Attorney Contingency Fee Agreement

An attorney fee is a term that refers to the amount of money that a lawyer charges a client for the provision of legal services. The fee may be billed on an hourly basis, at a flat rate or a contingent. It may be prescribed by a compensation agreement between the two parties (attorney and client), by a court of law, or by statutory provisions.

Essentially, you need an attorney with a proper understanding of the subject matter of a pressing legal problem that you may be facing, one that you can effectively communicate with, charges reasonable rates, and also respects you, among other aspects.

Even though most lawyers are expensive, it’s possible to find one who charges rates that can fit within your budget. Nonetheless, there are a number of general rules that you should keep in mind when choosing an attorney.

When is a Contingency Fee Agreement Required?

 This is a form of contract whereby you commit to making payment to your lawyer once you receive some form of monetary reward in a case. In other words, with a contingency fee agreement, payment for your lawyer’s legal services is dependent on your receipt of compensation from an injurious party.

In general legal practice, lawyers receive payment for services that they give. In any case, law firms must generate income. However, you may require legal representation after a motor vehicle accident, fire, chemical exposure, or fall that causes injury. Such a situation may arise when you have little or no money to hire a good personal injury attorney. This is the main reason why a contingency fee agreement exists.

When are Lawyer’s Fees Prohibited?

Legally, an attorney is not expected to make a contract for, demand for, or get paid an unrealistic amount of fees or an unfair amount for costs. Some of the factors that are taken into consideration when determining if legal fees are realistic or unrealistic include:

  • Amount of time and manpower needed the complexity of the questions, as well as skills needed to carry out the legal service.
  • Whether the legal fee is a fixed amount or dependent/ contingent on something else.
  • The probability that acceptance of that specific employment would prevent other engagement by that attorney.

A lawyer is prohibited from entering into a contract for, levy, or demand for:

  • Any changes in a matter that involves a domestic dispute, payment which is dependent on getting a divorce settlement or upon the extent of alimony or property settlement subject thereof;
  • A contingent fee levied for offering legal services to a defendant facing criminal charges.

Benefits of Contingency Fees

Contingency fee contracts offer a number of benefits to clients:

  1. No need to make payments beforehand- as a client, the lawyer doesn’t expect you to make any payments in advance, and neither will you be faced with substantial legal fees while the matter is in progress. Consequently, people with low incomes can obtain legal services.
  2. No costs in case of losses- in case the matter fails to turn out as expected, you won’t be forced to pay large fees to the lawyer.
  3. Motivation- as a client, you are guaranteed that your lawyer will work to the best of their ability. This is because they will only earn money if the lawyer helps you to win that case.

Disadvantages of Contingency Fees

With this arrangement, there is a possibility of incurring costs that exceed expenses that you would have incurred if the attorney had charged a fixed rate or on an hourly basis. Once the contingency fee agreement is made, you are obligated to pay the fraction that you have agreed upon, regardless of whether the matter is dispensed within seven days, seven months, or seven years.

Another drawback of this arrangement is that when lawyers take up legal matters on this basis, they tend to become choosier with regard to matters they accept to take on. As a result, such attorneys may be tempted to keep away from matters that seem difficult or may demand exorbitant fees for cases that seem risky.

How to Operate Under a Contingency Fee Agreement?

This type of billing permits a lawyer to get paid a specified fraction of damages granted at the conclusion of a legal dispute, rather than at fixed or hourly rates. Basically, the lawyer accepts to take on a matter without demanding payment at hourly rates. In exchange for this, the lawyer receives a specified percentage of the money awarded when that case is concluded.

Depending on your legal jurisdiction and specific details of that contract, fees can range from anywhere between 5% to as high as 50% of the ultimate award. Nevertheless, the lawyer does not get paid in the unfortunate event that a client fails to win.

Example

Michael Owen is employed as one of the official drivers at a reputable university in the United States of America. One day, Michael gets involved in a grisly road accident as he is engaged in official duties. When an investigation is conducted by the police, insurance company, and officials from the motor vehicle inspectorate department, the primary cause of that accident is found to be faulty brakes as a result of irregular maintenance and repair.

Since Mr. Owen is among the lowly paid staff members in that university, he cannot afford to hire a competent attorney to take up the matter in court. For this reason, he approaches one of the leading law firms in New York City, who agree to pursue a compensation claim on his behalf. Given that he cannot pay the prescribed hourly rate, Mr. Michael Owen opts to enter into a contingency fee agreement with the NYC law firm.

Are Contingency Fees Negotiable?

Despite the significance of fees to the attorney and client, the latter rarely chooses an attorney based primarily on price. However, do not forget that such fees are usually negotiable.

It is very improbable for an attorney to encourage their client to bargain the number of fees. Nevertheless, there are certain factors that may give you the liberty to bargain. Law firms that have just opened shop, for instance, often charge a lower amount of fees when compared to more established firms. An attorney may also express a willingness to bargain if the matter is fairly new or appears to be very lucrative.

Sample Contingency Fee Agreement

Davis & Partners

Attorneys at Law, Commissioners for Oaths & Advocates

Contingency Fee Agreement

We at Davis & Partners agree to take up the matter involving Esther Mathews against Hiroshima Building Contractors Incorporated. In this matter, Ms. Esther is seeking compensation following a grievous injury sustained while conducting official duties inside the aforementioned company’s premises. Esther is also seeking compensation for wrongful dismissal from work.

We at Davis &Partners accept to enter into a contingency fee agreement with Ms. Esther Mathews, wherein we commit to represent the client without the demand for any upfront fees, on condition that she pays 35% of all the monies that the court may award as compensation.

Sincerely,

………………………….

Davis Houghton

Principal Partner

December 30, 2020

Sincerely

……………………..

Esther Mathews

Plaintiff

December 30, 2020

Free Contingency Fee Agreement Templates & Examples

Preparing a comprehensive attorney contingency fee agreement is not as simple as many people think. Even if you are a qualified lawyer, you will still need to do a lot of research before coming up with a good contract. However, you don’t have to lose sleep because of this. You can simply download a template from our site. This will undoubtedly make your work easier.

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Contingency fee agreements can be very helpful in situations where clients have complicated and expensive cases but have inadequate finances to seek redress in court. Most litigation attorneys usually accept matters that present outright liability as well as clear means to collect a settlement. This may be through the other party’s insurance policies, for instance. 

The agreements are common in civil matters such as personal injury or professional malpractice. However, they may also accept to take up cases involving sexual harassment, debt collection, employment discrimination, or class action lawsuits, among other claims.