If you have been injured in an accident, you may worry about affording legal representation while dealing with medical bills and lost wages. Contingency fee arrangements solve this problem by allowing you to hire an attorney without paying anything upfront. Understanding how these fees work helps you make informed decisions about pursuing your claim.
What Is a Contingency Fee?
A contingency fee is a payment arrangement where your attorney’s compensation depends on the outcome of your case. According to Cornell Law School, the lawyer only receives payment if they successfully resolve the case in your favor. If you do not recover compensation, you owe no attorney fees.
This structure differs fundamentally from hourly billing, where clients pay for every hour of work regardless of results. With contingency fees, the attorney assumes the financial risk of your case. They invest their time, expertise, and resources with no guarantee of payment.
How the Percentage Works
Contingency fees are calculated as a percentage of your total recovery. The industry standard for personal injury cases typically ranges from 33% to 40%, with one-third being most common for cases that settle before litigation.
Many attorneys use a sliding scale where the percentage increases if the case proceeds further. For example, an attorney might charge 33% if the case settles before a lawsuit is filed, but 40% if the case goes to trial. This reflects the additional work, time, and risk involved in litigation.
Using a simple example: if your case settles for $90,000 and your attorney’s fee is 33%, the attorney receives $30,000 and you receive $60,000, minus any case expenses.
Understanding Case Expenses
Attorney fees and case expenses are two separate things. Expenses include costs like medical record retrieval, expert witness fees, court filing fees, deposition costs, and investigation expenses. These costs are necessary to build and prove your case.
Different attorneys handle expenses differently. Some advance all costs and deduct them from your settlement. Others may require you to pay certain expenses as they arise. Before signing any agreement, ask how expenses will be handled and whether you owe anything if the case is unsuccessful.
The timing of when fees and expenses are calculated also matters. Some attorneys calculate their percentage before deducting expenses, while others calculate it after. This distinction can significantly affect your final recovery amount.
Benefits of Contingency Fee Arrangements
The primary advantage is access to justice. Injured people can pursue claims against well-funded insurance companies without needing money upfront. You receive quality legal representation regardless of your current financial situation.
Contingency fees also align your attorney’s interests with yours. Because the attorney only gets paid if you win, they are motivated to maximize your recovery. There is no incentive to drag out a case unnecessarily or bill for unproductive work.
Additionally, you can communicate freely with your attorney without watching a billing clock. Questions, updates, and discussions do not generate additional charges.
What to Ask Before Signing
Before entering a contingency fee agreement, understand exactly what you are agreeing to. Ask what percentage the attorney charges and whether it increases if the case goes to trial. Clarify how expenses are handled and what happens to those costs if you lose. Confirm whether the fee percentage applies before or after expenses are deducted.
The agreement should be in writing and clearly explain all terms. Take time to read it carefully and ask questions about anything unclear.
Contingency Fees and North Carolina Cases
North Carolina’s contributory negligence rule makes attorney selection particularly important. Because any fault on your part can bar recovery entirely, you need an attorney who will thoroughly investigate and build the strongest possible case. A Charlotte motorcycle accident lawyer working on contingency has every incentive to prove the other party was completely at fault.
If you have questions about hiring a personal injury attorney, contact The Layton Law Firm for a free consultation.