What is a contingency fee?

A contingency fee is a payment structure where the payment is contingent on the services provided being successful or beneficial to the client. In a contingency fee arrangement, the client will usually only render payment when certain conditions are met.

This contingency fee definition can apply in many scenarios, but what is a contingency fee when it comes to legal situations? The basic contingent meaning in law scenarios is that payment will only be provided by the plaintiff when they receive their settlement check.

Contingent Fee Meaning in Law

The most basic contingency fee meaning is that it is a standard payment method offered by attorneys who provide legal services for injured clients. When you work on a contingency fee basis with your lawyer, you do not pay any money upfront. Instead, your payment is contingent on your lawyer winning your case.

Payment Structure of Contingency Fees

The typical payment structure with a contingency fee arrangement works like this – you get the legal representation you need, your lawyer secures a settlement for you, and you pay a percentage of your settlement check to your attorney once you get it.

It's important to understand the contingent fees meaning in your attorney contract fully and whether it applies to your legal situation since not all attorneys utilize this payment structure. Some lawyers charge per hour, while others might charge you per case. You’ll want to understand exactly how much you’ll be paying for your legal representation.

What is the contingency fee average per case? Lawyers create their own payment structures, but you can expect to get charged around 25-40% of your settlement award for legal representation. Lawyers will usually charge more when your case is complex, requires highly specialized knowledge, or will take a long time to resolve.

Common Cases that Use Contingency Fees

When you’re seeking compensation for injuries, you’ve already had to pay out money that you likely didn’t have on medical bills, lost wages, and other damages. That said, contingency fees are most often used in accident cases where one party had a duty of care towards another party, they failed to uphold that duty of care, and the breach of duty caused the accident.

Negligence in accidents transfers legal and financial responsibility to that negligent party. The most common cases are types of car accidents, but contingency fee structures are also used in wrongful death situations, product liability claims, and other personal injury situations.

Benefits and Drawbacks of Contingency Fees

One of the biggest advantages of a contingency fee arrangement is that it allows injured individuals to get the legal representation they need without incurring even more financial distress during their time of need. When clients look for legal representation in a personal injury claim, they’re already at a financial loss and may not be able to afford up-front payments. Another benefit to this payment structure is that it incentivizes your lawyer to work even harder for the win.

One of the biggest drawbacks of contingency fees is that it will cost you a hefty chunk of your settlement for representation. You might pay more than you would with hourly billing if your case settles quickly, but it’s also difficult to predict how complex or time-consuming your case will turn out to be over time.

How Contingency Fees are Calculated

Proving liability in accidents is sometimes straightforward. For instance, if you experienced a car accident and the other driver was arrested for driving intoxicated after the crash, then liability will be pretty clear-cut. Recovering damages should be a lot faster and easier than if you experienced a crash that involved three other drivers, a trucking company, and a defective car part that started the whole collision.

That said, contingency fees are often calculated based on the estimated extent of accident lawyer assistance you’ll need throughout your claim. If your case is complicated, then expect to get charged a higher fee.

Glossary References

https://www.law.cornell.edu/wex/contingent_fee 

https://dictionary.cambridge.org/us/dictionary/english/contingency-fee