What is a Contingent Fee?
Have you been hurt and feel like you need a lawyer, but lack the money to hire one? If so, you may be interested to learn what a contingent fee is.
In this blog post, Erie Injury, your go-to attorneys for personal injury, car accidents, and workers’ compensation, will take an in-depth look at contingent fees. This information may help you determine if it’s the right option for you.
A Quick Look at the Legal Landscape
There is a significant “justice gap” in the United States. More specifically, there is a severe difference between the civil legal needs of low-income Americans and the resources they have available to hire an attorney.
According to a 2019 study conducted by Legal Sources Corporation (LSC), “86% of the civil legal problems reported by low-income Americans… received inadequate or no legal help” due to a lack of resources.
In fact, a large majority of Americans refuse to seek help because they are unsure of where to go to receive support, do not know if their issue is legal, or choose to tackle a problem on their own, given that they lack the funding to hire a lawyer for their case.
What is a Contingent Fee Arrangement?
The American Bar Association (ABA) states that in a contingent fee arrangement, “the lawyer agrees to accept a fixed percentage of the recovery, which is the amount finally paid to the client.” Furthermore, a contingent fee only applies when the client’s case has resulted in success. A lawyer will typically accept a percentage of the money awarded to the client upon winning or settling the case instead of hourly pay.
When the case results in loss, neither the client nor the lawyer will be paid. In this scenario, the client is not legally required to pay their lawyer.
Civil cases, such as personal injury and workers’ compensation cases, are most likely to involve a contingent fee arrangement, given that the end goal is to claim money. These cases often result in a resolution between the lawyer and the insurance company instead of a court hearing. Other scenarios that may use contingent fee arrangements are:
- Professional malpractice
- Sexual harassment
- Employment discrimination and wage dispute cases
- Class action lawsuits
- Debt collections
Clients usually opt for a contingent fee arrangement with a lawyer when they have limited financial resources, or the case is both complex and costly.
Prohibited Contingent Fee Cases
The ABA Model Rules of Professional Conduct “prohibits a lawyer from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained.” Essentially, contingent fees are prohibited in cases regarding:
- Domestic relations
- Representation of a defendant in a criminal case
One of the most common reasons clients choose a contingent agreement is that they do not have to pay their lawyer if their case is lost. Often, the client does not have the initial funds, making the appeal stronger. A contingent agreement may appeal to lawyers because it motivates them to do their best in a case; otherwise, they do not receive payment. If both the lawyer and client are successful, they both will receive compensation.
Regarding advantages, Cornell Law School states that contingent fee agreements may:
- Improve access for indigent clients by enabling people who could not otherwise afford counsel to assert their claims
- Provide an incentive for attorneys to seek client success
- Enable clients to shift the risk of losing to the lawyer.
The potential downside to contingent agreements is that the client may end up paying the lawyer more than they would have if they had paid by the hour. Lawyers may not always opt for a case with a contingent agreement due to its high-risk nature, but if they do, they may negotiate for a higher percentage of the settlement. In the United States, contingent fee agreements and compensation caps vary by state.
With our contingent fee arrangements, Erie Injury never charges a fee unless we obtain you a recovery. We also front all the expenses in your lawsuit so insurance companies won’t get the best of you, meaning that you can fight for fair compensation while obtaining a lawyer within your financial means.
Minimize Your Risk, Maximize Your Reward
If you find that you are struggling with an auto accident, personal injury, or even social security disability benefits, the attorneys at Erie Injury are prepared to fight for your rights. Don’t allow a lack of funds to deter you from challenging a case. Whether you are located in Erie, Meadville, or Smethport, an attorney is on standby, ready to help. Call us today at 1-800-999-0750 for a free case evaluation.