Personal Injury FAQs / What is a Contingency Fee?

What Is a Contingency Fee?

Common in Personal Injury, It Means Your Lawyer Gets Paid If They Win

Court fees concept
When hiring a lawyer, one of the first things new clients want to know is, “What will it cost?”
Ultimate Guide to Understanding Contingency Fee Agreements in CA

After all, if you’re involved in an accident that wasn’t your fault, you’re probably already under tremendous financial pressure.

The good news is that you can make fee arrangements and won’t have to pay attorney fees upfront. This means you will receive legal services without paying an hourly fee for the hours worked. What’s more, if we can’t secure a successful outcome for you, you won’t have to pay on an hourly basis or any monetary amount as a lawyer’s fee at all!

In this article, we’ll answer the question, “What is a contingency fee?” and provide you with all the details you need about legal fees attorneys bear up front.

Contingency Fee Help Prevent Frivolous Lawsuits?

Yes! The contingency fee system in California protects clients against “frivolous lawsuits.” Most contingency fee attorneys will refuse to undertake an insurance claim or file lawsuit over a claim that lacks legal merit.

The reasoning in favor of this theory is that investing hundreds of hours of time and money into legal work makes no sense unless the client has a good chance of winning. No victory, no attorney’s fees.

Understanding Contingency Fee Agreements

The truth is that lawyers have to charge for their services. After all, they invest a lot of time and resources into winning a case. However, unlike other professionals that charge for their services hourly or per consultation, attorney fees are payable once you receive compensation.

Another way to put it is that with a contingency fee agreement, reimbursement for your lawyer’s services is “contingent upon” you being paid something. A predetermined portion of your settlement will go to your lawyer at no additional charge.

At Ehline Law, we pride ourselves on maintaining an excellent attorney-client relationship with all our clients, which is why we are upfront about our legal fees.

Usually, this proportion is around 1/3 or 33.33% of the amount. The fees payable will vary depending on several reasonable variables.

This includes:

  • Who pays the filing fees and other legal costs

  • How complex and risky your case is

Complexity and Risk

Your lawyer will probably ask for a more significant proportion of the contingency fee if your case is risky or complex. You might have to hand over a more significant proportion of the recovery if the claim is more difficult or more intricate. In contrast, a reasonably straightforward case with a high likelihood of success would have a lower contingency fee percentage.

Who Pays Filing Fees and Other Legal Costs

Even if an attorney is ready to act pro bono (or for free), filing a personal injury claim will always be expensive.

These litigation costs may include dollars for:

  • Discovery costs

  • Filing fees and court costs

  • The expenses associated with obtaining expert witnesses

  • Costs for obtaining evidence

  • Postage

  • Trial exhibits

  • Investigator fees.

You will be required to pay these costs above and beyond the contingency fee agreement, which means that the attorney will pay these expenses and recover this amount from your settlement. Alternatively, depending on the circumstances, your attorneys may ask you to pay these costs upfront rather than refund them after you get justice.

Moreover, if you don’t have the money to pay these expenses upfront and they are deducted from your compensation, you may end up taking home only 50 to 45% of the overall amount awarded.

Are Contingency Fees Reduced in Some Cases?

The short answer is yes. Like minors and incompetents, protected people will find their settlements universally scrutinized by the court. Some people are deemed incompetent or less capable of negotiating a fair fee arrangement. Courts have the power to force the lawyers to charge less and sometimes even eat their out-of-pocket costs.

Some cases qualify for a reduction in contingent fees, usually when the client is incapable of defending themselves, which includes:

  • Minors

  • Elders (in some cases)

  • Incompetents.

Keep in mind that in California and many other states, these contingency fee agreements are, therefore, closely reviewed.

Example 1: You will often need to constitute and establish a trust fund and conservatorship in California. Any damages won or money awarded in a car accident must be protected until a minor reaches the age of majority.

Example 2: An elder or mentally retarded person may need a conservator who is paid by a trustee who manages the incompetent person’s affairs.

In both examples, this will be a trusted person appointed by or accepted by a court to protect the rights of the minor, damaged, impaired person, or “dependant.”

Reasoning

Paid representatives called trustees, conservators, and managers, among other stylistic titles must be hired to manage court proceeds and awards owned by these incompetents. Their business is performing important administrative and caretaker tasks that require payment. Large contingency fees could offset the lifetime care required to pay for this individual. As a matter of public policy, financial considerations like this reason against large fee arrangements with these parties.

What Percentage of Your Settlement Goes to Your Attorney?

As mentioned, you can expect to pay a third or 33.33% of the total amount recovered as part of a traditional contingency fee arrangement. However, because many personal injury claims are complex, you’ll look at about 35 to 40% in eligible contingent fees.

Suppose your damages case is relatively simple, and there’s a good chance you’ll win. In that case, your contingent fee will probably be lower, probably even between 20 and 25%.

As explained above, if there are hefty litigation costs and you don’t have the money to cover these costs, your lawyer will add these charges to the contingency fee arrangement, so you may end up paying as much as 50 to 55%. But for most, this beats having to pay hundreds of dollars up front to move their civil cases through the legal system.

How Is a Contingency Fee Taken?

The attorney handling your case will get the settlement check from the defendant. The draft is deposited into the trust account for legal assistance. This ensures that the expenses owed to your line holder and attorney are paid. Prior to receiving the money you are due, any additional extra-contractual costs will be transferred to your bank account.

