The Whys and Wherefores of Contingent Fees



Q:
When I went to an attorney for help recently, he said my case could be handled on a contingent fee basis. What is a contingent fee?
A:   When your attorney works on a “contingent fee basis,” it means that he will charge you a fee only if you recover money through a court proceeding or settlement. If you do not recover any money, then you will not have to pay a fee to your attorney, regardless of the time and effort your attorney puts into your case.  

Q: When do attorneys charge a contingent fee?
A: Attorneys may charge a contingent fee rather than an hourly or flat fee if they feel there is a reasonable chance they will be able to collect money for the client either through settlement or a court case.

Q: Could my attorney add his contingent fee to the amount the court may award me, so I can get all the money?
A: With very few exceptions, the contingent fee cannot be added to the amount collected.

Q: What types of cases are handled on a contingent fee basis?
A: A contingent fee is generally used in personal injury/medical malpractice cases or breach of contract/collection cases where money may be recovered. For example, if you are injured in a car accident, a lawyer likely will take your case on a contingent fee basis so that you will not have to pay the lawyer unless you collect money after the court decides your case. Your lawyer’s fee will be a percentage of the amount of money collected after the court award or settlement.

Q: What is the usual contingent fee percentage I can expect my attorney to charge if I win my case?
A: The amount of the fee will depend on the type of case, may depend on whether or not your attorney has to file a lawsuit for you, and may also vary depending on the geographic area where the case may be brought. Therefore, a typical contingent fee amount may range anywhere from 25 to 40 percent. Discuss with your attorney the percentage that will be charged, and make sure to sign a written contingent fee agreement. The agreement should specify the percentage you have discussed with your attorney and how out-of-pocket expenses will be paid. 

Q:   Will I have to pay court costs and my attorney’s out-of-pocket expenses on top of the percentage he’ll take from my award?
A: Yes, you are responsible for paying the out-of-pocket expenses for your case. These expenses are paid separately from the contingent fee and cover charges for reports and depositions, etc. Ask your attorney what those expenses might include and whether you must pay for them in advance or whether you can reimburse your attorney for those expenses when your case is resolved. 

Court costs are separate from the out-of-pocket expenses for your case and you will only have court costs if your attorney actually files a lawsuit for you. Ask your attorney how the court costs will be paid, since court costs may vary based on the court involved. 

Q: Can I recover these costs and expenses if I win my case?
A: If your attorney files a lawsuit for you and you are successful, you may be able to recover some of your court costs. 

You generally cannot recover out-of-pocket expenses when you settle your claim without filing a lawsuit or going to trial. You may be able to recover some of your out-of-pocket expenses if you file a lawsuit or go through a trial, but will be determined on a case-by-case basis. 

12/19/2016

This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association (OSBA). It was prepared by Akron attorney Terry Zimmerman.

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Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.

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