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What Is A Contingency Fee?

September 21, 2022 Personal Injury Blog

If you were recently injured in a preventable accident caused by another person’s negligence, you may be considering pursuing a claim and hiring a personal injury lawyer. If so, a term you will commonly encounter is “contingency fee.” This term refers to how the personal injury lawyer charges legal fees. 

The Meaning of a Contingency Fee

A contingency fee means a San Diego accident lawyer will cover all upfront costs related to pursuing your claim. As a result, you do not have to pay any money to retain their services, and you will only owe legal fees if you recover compensation. As a result, you will not have to pay if you lose. A contingency fee makes it possible for all injury victims to afford to hire an attorney after a serious accident, regardless of their financial situation. 

What Is the Usual Fee for a Personal Injury Lawyer?

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Your personal injury attorney will get paid for their services by taking a percentage of your settlement or verdict award. Before accepting your case, you will have to sign a contingency fee agreement containing the terms of how legal fees will be paid. Most firms charge a contingency fee of about 33%, or one-third, of the final award. So, for example, if you settle for $100,000, your lawyer will keep about $33,000 as their fee for representing you. 

Some attorneys increase or decrease their contingency fee percentage depending on your case’s complexity and how it is resolved. For instance, 25% if your case is settled quickly, 33% if they must file a lawsuit, and 40% if they represent you at trial. Other attorneys’ contingency fees may vary based on the amount of compensation you recover. As a result, it is critical to understand the terms of your arrangement before you sign an agreement for an attorney’s representation. 

What Happens if I Lose My Case?

If you retain a lawyer on a contingency fee basis and lose your case, they will not collect their contingency fee. However, you may still be responsible for other case expenses such as depositions, filing fees, court reporter fees, witness fees, etc. Your attorney typically advances some of these costs if you cannot afford them, but you must reimburse them whether you win or lose. Therefore, in your initial contingency fee agreement, the terms should stipulate whether you must pay for these expenses or if your lawyer agrees not to make you reimburse them or will split them with you if you lose. 

The Settlement Check Will Be Sent to Your Attorney

Once you resolve your case, the settlement check will typically be sent to your attorney first. That way, any liens against your settlement (e.g., unpaid bills to medical providers) can be paid first. Then your lawyer will deduct their contingency fee and case expenses according to your agreement before sending the remainder to you.

Most lawyers, like our injury attorneys in San Diego use a contingency fee, but not all. Some other types of fee arrangements you may come across include fixed or flat fees, hourly fees, or retainer fees.