What Does “Contingency Fee” Mean?

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You may have heard the phrase “no fee unless we win” on personal injury commercials. But what does it actually mean? The “no fee unless we win” arrangement is referred to as a contingency fee. The “contingent” portion of the fee means that the attorney gets a portion of what the client’s overall settlement is. So, for example, if a client gets a settlement of $30,000.00, the attorney gets a previously agreed upon percentage of that number. If the client gets $0, then the attorney gets $0 as well – this is the “no fee unless we win” part.

A contingency fee is either a set or escalating fee often utilized in personal injury cases. A set fee would be a percentage, typically 33.3333%, of the overall settlement. If the fee is set, this means that the attorney takes 33.3333% no matter if the case settles before going to trial or after a case is a tried.

If the contingency fee is an escalating fee, then the overall percentage will escalate depending on how far the case is taken. For example, if the case settles before the attorney files a complaint, the attorney may take 33.3333% of the settlement. If the attorney has to file a complaint, they may take 35%. If the attorney takes the case all the way through trial, they may take 40% of the jury verdict award.

Contingency fee arrangements are most often seen in personal injury cases, such as automobile collisions, slip and falls, wrongful deaths, and medical malpractice. Contingent fee arrangements may be available for employment law or collection matters. They are rarely or never available for business services such as drafting business documents, business litigation, divorce, child custody, bankruptcy, or criminal matters.

Prior to entering a contingency fee agreement with a lawyer, make sure that you speak with the lawyer about the contingency fee arrangement to ensure that you fully understand the agreement, including the risks and benefits to you.

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