Personal injury plaintiffs who are exploring their legal options are likely to have come across firms that offer their services “on contingency.”  Contingency fee arrangements are ubiquitous in the personal injury context, and for good reason — the use of a contingency fee can create a win-win scenario for both the plaintiff and the attorney, incentivizing high-quality legal representation at every stage of the litigation process.

Let’s explore some of the basics for a clearer understanding of how contingency fee arrangements work, and how they are beneficial.

Fundamentals of a Contingency Fee

Contingency fee arrangements may be difficult for many first-time plaintiffs to understand, but in truth, they are rather simple.  Essentially, an attorney working on contingency is not paid unless and until the plaintiff successfully receives compensation through a favorable trial verdict or settlement.

Throughout litigation, there are a number of costs: fees for working with experts (who will provide supportive testimony), filing fees, and various other expenses.  In the typical contingency arrangement, these fees and costs are covered by the representing attorney’s firm.  Just to reiterate, you — the plaintiff — are not expected to pay out-of-pocket unless and until you secure a win.

Consider the following example.

Suppose that you are injured in a car accident due to a speeding, distracted driver.  You hire an attorney on contingency and litigate the case.  You pay nothing for these legal services, which may last for a significant length of time (upwards of a year in some cases).  After extensive litigation, your attorney secures $500,000 in damages through a favorable trial verdict.  It is at that point that you will have to pay the attorney.

Contingency fees vary from firm-to-firm, though as a general rule, they tend to hover around 35 percent to 40 percent of the total recovery (depending on whether the case had to go all the way through to trial).

Understanding the Contingency Fee Dynamic

Contingency fees can create an advantageous, win-win dynamic for both the plaintiff and the attorney, which is why they’re so commonly used.  This is perhaps best understood when compared to an hourly-fee arrangement, or some other effort-based pay arrangement.

If an attorney is paid for the hours they put in, for example, then they are incentivized to take as much time as possible to resolve your case.  In fact, even if a significant opportunity to resolve the case early presents itself (i.e., the defendant offers a favorable settlement compromise), the attorney may try to push back against it and further delay the resolution of the dispute, if only to further enhance their own income.  With an hourly-fee arrangement, the attorney’s interests are fundamentally at-odds with that of their client.

Contingency fee arrangements create a unity of interest between the plaintiff and their attorney.  The attorney is paid only if they can secure compensation for their client, and further, their earnings are a percentage cut of the total compensation.  This ensures that the attorney will be incentivized to resolve the case in a time-efficient manner, and that they will work hard to maximize the damage recovery, as that his directly tied to their own earnings.

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If you’ve been injured in an accident due to the fault of another, then you may be entitled to significant damages to cover your losses, but you’ll want to first secure the assistance of a qualified attorney who can help guide you through the litigation process.  Contact an experienced personal injury attorney for comprehensive assistance.