How Do Contingency Fee Agreements Work?

Posted April 25th, 2024.

Categories: Blog.

lawyer and client

Dealing with a legal case or lawsuit can be overwhelming and confusing for someone with little to no knowledge of the law. Hiring an attorney can help ease worries regarding your case, but it can also cost you financially. Contingency fee agreements are a great way to acquire the skills and services of a lawyer even if you cannot afford to do so. For more information read on and contact the law offices of Mark S. Guralnick.

What is a Contingency Fee?

A contingency fee is a way to pay your attorney contingent on whether you win your case. Basically, you and your lawyer sign a contract stating that they will represent you for free, but if you win your case they are entitled to a certain percentage of your awarded compensation. If you lose and do not win any money, you do not have to pay the attorney for their services.

The percentage of compensation you owe your lawyer will be agreed upon by you both before work begins. Standardly, 33% of your compensation is designated as payment for your attorney, however, that percentage could increase or decrease depending on the complexity of the case and the risk that the lawyer is taking by working for you without guaranteed payment.

What Other Ways Can Lawyers Be Compensated?

While contingency fee agreements can benefit both parties, they are not the only way to pay your attorney. There are a few ways that lawyers can be compensated for their services during a case or trial. Besides a contingency fee, the following are ways that a lawyer can receive wages for their hard work.

  1. An hourly rate. This is one of the more common ways that an attorney will charge their clients. You will typically pay a retainer which is a sum of money upfront to acquire the commitment of the lawyer, then eventually you will be billed a certain dollar amount per hour of work that your attorney puts into researching, communicating with relevant parties, and defending your case.
  2. A flat fee. For simple cases that wrap up quickly or one-time services like writing a will or divorce agreement, you may be asked to pay one fee.
  3. Pro bono. If you cannot afford to hire legal counsel you can request a pro bono lawyer to represent you, meaning they will act as your attorney free of charge.

What Are the Pros and Cons of Contingency Fee Agreements?

Pros of agreeing to a contingency fee payment include:

  • You do not have to pay any lawyer fees upfront
  • Your attorney may be better incentivized to put all of their efforts into your case since they do not get paid unless you do
  • If you lose you do not have to pay attorney fees

Cons of using a contingency fee during your case include:

  • Depending on the length of your case it could end up costing you more than if you had agreed to pay the lawyer an hourly rate
  • You may have to pay some administrative costs even if you lose
  • The percentage of your compensation that your lawyer is entitled to may be very high depending on the circumstances of your case


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