What is A Contingency Fee for Lawyers?

legalA frequent question from our clients is how do contingency fees work? We do almost all of our personal injury work on a contingency fee basis. That means the fee is a percentage of the amount we recover for the client. Depending on the kind of case, contingency fees can range from 25% to 40%. Also depending on the kind of case, certain amounts recovered are not subject to the contingency fee. There is an infinite variety of ways to structure a contingency fee.

Contingency fees have significant advantage over hourly fees. If you hire a lawyer on an hourly basis, typically they are going to require an upfront payment and then bill monthly. The attorney will expect to get paid monthly. If the client stops paying, then the attorney will stop working and move to terminate the relationship. Most insurance companies pay their lawyers either on an hourly basis or sometimes on a flat fee basis. In a contingency fee case, the lawyer gets a part of the recovery. Said another way, the lawyer doesn’t get paid unless the client gets paid. Often times our cases run on for years, and most clients can’t afford to pay attorneys on an hourly basis for years. Our clients prefer contingency fees because it is financially the best way for them to hire a lawyer to protect their interest.

Another advantage of a contingency fee is the motivation factor. Financially,the client and the attorney have a mutual interest in the recovery. In an hourly fee case, the lawyer gets paid regardless of the outcome of the case. The lawyers are professional and will do their best, but a financial incentive is always helpful.

Our firm can be flexible on contingency fees. For example, on large cases where we know there is a certain recovery, we can adjust the contingency fee to either a reduced percentage or for example on large cases, no fee on the first $100,000. This always depends on the size and complexity , the , likelihood of recovery, and the severity of injuries. We believe in and are open to frank conversation about fees. Our goal is to add value, so that hiring a lawyer improves the value of the case even after the fee is paid. We generally set our fees in personal injury cases at 33% if the cases settle without following suit, and 37% in a personal injury matter if we do file suit. Fees in workers compensation cases are based on a percentage of the recovery, usually 25% in North Carolina and 33% in South Carolina. I think it’s good for the attorney and client to discuss the amount of work that goes into each case. There is also value in the ability of a law firm like ours to file the lawsuit and prosecute the case all the way through to a verdict. I firmly believe the ability to file the suit and try the case adds value to any settlement.

It is also important for the client to remember that in the contingency fee situation, the attorney is bearing the risk by working for years without pay. If the case does not work out as expected, the lawyer has worked for free. No one wants results like that, but the percentage earned in the contingency fee also reflects who bears the risk.

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