Contingency Fee



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What Is a Proper Contingency Fee?

Personal injury law is the branch of law that addresses injuries to individuals caused by some type of negligence. Typically, these injuries are to the body and can be caused by many different factors. When personal injury occurs, the affected individual may seek compensation to pursue treatment. Often, this takes the form of hiring a personal injury lawyer and filing a personal injury lawsuit.

In this post, learn more about how to know what the proper contingency fee is for hiring a Los Angeles personal injury attorney.

Types of Personal Injury Lawsuits

There are many different reasons why a person might file a personal injury lawsuit, including vehicle incidents, medical malpractice and unsafe work conditions.

Here, there are two categories: strict liability and intentional wrongs. Both are valid categories in a personal injury case.

How it Works to Pay a Contingency Fee

One common question every plaintiff has is how attorneys get paid. There are two typical ways that attorneys get paid: an hourly fee or a contingency fee.

In the arena of personal injury, it is much more common for attorneys to charge a contingency fee rather than hourly rates. A contingency fee is a fee collected after the case has been tried and won. If the case is tried and not won, the attorney collects no fees, even though the attorney’s firm has paid for all trial expenses.

If the case is tried and won, the attorney collects a fee that is a percentage of the overall settlement of the personal injury case. Let’s say the settlement awarded is $1 million. The contingency fee for the attorney is 10 percent of whatever the settlement amount is. This means the attorney’s contingency fee upon winning the case is $100,000.

Two Contingency Fee Models

The most common reason why a personal injury attorney agrees to work based on a contingency fee is when there is no state statute limiting the amount of awarded damages and there is a reasonable chance the case can be won. In this case, the attorney and client will sign a contingency fee agreement that will govern how settlement funds are disbursed if the case is won.

There are two different contingency fee models. The first includes some or all trial expenses plus a contingency fee if the case is won. The second includes no trial expenses plus a contingency fee if the case is won. In this case, the attorney’s firm would still bear the trial expenses up front, but then would be eligible to recoup those expenses plus the full contingency fee out of the settlement awarded.

Negotiating a Proper Contingency Fee

The typical contingency fee ranges from 30 to 40 percent of whatever the final settlement award may be.

Here, if the contingency fee agreement includes recovery of the attorney’s trial expenses, it will make a difference whether those expenses are collected before or after the attorney collects the contingency fee itself. In other words, the attorney will earn a larger contingency fee if the fee is collected out of the settlement money before the expenses reimbursement deduction takes place.

It is important to know that each of these points is negotiable. The stronger the personal injury case, the more negotiable the financial arrangements will often be. It is also important to realize that a contingency fee arrangement will apply whether the case is settled by the attorneys out of court or the case goes to trial and a settlement is awarded by a judge and/or jury.

By understanding what type of proper contingency fee to expect, how the contingency process itself works and how to negotiate fairly with an attorney, the trial proceedings can proceed more smoothly. This way, there is confidence on both sides that the contingency fee agreement is fair based on the work both parties will contribute towards winning the case.

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