What Are Contingency Fees?

What Are Contingency Fees?

Most Los Angeles personal injury attorneys charge a contingency fee. But unless you have hired a lawyer before, you might not know exactly how contingency fees work. 

You should understand how much you will pay for your lawyer’s services. This will reduce the risk of any disputes over fees at the end of your case.

Here’s an overview of what contingency fees are and their benefits to accident victims.

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Legal Fees in California

Lawyers in private practice almost always charge for legal services. You might find free representation for some types of cases from legal aid groups or pro bono services, but these services rarely provide free representation for injury cases.

Lawyer fees usually fall into one of these categories:

Hourly Fees

Lawyers charge hourly fees when they don’t know how much work a case will require. Suppose that you have a business dispute with a supplier about the goods you received. A lawyer would likely charge you an hourly fee to file a lawsuit and litigate your case.

A lawyer who charges $300 per hour has quoted you an hourly fee. You will pay for the time the lawyer spends on your case, regardless of the outcome.

Flat Fees

Lawyers charge flat fees when they know exactly how much work a project will require. For example, a lawyer might charge a flat fee to file a trademark application or handle a traffic ticket. When you pay a flat fee, you pay the lawyer for the work the lawyer will perform, regardless of the outcome.

Contingency Fees

Unlike hourly and flat fees, a contingency fee depends on the outcome of the case. Lawyers usually calculate contingency fees as a percentage of the amount of compensation recovered. A typical contingency fee falls between 20% and 40%, with most totaling 30% to 35%.

You pay the fee at the end of the case out of your compensation. If a lawyer quotes a contingency fee of 35% and you settle your car accident case for $100,000, your lawyer receives a legal fee of $35,000.

The Services Your Contingency Fees Cover

You should discuss what your contingency fee will cover when you hire a lawyer. Lawyers structure their practices differently, so some may offer more services than others for the agreed-upon fee.

Some services your contingency fee will likely cover include:

  • Communicating with you via meetings, email, and phone calls
  • Investigating the case
  • Collecting evidence
  • Preparing and submitting an insurance claim
  • Negotiating with the insurer to settle the claim
  • Drafting pleadings and filing lawsuits
  • Helping you prepare for your testimony
  • Writing motions during pre-trial
  • Presenting evidence and arguments at trial

Many lawyers also list the services that the fee will not cover. Some examples include:

  • Appealing your case if you lose at trial
  • Collecting the judgment if you win at trial
  • Litigation costs

You should discuss the third item, litigation costs, with the lawyer before signing the fee agreement. Litigation costs include all the hard expenses that your case requires. Some examples include:

  • Filing fees
  • Court reporter costs
  • Expert witness fees

The lawyer pays these costs upfront, but they will expect reimbursement at the end of the case. You should discuss whether you must reimburse the lawyer if you lose your case. You should also ask if the reimbursement happens before or after the lawyer deducts the contingency fee.

Benefits of Contingency Fees

Injury lawyers work on contingency for many reasons, including the following:

No Upfront Fee

Since the fee depends on the outcome of the case, the lawyer does not charge any upfront fees to start on your case. For accident victims, this allows them to get representation while saving their income and savings to pay for medical treatment and daily expenses.

No Fee for a Losing Outcome

If you do not win or settle the case, the lawyer earns no fee. This substantially reduces the risk of bringing your claim.

An incentive for the Lawyer

The greater the settlement or damage award, the greater the legal fee collected by your lawyer. This means that injury lawyers have an incentive to get as much compensation as possible for you.

Keep the Bulk of Your Compensation

In a difficult case, hourly fees could eat up all of your compensation. But a contingency fee guarantees that the legal fees will not exceed the percentage you agreed to. This means the bulk of the fees will go toward your medical treatment, lost wages, and pain and suffering.

Hiring a Contingency Fee Lawyer in California

A lawyer must provide a written fee agreement for all contingency fees in California. This agreement will outline the fee rate and how the lawyer will handle litigation costs. You should review this agreement carefully and ask the lawyer about any terms you do not understand.

A contingency fee gives accident victims a way to hire high-quality legal representation. Your lawyer will have the skills, experience, and knowledge to go up against the insurance company’s lawyers. To discuss contingency fees and how an injury lawyer can help you get fair compensation, contact M&Y Personal Injury Lawyers to schedule a free consultation.

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