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Contingency Fee Definition
A contingency fee is the settlement or judgment amount that the client’s attorney will receive upon successfully handling their case. By making a contingency fee agreement, the injured party (client) can receive proper legal representation regardless of their financial status.
If the client loses their case, neither party will receive any money, and the client will not need to pay attorney fees. However, they may still be required to pay court filing fees.
Benefits of Contingency Fees
Client Benefits
- Avoid costly upfront attorney fees, especially if the case takes years to settle.
- The client doesn’t have to pay the attorney if the case is unsuccessful.
- Incentivizes the attorney to get the best settlement as quickly as possible.
Attorney Benefits
- Allows the attorney to proceed with subpoenas, depositions, or other actions that a client paying legal fees may wish to forgo.
- Take potentially lucrative cases that the client may not otherwise be able to afford.
- Depending on the settlement percentage the attorney is entitled to, a contingency fee may be more lucrative than hourly billing.
Standard Fees
A contingency fee agreement may vary greatly depending on the nature of the case, the attorney’s experience, and the amount of anticipated work the attorney may face. A client may negotiate with their representative to determine a suitable fee structure.
Fixed Percentage Fee
This is an agreement where the legal representative will receive a fixed percentage of the client’s gains, no matter when the case is resolved. Generally, the client can expect to pay one-third of their award to their attorney.
Graduated Fee
Sometimes, the contingency fee may be on a sliding scale, and the percentage paid to the attorney increases or decreases depending on the length of the case and whether it settles before trial. This is also referred to as a “staged contingency fee.”
Partial Fee
The agreement may involve a partial fee where the client agrees to pay for some initial or ongoing legal services and a contingency fee when the case is resolved.
Sample
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CONTINGENCY FEE AGREEMENT
1. THE PARTIES. This Contingency Fee Agreement (the “Agreement”) is made effective as of [MM/DD/YYYY] by and between:
Attorney: [ATTORNEY NAME] with a mailing address of [ATTORNEY ADDRESS] (the “Attorney”), and
Client: [CLIENT NAME] with a mailing address of [CLIENT ADDRESS] (the “Client”).
2. LEGAL MATTER. The undersigned Client hereby retains the Attorney in regard to the following: [DESCRIBE LEGAL MATTER] (the “Legal Matter”).
3. RETAINER. As part of this Agreement, the Client shall pay a retainer in the amount of $[RETAINER AMOUNT]. Should a retainer be paid, it shall be deducted from any contingency fee paid by the Client as stated in Section 4 of this Agreement.
4. CONTINGENCY FEE. It is understood and agreed that the Client will pay the Attorney the following fee for the Legal Matter to be rendered [%] of any and all sums recovered by way of settlement prior to instituting a lawsuit.
5. ATTORNEY REMOVAL. If the Client requests to change attorneys or otherwise requires the Attorney to withdraw from the case, the Attorney shall be entitled to the fees included in Section 4 based upon any settlement offered by the opposing party prior to the withdrawal date. If no settlement offer has been made, the Attorney’s hourly rate of $[RATE]/hour shall be paid.
6. LIEN. The Client agrees to give the Attorney a lien on the claims or causes of action and on a sum recovered by way of settlement and on any judgment that may be recovered thereon to the extent of the amounts herein provided as the Attorney’s fees and other fees, charges, and expenses incurred.
7. CLIENT’S DECISION. The Client has the ultimate right to decide whether or not an offer of settlement is satisfactory. If the Client and the Attorney cannot agree to a settlement of the case, the Attorney may withdraw from the case and will be paid the fees stated in Section 4 up to the withdrawal date.
8. CLIENT AUTHORIZATION. The Client hereby authorizes the Attorney to thoroughly investigate the facts and laws relative to the Legal Matter.
9. GOVERNING LAW. This Agreement shall be governed under the laws in the State of [STATE NAME].
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates written hereunder.
Attorney’s Signature: ______________________ Date: [MM/DD/YYYY]
Print Name: [ATTORNEY NAME]
Client’s Signature: ______________________ Date: [MM/DD/YYYY]
Print Name [CLIENT NAME]