What Does Contingency Fee Basis Actually Mean?

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Contingency fee is a fairly common law term, but many people do not know what it means, exactly. In a nutshell, a contingency fee allows you to hire a lawyer without having to pay any money upfront or by the hour. When you enter into a contingency fee agreement with a lawyer, he or she will only get paid if you receive compensation for your damages either through a settlement or after trial. This is a great option for people who don’t have a big budget for a lawyer who do not have enough money to pay at the beginning of the case. Again, with a contingency fee agreement the client does not have to pay anything until the case has been taken on and resolved by an experienced attorney of your choice. It should also be noted that a contingency agreement will dictate the circumstances of payment, including how much the attorney is owed and when he or she will receive payment.

Understanding the Basics

Contingency fee agreements are typically entered in when the plaintiff has the opportunity to receive monetary compensation for their injuries or damages incurred. Every lawyer is different – as are the laws pertaining to contingency agreements. In some cases, lawyers may choose not to accept a contingency fee agreement. Because of this, it is important for you to openly discuss your payment options with your lawyer before moving forward. Some legal claims have a cap on how much the plaintiff can receive in damages, which could make an attorney hesitant about working on a contingency fee basis.

Another important topic in regards to contingency fees is the amount a lawyer can charge for a contingency fee, which is typically not regulated by law. There are some exceptions to this rule – such as worker’s compensation claims or claims under the Federal Tort Claims Act. That being said, contingency fees are quite common throughout the United States and fairly uniform. There are a host of factors that will go into how much a lawyer charges for a contingency fee, including:

  • How complex is the case?
  • How time consuming is the case?
  • What type of claim is it?
  • How much risk is involved with the case (both monetarily and otherwise)?
  • Does the case involve an appeal?
  • Did the case go to trial?

The actual formula used to calculate contingency fees is not as straightforward as many would like. Lawyer fees are typically related to the amount of cases expended in the case, often because the client probably won’t have to pay back any costs to the lawyer during the case. If the lawyer can see he will have to spend quite a bit of time and money out of his own pocket in order to win the case, the contingency fee or percentage may be larger in the end.

One of the most common questions we find pertaining to contingency fees is whether the fee is calculated based on the total amount recovered, or the total amount after all expenses have been deducted. In most cases, the fee is calculated based on the total sum recovered. A good way to think of it is that the lawyer’s time, expertise, and resources are his trade, which therefore means his compensation should be tied to those factors.

It is important to discuss the ins and outs of your contingency fee agreement with your attorney prior to moving forward with the case. In doing so, you won’t be faced with ‘sticker shock’ or any other surprises when you receive the lawyer’s bill at the end of your trial. Once again, contingency fees are only in play when a lawyer wins your case. If you enter into a contingency fee agreement and lose your case, you will not have to pay your lawyer.

For more information regarding contingency fee agreements in Dallas, please contact Rad Law Firm today.