When it comes to explaining contingency fees, including what they are and how they work, it’s crucial to know that under a contingency fee arrangement, your personal injury lawyer will take their attorney’s fee out of any final settlement. This means that, if your lawyer doesn’t win your case, you don’t have to pay an attorney’s fee.
This arrangement allows you to secure competent legal counsel without worrying about paying up front. You can talk to an Atlanta personal injury lawyer to learn more about contingency fees, how they work, and their benefits.
How Contingency Fees Work
When most personal injury lawyers accept a case, they accept it on contingency. When on contingency, the lawyer agrees to take their attorney’s fee out of any final settlement. Instead of taking a fee up front, the lawyer takes a portion of any final settlement or verdict after the case is resolved.
The flipside of this arrangement is that, if the lawyer doesn’t win your case, you don’t have to pay the attorney’s fee. It’s called a “contingency” fee because whether the lawyer receives payment is contingent (i.e., dependent) on them winning the case.
Lawyers take contingency fees out of the final settlement check. When the insurance company sends your lawyer a settlement, they’ll automatically deduct their fee from the proceeds, leaving you with the remaining amount.
Contingency Fee Percentages and Examples
Contingency fees are usually calculated as a percentage of any final settlement. The typical contingency fee for most personal injury lawyers is between 33% and 40%. Thus, anywhere between 33% and 40% of your total settlement will go to the lawyer first.
Using some real numbers can help illustrate the concept: Say your total settlement is $100,000 and your lawyer charges a 40% contingency fee. That means they’ll receive $40,000, and you’ll receive the remaining $60,000.
There are variations in how lawyers can deploy contingency fees. For example, a lawyer might charge a base contingency fee but charge a higher one if the case ends up going to trial. Some lawyers may charge a combination flat fee and contingency percentage of the final settlement.
Benefit of a Contingency Fee Arrangement
Contingency arrangements have been part of legal practice in the U.S. since the 1800s and are essentially the default in personal injury law. Below are just some of the benefits of contingency fees:
No Upfront Fee
Most importantly, you don’t have to worry about paying for a lawyer up front. Many of our clients hesitate to get a lawyer precisely because they don’t have the money to pay at the start. With a contingency fee, you can secure competent legal counsel without putting yourself in financial distress.
Aligned Incentives
Contingency fees take the pressure of paying off of you, but they also incentivize your lawyer. Since their fee is based on the total amount of money recovered, they are incentivized to pursue the highest possible settlement. With a flat upfront fee, the lawyer receives the same amount no matter the outcome of the case.
Less Financial Risk
A contingency fee also puts you at less financial risk. Your lawyer will absorb the additional costs and fees related to litigation. You may still have to pay court-filing or deposition fees, but you won’t have to pay the attorney’s fee, which is the main cost of litigation.
Predictable Costs
With a contingency fee arrangement, you know exactly what percentage of your final settlement goes to your lawyer. You are aware of precisely how much you need to pay your lawyer and when you’ll pay them.
Legal Guidelines About Contingency Fees
Georgia gives clients and lawyers fairly broad latitude to design a contingency fee arrangement, but there are a few rules.
While there is no statutory cap on contingency fee percentages, Ga. R. Prof. Cond. 1.5 prohibits lawyers from charging fees that are unreasonable. Whether or not a fee is unreasonable depends on time, effort, and the circumstances of the case.
Lawyers must also provide contingency fee arrangements in writing for them to be valid. Contingency fees are allowed in civil cases in Georgia, but not in criminal cases.
Questions You Should Ask About Contingency Fees and How They Work
Before hiring a lawyer, you need to know exactly what their contingency fee arrangement is and how it works in practice. Below are the most important questions you need to ask:
- What percentage do you charge as a contingency fee?
- Do you charge more if the case goes to mediation or trial?
- Are there any legal expenses that I have to cover?
- Is the contingency fee negotiable?
- Are fees deducted before or after other liens are taken out?
- Are case costs included in the contingency fee?
Contact a Personal Injury Lawyer in Atlanta from Van Sant Law
Do you have any more questions about contingency fees, what they are, and how they work? If so, contact Van Sant Law online or reach out by phone to speak to an Atlanta personal injury lawyer.
