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Contingency Fee

Definition - What does Contingency Fee mean?

A contingency fee is a pay arrangement for legal services which is dependent or contingent on the plaintiff recovering compensation for their legal case. Contingency fee arrangements are most common in personal injury claims or other civil lawsuits where an award is expected.

Under a contingency fee arrangement, if the plaintiff wins their personal injury case the injury attorney is paid a percentage of the money awarded, generally 25 to 30%. If the plaintiff loses they are not legally obligated to pay their injury attorney for their legal services.

Benefit of the contingency fee arrangement

Contingency fee arrangements can benefits claimants who cannot afford to hire a personal injury lawyer. Proponents claim this fee arrangement opens the courthouse to lower income claimants who cannot afford the up-front costs for legal services. This arrangement can also be highly motivating for the personal injury attorney who will work hard to ensure they receive payment for their services.

There are also some disadvantages of this legal arrangement. First, if the plaintiff does not have a good personal injury case and the lawyer does not believe they can win, the lawyer will not take the personal injury case. Plaintiffs may also end up paying more than they would have paid if they had simply paid the personal injury attorney an hourly rate.

Plaintiffs will also pay the same amount for legal services from the injury lawyer regardless of whether the injury case takes one year or one week to settle.

A contingency fee arrangement is specifically used for civil cases where the plaintiff may recover damages for their injuries or losses. Criminal lawyers do not work on a contingency fee basis because there is no chance of financial recovery.

Can I negotiate a lower contingency fee?

Whether or not your lawyer is willing to negotiate a lower contingency fee payment will depend on the lawyer and your case. It is worth asking the question, especially if you believe your case could be settled quickly without too much legal work.

Contingency fee arrangements may also vary depending on how much work the lawyer has to do. For instance, some arrangements will allow the plaintiff to pay twenty- five (25) percent of the gross amount recovered by settlement prior to the filing of a complaint; thirty-three and a third percent of the gross amount recovered by settlement after a complaint is filed but before a trial is commenced; and forty (40) percent of the gross amount recovered during or immediately after the first trial, by settlement or otherwise.

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