A contingency fee means the lawyer takes the risk, not the expenses

After an accident, many people worry that hiring a lawyer will create an extra financial burden. However, a contingency fee can reduce that concern because the attorney's payment depends on recovering money for the client.

It's worth emphasizing that the lawyer's financial risk and the expenses required to pursue a claim aren't always the same thing. Parsing the difference between these two can help injured people ask better questions before hiring an attorney. It can also prevent unpleasant surprises when a case reaches a successful outcome or fails to recover any compensation at all.

What Exactly Is a Contingency Fee and How Does It Work?

A contingency fee is an arrangement where a lawyer doesn't receive an upfront payment. In fact, they only receive a payment when the client gets a financial recovery through a verdict or negotiated settlement. Rather than paying an attorney by the hour or with a lump sum, the client agrees that the lawyer will receive some percentage of the money recovered.

Personal injury cases often use this arrangement. A person dealing with the following may not be able to pay a lawyer hundreds of dollars per hour while a case inches forward:

• Medical bills
• Missed work
• Other financial pressures

A contingency arrangement allows that person to have legal representation without the need for a large initial attorney fee.

Figuring out how lawyers get paid under this model is crucial. The attorney may spend months or even years doing the following:

• Investigating an accident
• Gathering evidence
• Speaking with witnesses
• Negotiating with insurance companies
• Preparing for trial

If the case doesn't produce a recovery, then you don't have to worry because the lawyer generally doesn't receive a fee for that work.

That arrangement leads to a shared financial motivation. The lawyer has an incentive to evaluate the claim meticulously and put together the strongest possible case because payment depends on a win.

Still, a contingency agreement should always be read carefully. The percentage charged may vary depending on the following:

• The type of case
• The stage of litigation
• The terms permitted under applicable law

Some agreements may also increase the percentage if a lawsuit becomes necessary. This is because litigation can require far more work.

Do You End Up Paying a Lawyer if You Lose a Personal Injury Case?

The phrase "no win no fee" is often used to describe contingency arrangements. However, clients should understand precisely what the phrase covers. In many cases, losing means the client doesn't owe the attorney a professional fee for the lawyer's time and work.

Still, a contingency fee agreement doesn't necessarily answer every financial question. Expenses accumulated while building and pursuing the case may be treated separately from the traditional lawyer's compensation.

For example, a personal injury claim may involve the following, among other expenses:

• Medical record requests
• Filing fees
• Expert witnesses
• Investigators
• Deposition transcripts

A law firm may advance some or all of those amounts while the case is ongoing. By the way, advancing an expense means the firm pays it initially so the client doesn't have to pay until later.

What happens to those expenses afterward depends on the agreement. Some firms may deduct advanced expenses from a recovery. Others may absorb certain expenses if the case is unsuccessful.

Clients should never assume that a single arrangement applies to every law firm or every case.

Experienced personal injury firms, including Thompson Law Injury Lawyers, can explain their fee structure and how expenses are handled so clients fully understand the financial arrangement before taking the next step.

A written agreement matters because it can explain everything from the percentage charged and how expenses are treated to what financial obligations may remain if the case fails. Asking thorough questions before signing on the dotted line is far easier than trying to interpret the agreement after a dispute erupts.

What Expenses Aren't Covered by a Contingency Fee?

Remember, attorney compensation and case costs are two different categories. The contingency fee generally pays the lawyer for professional legal services, while expenses are the out-of-pocket charges associated with pursuing the claim.

Common expenses may include the following:

• Court filing charges
• Police reports
• Medical records
• Expert evaluations
• Deposition services
• Other costs necessary to investigate or present the case

Complex claims call for substantial financial resources, especially when experts and extensive evidence are involved.

A lawyer may choose to advance those expenses because clients often can't afford to pay them during an already difficult period. Advancing money, however, doesn't always mean the expenses evaporate.

Frequently Asked Questions

Can I Negotiate a Contingency Fee?

Clients can ask whether aspects of a fee arrangement are open to discussion before deciding on representation. Although a lawyer may have standard terms, asking questions about anything from the percentage and expenses to other financial obligations can help a client better understand the agreement.

Negotiation may depend on the precise circumstances of the case and the law firm's policies. Even when the percentage itself doesn't change, clients should make sure they understand how costs are handled. The same is true regarding whether the agreement includes different rates at different stages of the case.

Why Would a Lawyer Refuse a Contingency Fee Case?

It's worth remembering that a lawyer assumes financial risk when accepting a contingency case, as the attorney may spend substantial time and resources without receiving payment. For that reason, lawyers tend to evaluate the strength of the evidence, the available insurance or assets, and other factors before taking on a case.

As such, a lawyer declining a case doesn't necessarily mean the injured person has no claim.

A Contingency Fee Can Be Helpful, But It Can't Take Care of Everything

While a contingency fee is a great way to get professional representation without breaking the bank, there could still be some legal fees you're responsible for even if the case fails. Knowing the ins and outs of your agreement helps you avoid any surprises.

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