The things to consider when hiring a lawyer on a contingency fee arrangement
A contingency fee is when a lawyer agrees to work on your case without getting paid upfront. Instead, they’ll take a cut from the money you win, like if you settle your case or win it in court.
Let’s say your lawyer agrees to a 35% contingency fee. That means if you win $100,000 in your case, the lawyer gets $35,000.
But then, if you lose?
You pay nothing in attorney’s fees.
But it’s not just about that percentage. Lawyers can’t just pick any number they want. They have to follow certain rules set by the American Bar Association.
If you need help understanding a contingency fee agreement, want to know about the three typical fee structures, or you’re simply not sure if your case qualifies, read on and we’ll clear all your skepticism.
What Do You Need to Know Before You Sign Anything?
Let’s discuss the factors you really need to look out for before you say yes to a contingency fee agreement. Because once you sign, you’re locked into the terms, and not understanding those terms can come back to bite you.
What percentage are they taking?
Don’t just ask what they’ll take, be sure to get it in writing. Is it 33%? 35%? 40%? More importantly, does that percentage change depending on whether the case settles early or goes all the way to court? Some lawyers take a smaller cut if they settle before trial and a larger one if they have to go to court.
Who pays for extra stuff?
Legal battles are expensive. There are court filing fees, charges for getting expert witnesses, costs for copies of medical records, and even paying people to deliver legal documents.
These costs aren’t covered by the lawyer’s fee. You need to ask: If we lose, do I have to pay these expenses back? Or does the lawyer eat that cost too?
Some lawyers pay all those costs upfront and only get reimbursed if they win. Others might expect you to pay them whether you win or lose.
What if you fire the lawyer?
Let’s say you hire a lawyer and six months later you’re not happy. Maybe they’re not answering your calls, or you just don’t trust them anymore. You want to switch. Can you? Sure, but read the fine print.
Some agreements say that if you fire the lawyer before the case ends, you still owe them money for the work they already did. That can be thousands of dollars. Always check the termination clause.
The Risks Involved
The contingency fee arrangement poses risks for both you and the lawyer.
The lawyer’s risk
You may not have thought about this yet, but lawyers can spend thousands of dollars and hundreds of hours on your case, and walk away with nothing.
Let’s say a lawyer is working on a big case. They’ve got to pay for subpoenas, depositions (that’s when they sit people down and ask them questions under oath), expert witnesses, court filing fees, and maybe even mediation sessions to try to settle. This can cost anywhere from $10,000 to over $100,000. If they lose? That money is gone from their pocket.
That’s why good lawyers don’t just take any case on contingency. They’re going to look at your case hard before agreeing, because they’re taking a serious gamble.
Your risk
Now flip it around. What if your case was easy? What if it settled quickly with barely any effort? You might feel like, “Dang, I could’ve just paid a few thousand in hourly fees instead of giving away 35% of my whole settlement.”
But then again, easy cases are rare. Most people have no idea how complicated legal stuff can get. Even something simple, like getting a bank to hand over financial records, can take months because of all the legal back-and-forth.
The court system moves slowly, and every step takes effort. A good lawyer earns their cut. But if you pick a bad one who doesn’t do the work? You’re the one who suffers. Your case drags on, and if it settles at all, it’ll settle for way less.
The Benefits of the Contingency Fee Arrangement
One of the coolest things about contingency fees is that your lawyer is just as invested in winning as you are. If they don’t win, they don’t get paid.
They have every reason to fight hard, work fast, and do a good job, because that’s how they get paid.
In hourly cases, some clients might tell their lawyers to slow down or skip certain things because they don’t want to pay more. That can seriously hurt the case. But in a contingency fee arrangement, the lawyer has the freedom to do everything needed to push for the best result, without worrying about billing you more.
So in a way, hiring on contingency gives you a lawyer who’s fully in the game with you, not just clocking hours.
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