What is a contingency fee?


The purpose of a contingent fee is to allow people with limited financial means to hire a lawyer. It allows you to get the same high-quality legal representation that doctors and insurance companies have but without paying hourly attorney fees.

In most personal injury and medical malpractice cases, lawyers don't charge by the hour. Instead, they work on a contingent fee basis. A contingent fee is calculated based on a percentage of the recovery amount (settlement or award). The percentage of the fee can vary, but it usually will be at least one-third of the settlement or verdict, or as high as one-half, depending on the difficulty of the case involved. If there is no recovery then you owe the attorney nothing.

A contingent fee lawyer may take on considerable risk because the lawyer may not get paid unless he or she wins or produces a recovery for the client. For this reason, the percentage rate of the contingent fee must be high enough to compensate the lawyer for taking on a case where he may not get paid. Generally speaking, cases that present the most risk (i.e., difficult to prove, time consuming and/or complex cases) may require a higher contingent fee.

In order to help prove a case an attorney may need to advance costs incurred in a case. Typical costs include charges for copying medical records, filing fees, investigation, expert witness fees, deposition fees, etc. The state bar ethics rules require that the client must be responsible for paying all costs associated with the case. These costs are subtracted from the final recovery amount.

A contingent fee arrangement makes it possible for anyone who has a legitimate case to hire a lawyer, without paying out of pocket first. More importantly, the contingent fee arrangement gives everyone access to the justice system. It assures people who have been wronged will have equal access to a lawyer. It assures people that they will be able to protect their legal rights against the interests of powerful defendants like doctors, governments, and insurance companies.