What Is a Contingency Fee When Paying a Lawyer?

Few people plan ahead for serious injuries with costly medical treatment and days, weeks, or months of missed work days. However, serious injuries happen. CDC data shows around 40 million injury-related emergency room visits annually. 

Injuries are expensive as well as painful and debilitating. A successful personal injury claim against the person or business at fault for an accident can help recover expenses, plus compensation for pain and suffering, but successfully recovering compensation for damages often depends on having skilled, experienced legal representation. Many injury victims dismiss the idea of hiring an attorney after a serious injury because they’re already facing financial hardship from the injury and feel they cannot afford legal fees. Fortunately, reputable personal injury attorneys understand this and operate on a contingency-fee basis for personal injury cases. So, what is a contingency fee and how does it work in personal injury cases?

How Does a Contingency Fee Work In an Injury Claim?

Experienced personal injury lawyers understand that their clients are often out of work at the same time that their medical bills from the injury begin to pile up. It’s not the time for them to have to pay attorney’s fees. Instead of requiring payment upfront, the attorney offers a free consultation during which they evaluate the merits of the case to determine if it should move forward. Typically, an attorney only takes the case if they feel it has merit and they can recover compensation for their client through a settlement or lawsuit. After they agree to take on a client’s case, the client signs a contract for contingency-based payment. A contingency fee is a payment that is contingent—or depends—on the case’s success. The client does not have to pay the attorney if the attorney does not secure the client’s compensation through a settlement or court award in a lawsuit. If the attorney successfully negotiates a settlement from the at-fault party’s insurance company or wins a jury award for damages in court, a percentage of the amount recovered pays for their fees. Most personal injury attorneys charge a fee of 30% to 35% of the amount they recover for their client. Depending on the geographical location and skill and experience level of the attorney, they could charge as much as 40%.

The Additional Benefits of Contingency-Based Payments for Legal Fees

Contingency fees for attorneys not only make legal representation accessible to those with limited resources but also incentivize the attorney to win the case and recover the largest possible settlement for the client. Most personal injury cases are resolved with settlements through negotiations with the insurance company of the at-fault party. If the insurance company does not offer an acceptable settlement, the case may proceed as a lawsuit as long as the petition is filed within the state’s statute of limitations. Lawsuits take longer to resolve and require larger fees but jury awards for damages are typically larger than settlements.

Ask Your Attorney If Their Fee is Based on Gross or Net Award

A gross settlement or award is the total amount of compensation the injury victim receives through a settlement or from a jury verdict in their favor. The net amount is the amount they recover after paying court costs, filing fees, and other expenses. Whether or not the attorney takes their fee based on the gross award or the net amount that the victim has remaining after fees makes a significant difference in the portion of the compensation the injury victim gets to keep. As the client, be sure to carefully read the details of your contingency fee contract before you sign the agreement. Speak to an injury lawyer in Austin to learn more!