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“No Win, No Fee”. You’ve seen it on many attorney websites and commercials, and if you’re curious how this works its through the world of “contingency”. In the simplest terms Contingency fee lawyers can take your case with no cost out of pocket and you agree that they can have a percentage of the proceeds if they win your case. If they lose your case, you don’t owe them anything. Contingency fee lawyers are obviously motivated by getting the highest financial award for you, because they’re paycheck is dependent on your outcome.
How is a Contingency Lawyer Paid?
The contingency fee arrangement can vary based on the attorney and the case, often times the fee is negotiable but is never marketed as such. The most common rate for a personal injury case is usually 33%. Also, the hard costs and expenses of the case are usually added to the contingency fee when the final accounting is done. You may also be able to negotiate an arrangement with your attorney that they take a less than 33% if the case settles quickly or doesn’t get to the point of a lawsuit being filed. Let’s take a look at a fairly straightforward example:
John has a personal injury case where he was hit by a car and retains attorney Smith based on a 33% contingency fee arrangement. Attorney Smith settles the case out of court for client John and recovers $10,000 in compensation. Attorney Smith’s law office is sent the settlement check. However, during the course of the negotiations, attorney Smith incurs $500 in fees (deposition, court reporter, filings Etc). The actual amount the client John will receive looks something like this:
Award: $10,000.00
Contingency Fee of 33%: -$3,333.33
SubTotal: $6,666.67
Expenses: -$500
Total Payout: $6,166.67
Should I Take My Case to Trial?
Only you and your attorney can come to this decision based on the specific facts of your case. However, keep in mind that contingency fees usually go up based on if the attorney has to litigate, or take the case to trial. The time and effort of a trial goes up exponentially compared to settlement negotiations. That usually means the contingency fee will go up to 50%+ if your case proceeds past settlement negotiations to trial. A trial is also extremely expensive and the attorney will often have to hire professionals: doctors, psychiatrists, forensic scientists, land surveyors Etc. The cost of these professionals is tacked onto the expenses of the case. The same scenario above may look very different if that case went to trial:
Award: $10,000.00
Contingency Fee of 50%: -$5,000.00
SubTotal: $5,000.00
Expenses: -$2,500
Total Payout: $2,500.00
Keep in mind that if your case goes to trial there is an opportunity that you may win more than what was previously offered during settlement negotiations, but there’s also a chance that the case may be decided against you and you win nothing. If you win nothing at trial you pay nothing to the attorney for the fees and expenses he/she incurred as a result.
The decision to go to trial is complex and you need to consider the time, potential payout over a settlement, potential risk of loss, experience and success rate of your lawyer and the merits of your case. Each one of these factors alone can have an entire article written about it, so it’s not a decision to be taken lightly.
What Cases are Taken on Contingency?
Personal injury attorneys are the most common lawyer that takes cases on contingency, but that doesn’t exclude other types of cases. A contingency agreement can be made with an attorney if there’s potentially a large pile of money at the conclusion of the case. Essentially, that’s the “carrot” the lawyer is after, if there’s no potential payout why would any attorney take the case?
Common cases taken on contingency:
- Personal Injury
- Medical Malpractice
- Nursing Home Abuse
- Collection of debt
- Sexual Harassment
- Class Actions
- Creditors in Bankruptcy cases (rare)
Cases usually NOT taken on contingency:
- Family/Divorce
- Criminal Defense
- Real Estate
- Bankruptcy – debtor
- Business Litigation
- Immigration
- Intellectual Property (trademark, patents, copyright)
Although this list is not comprehensive it’s a good look at the most common types of cases most people have. Also, there may be circumstances where an exception may be made by the attorney to take your case on contingency if he/she sees an opportunity to recover a significant amount of money. These one-off cases are far beyond the scope of this article and should be discussed personally with your lawyer.
Disclaimer: Every case is unique and the merits of each case is different. This article is not legal advice and should not be interpreted as such. This article is general information and you should not make legal decisions based on the content of this blog, or any information you read on the Internet. You should discuss your case with an attorney for up to date and accurate legal advice.
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