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What You Need to Know About Contingency Fees?

Posted in Our Blog on October 14, 2020

Many times, victims hurt in a devastating accident are too scared to pursue legal damages. Often because they believe they are required to pay upfront for any legal services. They worry that since they do not have the money to pay for a lawyer or have the funds to cover all the legal expenses, they cannot pursue a claim.

Yet, these individuals do not realize that almost all wrongful death or personal injury cases are handled on a contingency fee basis. What does this mean exactly? In this blog post, we will dive into this issue and describe what a contingency fee arrangement is, the benefits and disadvantages that come with it, and why you should work with an attorney on a contingency fee basis.

What Exactly Is a Contingency Fee?

Even though it may sound complicated, contingency fees are relatively straightforward. What it boils down to is a client only pays their lawyer if their case is successful, either through a settlement or a jury verdict. Under a contingency fee arrangement, the attorney accepts a fixed percentage, which is often one-third of the recovery. This amount is paid out only if you win your case. In situations where you lose your case, you may not get any money awarded to you. But you also will not have to pay your lawyer for the work done on your case.

However, one important detail to keep in mind is you may have to pay court filing fees or costs related to deposing witnesses even if you end up losing your case.

When Are Contingency Fees Used?

Contingency fee arrangements are often used in civil cases like workers’ compensation cases or personal injury claims. However, a lawyer can accept work on a contingency basis in other circumstances, including:

  • Sexual Harassment Cases
  • Malpractice Cases
  • Employment Discrimination and Wage Dispute Claims
  • Class Action Lawsuits
  • Debt Collection Claims

Many attorneys generally accept cases on a contingency basis if they have clear liability and a way to collect the judgment. Yet, if your case is riskier or the reliability of succeeding is not clear, an attorney may not accept the case, even on a contingency basis.

Legal Cases That Do Not Allow Contingency Fees

Yes, contingency fees are beneficial. However, they are not always allowed. In fact, they are prohibited by law in a variety of cases:

  • Clear-Cut Cases: If the case looks like an obvious win, an attorney should advise the client on how much work the case needs and provide them with a reasonable rate. Otherwise, it can appear as if the attorney is taking advantage of the client and the case’s circumstances.
  • Criminal Law and Family Law Cases: In Louisiana, it is against professional ethics rules to work on a contingency basis on a criminal matter or a family law case. This is because it would appear to condone or encourage unlawful activity or divorce.

Contingency Fee Benefits

Contingency fee arrangements provide clients with several benefits, including:

  • Incentives: When an attorney only gets paid on a contingency basis, they will most likely give your case the utmost care. It is highly motivating for them to do everything they can to provide you with the best results.
  • No Fees Up-Front: The most significant benefit of a contingency fee arrangement is that as a client, you do not have to pay your attorney upfront, and do not have to face substantial legal expenses while the case is ongoing. This is a significant factor for those with lower incomes to get better legal assistance.
  • Help When You Lose: Even if your case does not go as planned, a benefit of a contingency fee arrangement is that you do not have to worry about paying substantial lawyer expenses. You may be responsible for some administrative costs, but your attorney is not going to come after you with a hefty bill and require you to pay them for their work.
  • More Predictable: Contingency fee arrangements make legal costs more predictable, meaning you know what you are required to pay if you win. In comparison, with an hourly rate fee, the total bill will depend on several factors, including the amount of time the lawyer spends on your case.  In some circumstances, attorneys may even try to throw in surprise costs and fees.

Contingency Fee Disadvantageous

Contingency fee agreements can work out great. However, sometimes this fee structure may not be the best decision.

  • Cost You More: The contingency fee arrangement may end up costing you more money than an hourly fee arrangement. Under these agreements, your percentage is already agreed upon. No matter how long the case takes, this set amount is taken out of your winnings. Therefore, in cases that only require a few hours of work to settle. It may be more beneficial to discuss other payment options with your attorney.
  • Avoid Your Case: Unfortunately, working on a contingency basis makes most lawyers more selective about the types of cases they agree to take on. As a result, your case may get passed up, especially if it does not appear easily successful or appears as a much riskier case.

Should You Work With a Lawyer on a Contingency Fee Basis?

Contingency fee arrangements are a great tool to use if you cannot afford litigation costs upfront, and you have a solid legal case. However, just because you have a case does not mean that every attorney will take it.

If you decide to pursue a legal claim. Make sure to speak with an experienced attorney that can help you figure out if you have a viable claim, your chances of success, and can explain in detail about their contingency fee agreement. For more information, contact the Law Office of John W. Redmann today, or call our offices at 504-500-5000. Let us help you get the answers and the legal help that you need.