What Is a Contingency Fee?

Contingency fees are a way for clients to arrange payment to an attorney for services. Working on a contingency fee basis means that a client pays an attorney only if the case has a favorable result.

The contingent fee is a fixed percentage of the proceeds from a successful suit. Typically it is one-third of the proceeds. This type of fee arrangement is only used when the plaintiff is claiming money, usually personal injury cases. Contingent fees are prohibited in criminal mattes and domestic relations matters.

If the attorney loses the case, then neither the client nor the attorney receive any money, and the client will not be obligated to pay the attorney. This means that the attorney wins the case or the case is settled out of court.

The Benefits of Contingent Fees

From the client's perspective, one of the benefit of a contingent fee is that the client takes on less monetary risk. If the client wins, the fee comes from the judgment proceeds, and if the client loses, he or she does not need to pay the attorney out of pocket. It is also a more predictable method of figuring out how much an attorney will cost you. Another benefit is that the attorney has an invested interest in the outcome of the case, giving the client more assurance that the attorney will try their best to get a favorable outcome.

An attorney may also advance court costs such as filing, court reporter costs, and copying, which helps the client not have to pay on those immediately until a win. In calculating these costs into the fee, the amounts must "reasonably reflect" the actual cost of services rendered.

Flat Up-Front Fees and Billing Per Hour

On the other hand, say the client loses the case and the attorney already paid a flat fee for services or is being billed per hour for work. The problem with a flat fee is that typically you pay it up front. This means that the client needs to come up with the money to pay the attorney right away, something the client may not be in an easy position to do.

A common complaint about billing per hour is that legal costs can skyrocket very quickly. Personal injury cases typically involve a great deal of time and work, and the average person would not be able to pay hundreds of dollars an hour to get through a case. An attorney is required to keep an accounting of what they are billing for, but it is just a reality that clients are not going to be around all the time to watch the work happening. Thus there can be frustration and disconnect on the high billable costs and actual work done. Since you must agree beforehand, contingent fees take the guesswork out of how changing costs correspond to actual work done.

Sachs Waldman: No Fee Unless We Win

At Sachs Waldman, our attorneys work on a contingent fee basis because we follow a customer-oriented philosophy. You won’t have to pay attorney fees unless we win your case. Learn more about why clients trust us to get the job done.