What is a Contingency Fee?

When you hire a lawyer to represent you in a personal injury case, they may tell you that they operate on the basis of a contingency fee.  This means that the attorney’s fees and any expenses they incur related to your case will be deducted from the final verdict or settlement.  If you do not win your case, your attorney will not collect fees; however, they may collect any expenses that have been incurred.   This system allows an injured party the opportunity to hire an experienced attorney to represent them even if they cannot afford one.

While contingency fees are certainly negotiable, you will find that the average fees are between 33 1/3 and 40 percent of your settlement.  The amount can change depending on what stage you are in your case when it is settled.  If the attorney is able to settle the case with the person or business who caused you injury outside of court, without a lawsuit, an attorney typically receives no more than 33 1/3 percent of your settlement.  If the attorney must file a lawsuit to take the accused to court, and the settlement is reached after this, your attorney can collect the higher fees of 40 percent of your settlement.

As mentioned, in addition to a percentage of your overall settlement, attorneys are also allowed to deduct any expenses they incurred pertaining to your case.  These can include small expenses such as copies of police reports, medical records, and postage.  They can also be the larger expenses of expert witness fees, court filing fees, investigators, trial exhibits, and depositions.  Keep in mind that these fees add up, and could bring the amount your attorney collects to somewhere between 45 and 60 percent of your total settlement.

Finally, you should be aware that it is common practice for your settlement check to be sent directly to your attorney.  He or she will then deduct their contingency fee and expenses before giving the remainder to you.