Contingency Fee Agreement

Contingency Fee Agreement

A contingency fee agreement is a contractual arrangement between a lawyer and a client where the lawyer’s fees are contingent upon the successful outcome of a legal case. This means that the lawyer only receives payment if the client wins the case or achieves a favorable settlement. If the case is unsuccessful, the client typically owes no legal fees to the lawyer, although they may still be responsible for other costs associated with the legal process, such as court fees or expenses for expert witnesses.

In a contingency fee agreement, the fee is usually a percentage of the recovery amount—commonly ranging from 25% to 40%. For example, if a client settles a personal injury case for $100,000 and the contingency fee is set at 33%, the lawyer would receive $33,000 as their fee, while the client would retain $67,000. The use of contingency fees is prevalent in personal injury, medical malpractice, and other tort cases where clients may not have the financial resources to pay hourly legal fees upfront.

This arrangement serves not only to make legal services accessible to clients who might otherwise be unable to afford them but also aligns the interests of the lawyer and client, as both parties benefit from a successful outcome. However, it is essential for clients to fully understand the terms of the agreement, including the percentage charged and any potential costs they may incur throughout the litigation process.