You may hear complaints about contingency fees or the lawyers that charge them. However, most people can’t afford to pay for legal representation. If someone has been hurt due to somebody else’s fault, the inability to pay a lawyer shouldn’t prohibit them from recovering insurance money to compensate them for their injuries. They may have medical bills to pay or family depending on their lost earnings. In recognition of this public policy, the law allows lawyers to charge clients fees contingent upon recovery in injury matters.
Contingency Fees Minimize the Financial Risk for Clients
Clients benefit from contingency fees in many ways. For example, clients avoid paying the following litigation costs:
- Investigator fees
- Filing fees and other court costs
- Fees for medical records and other evidence
- Court reporter charges for transcripts
- Fees charged by expert witnesses, like physicians, to write reports and testify
When an injured party hires an attorney, the law firm pays these costs for the client and only receives repayment if there is a recovery. Therefore, the lawyer takes on considerable financial risk.
No Win, No Fee
With a contingency fee, the attorney could earn no fee for his work. If the attorney fails to win a settlement or court award, the client pays nothing. The attorney will also lose the money he paid in costs for the client. This means lawyers carefully screen and investigate these injury cases before agreeing to representation by contingency fee.
Why Is a Percentage Fee Part of the Industry Standard?
At the outset, it may be difficult to predict the recovery in a personal injury case. The defendant could be insolvent or have too little insurance. Because the amount of money recoverable in injury cases depends on the severity of the injury, it can be difficult for lawyers to predict the medical outcome early in the representation. In the end, each case is different, and the size of settlement depends on many factors.
Contingency Fees are a Good Deal for Clients
Setting attorney fees as a percentage of the final recovery amount incentivizes attorneys to work hard and get the most money possible for their client. In effect, the attorney and the client become partners in the venture. Their interests are aligned. When you consider all the benefits to the client, contingency fees are a good deal.