What is a Contingency Fee?

 
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What is a Contingency Fee?
Written By: Josh Lowell ~ 11/1/2021


After a car accident, the last thing you want to think about is paying bills. You have health insurance or Personal Injury Protection insurance to help afford medical treatment. You might be missing work, and the thought of paying an attorney is unthinkable. Fortunately, most attorneys understand the stress of motor vehicle collisions. Instead of requiring payment for services rendered up front, personal injury attorneys will typically handle cases on a contingency.

BLOGPOST_ContingencyFee110120021.JPGA contingency fee means that the attorneys services are only billed contingent upon winning your case. It is most often represented in a percentage of the gross settlement or litigation award. The industry standard is a 1/3rd contingency fee prior to a lawsuit being filed, and most attorneys will increase that fee to 40% (or even 50% depending on the type of case) if a lawsuit is required. In other words, you do not have to pay your attorney anything as they help you through the claim. Once the case settles or an award is issued by the court, the attorney claims a percentage of the final amount.

This is a huge risk for the attorney. Some cases are not slam dunks, and others might have complexities that raise the risk of a reduced award. In a disputed liability car accident – like a “who had the green light” scenario – your attorney might spend 50, 75, or even 100 hours taking your case to trial. If the jury finds in the defendant’s favor, your attorney will not be paid any fee. This also creates a scenario where you know your attorney will work their best for you because the more they win, the higher their fee.

Many attorneys may offer an hourly fee arrangement in certain circumstances, but those situations are rare. It might take 20 hours or more for a simple case to settle without litigation. At average attorney rates, your out of pocket might be well over $6,000 and could be as high as $10,000 for a more expensive counsel. A case going to trial could easily be 100 hours of work with fees alone exceeding $40,000. Especially while an injured party is focused on healing and getting back to normal life, a pay-as-you-go attorney fee is just not practical.

Contingency fees have an odd reputation in the community. Some clients may see the percentages as an unreasonable way of handling a fee agreement. However, the time and risk involved in the case make the alternative a far more precarious arrangement. If you are injured in a motor vehicle collision, you may need attorney assistance to ensure the insurance company plays fair. The law offices of Magnuson Lowell, PS are experienced litigators ready to tackle your claim head-on. Call today for a free case evaluation.


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