Furthermore, your lawyer still must do their duty to let you know as soon as they receive the settlement check. The attorney should fully disclose the amount he or she intends to deduct from the awarded amount. Once your lawyer has deducted the appropriate amount, the balance will be sent to you, on your behalf after they settle or dispose of the matter.

The Benefits of Choosing to Receive Legal Representation on a Contingency Fee Basis

Here are some of the benefits of choosing to work with contingency fee lawyers:

No Upfront Legal Fees

Don’t have any cash saved up? Individuals can still receive legal services when they work with most lawyers by handling their negligence claims on a contingency fee basis contract.

Contingency Fee Agreements Are Negotiable

According to state law, contingency fee agreements must state in writing that the contingency fees are subject to negotiation. This means there’s a better chance people will be able to negotiate a better price rather than be billed the total price for the attorney’s share.

It Allows Low-income Clients to Receive Legal Representation

This type of fee structure allows even low-income clients to obtain the legal assistance they require and stand a better chance of winning their cases.

Contingency Fee Lawyers Bear the Risk of Litigation

If you lose the case at trial, the lawyer loses out because, after all the resources and time invested into the case, they will walk away with nothing.

Other Types of Fee Agreements

Contingency fees are just one type of arrangement attorneys make with their clients. Lawyers may use other types of agreements to recover costs from most people they represent.

These include:

  • A fixed percentage or standard fee agreement. This is typically a flat fee, similar to routine services, such as drawing up a will or delivering documents to a party.

  • Hourly fee. Billing by the hour generally means the client will be charged hourly fees for the number of hours a lawyer works on their legal matter.

  • Retainer fee. A retainer fee is the expected lump sum paid to an attorney to “reserve” them.

  • Statutory fee. These fees are paid for certain legal proceedings and are determined by a court and often for the court to reject or accept pursuant to statute.

Examples: Personal injury claims, including civil rights, car accidents, motorcycle collisions, slips and fall, wrongful death, etc., are almost always contingency fee arrangements. Divorce law is almost always hourly billing.

Dealing with Liens

Any funds in the attorney-client trust account are kept to cover any liens we co-signed as provided by teh Rules of Professional Conduct. We will handle negotiations to try and reduce these liens for you. However, you will have to deal with the other creditors trying to collect from you upon cessation of your case. In other words, you keep that cash and choose your next course of action to improve your financial situation.

Just be aware that Ehline Law Firm might be obligated by law to deduct money from your payment. Next, sometimes our clients ask us to help lower outstanding debts, lien or not. Occasionally, it makes sense to let us handle unpaid debt collectors, as they likely don’t deserve maximum compensation.

We distinguish ourselves from other companies by giving you the savings from bill reductions. Only the personal injury element of your claim is subject to our charge. Yes, you read that correctly! That’s just one of the ways we stand out from our competitors. Understand yet?

Costs Are Not Attorney Fees

Remember that any costs that your attorney advances are not gratuitous. They are a loan with no interest. Less affluent clients benefit from advancements by paying for items like court charges. The less wealthy clients reimburse these costs following judgment and termination of representation.

The many areas where the money is spent while handling a personal injury case include:

  • Costs of depositions

  • Postage.

  • Witness fees.

  • Trial exhibits.

  • Medical records.

  • Investigators.

  • Police reports.

  • Filing fees.

Some attorneys, including our law firm, will occasionally waive your expenses on a case-by-case basis. However, this usually occurs when the injured victim has not received compensation. Otherwise, the client pays the attorney immediately as a flat fee out of the settlement proceeds or jury award.

What Your Contingent Fee Agreements Should Include

According to the American Bar Association, contingency fee agreements must have the following elements:

  • Information about how the contingency fee percentage is calculated and any cap

  • When and how will it be paid for the attorney’s services

  • Whether the client will be responsible for additional legal expenses if they don’t win the case

  • Client and attorney signatures

Our personal injury attorneys work on a contingency fee basis and have handled many cases at our law office. Losing is never an option. Finally, we do our best to ensure that our client’s demands are met and that they receive the most compensation possible for their personal injuries.

We have offices in strategic areas to better serve you and review any complex matters swiftly. You can call us to book a free consultation where we can discuss legal costs in greater detail. We have the answers and explanations victims need before pursuing a successful personal injury claim. Our attorneys can choose the appropriate legal claim and defense during your session.

We collaborate with our clients to ensure no charge is paid unless we prevail in their legal proceedings or reach a favorable financial settlement. (If the civil case or a lawsuit is settled or results in a verdict, the attorney receives payment from the client’s case.)

Ready to Take Legal Action? Contact Ehline Law Firm Today!

At Ehline Law Firm, our experienced attorneys maintain a good attorney-client relationship with every client we deal with. We will not deduct legal fees from your property damage portion of the settlement because we go the extra mile.

You owe us nothing if we cannot secure a personal injury settlement. We will also never take a cut for the amounts we save you. Call us today at (833) LETS SUE to learn more about our vast experience, and strength, and how we deal with individual contingency fees. You can also fill in our convenient online contact us form.

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Downtown Los Angeles Office
633 West 5th Street #2890
Los Angeles, CA 90071
(213) 596-9642
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Downtown Los Angeles Office
633 West 5th Street #2890
Los Angeles, CA 90071
(213) 596-9642
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Ehline Law Firm Personal Injury Attorneys, APLC