Will A Contingency Fee Arrangement Be Your Best Deal?

If you have been injured due to someone else's negligence, you should be compensated for your injuries. Unfortunately, in many cases, you must file a personal injury lawsuit in order to receive a fair amount of compensation, which most commonly results in hiring a personal injury attorney. Although many personal injury attorneys advertise that they will take your case on a contingency basis, is this really the best deal for you, or should you agree to pay their hourly rate? Here are a few points you may want to ponder prior to entering into a contract.

What Is A Contingency Fee Arrangement?

You have seen ads for lawyerss in the newspaper, on the internet, and even on television, who advertise that they will not get paid unless they win your case. You may also see ads that state that they will take you case for no money down or no out-of-pocket money. When you see this type of advertising, the attorneys are stating that they are willing to take your case on a contingency basis, or for a percentage of whatever settlement they are able to help you to recover. 

A contingent fee, or a contingency fee arrangement, is most commonly seen in certain types of cases. These include:

  • Personal injury cases
  • Wrongful termination cases
  • Product liability cases
  • Debt collection and other similar types of cases

They are almost never seen in other types of legal areas, because for an attorney to make money on a contingency basis, there has to be some type of award that they are able to take a percentage of. 

How Much Will Your Attorney Be Entitled To?

The percentage that the attorney is entitled to may be negotiable between you and the attorney, but it is not unusual for the fee to range between 33 and 40 percent of your settlement. Some states put limits on the amount the attorney is able to get based on the stage in which your case is settled, or you may have this fee structure as a part of your contingency fee agreement.

For example: If your case is settled prior to them having to file a lawsuit, they may be entitled to one amount, they may be entitled to another amount if they actually file the suit, and even a higher amount if the case has to go to court. To put numbers on this example, it may look like the following:

Your case settles for $45,000 prior to the actual suit being filed. Per your fee agreement, your attorney may entitled to 25% or $11,250. This means that out of the $45,000 you will receive $33,750 and your attorney will receive $11,250. But if your case goes further and your attorney has to file a suit, your attorney may be entitled to 33%. This will mean that they will receive $14,850 and you will receive $30,150. If your case has to go to trial and your attorney is entitled to 40%, they will receive $18,000 and you will receive $27,000. Of course, this is because the further your case goes, the more work your attorney will have to do. 

In addition to your attorney's fees you may also be responsible for additional costs, expenses, and fees. Some of these may include:

  • Filing fees
  • Copying fees
  • Expert witness fees
  • Postage
  • Medical records expense and more

All of these should be clearly spelled out in your contingency fee agreement. 

When Should You Not Hire An Attorney On A Contingency Fee?

An experienced and knowledgeable attorney is usually going to be able to get you a much larger settlement amount than you would be able to achieve on your own. This is because the attorney is a practiced negotiator, and the insurance companies know that the attorneys are aware of how much your case is actually worth.

But there are times that it may not be in your best interest to enter into a contingency arrangement because it may end up costing you more in the end. While you would still benefit from the services of an attorney, you may be better off contracting with them for an hourly rate or a flat fee, especially if you have the financial resources to pay upfront, or as the case proceeds.

Cases in which an alternative arrangement may be your better choice include:

  • Small personal injury cases
  • Straightforward settlement offers and other similar cases

Speak with a personal injury attorney at a law office like Walz Law Office and figure out what type of payment arrangement would be in your best interest. They will be glad to review your case, as well as your payment options with you.