheeler accidents;
- Train accidents;
- Bicycle accidents;
- Pedestrian accidents;
- Uber and Lyft accidents;
- Motorcycle accidents;
- Boating accidents;
- Dental malpractice cases;
- Medical malpractice cases;
- Cases involving negligent security;
- Fatal accident cases;
- Cases involving brain injuries;
- Premises liability cases;
- Camp Lejeune Water Contamination Cases; and
- Mass tort cases.
These are just some of the types of cases we take on contingency, but we take all types of cases involving accidents and injuries. If you’ve suffered injuries as a result of someone’s negligence, we may be able to take your case on contingency. Please don’t hesitate to contact us for a free consultation with an attorney who can talk to you about your case.
