How do Contingency Fees Work?

A “contingency fee” is a unique payment arrangement with a lawyer. This arrangement allows the lawyer to represent the client without an upfront payment when a case begins. Instead of an upfront payment, the client agrees to give a percentage of the award if the case is successful.

Typically, a contingency fee arrangement is used in cases where a person has been injured and is seeking money “damages” to remedy an injury. Lawyers often decide to represent a client with a contingency fee arrangement based on the nature of the case and the amount of damages that are being claimed. Some types of claims have limitations on how much an injured person can recover in damages, which may affect a lawyer’s decision to represent a client on a contingency fee basis.

Some contingency fee arrangement may require reimbursement of expenses as well as the agreed upon contingency fee percentage. A contingency fee arrangement may also involve a graduated contingency fee percentage, a contingency fee percentage that changes, depending on whether the case goes to trial or meets some other procedural benchmark.

A contingency fee agreement must be in made in writing. Here, it’s important for clients to carefully review the terms of any contingency fee agreement with a lawyer and ask questions about terms in the agreement that are not understood, before entering the agreement. Clients may also find it valuable to consult with another lawyer for advice about a contingency fee agreement they are considering.

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Last update: June 2019.