The Attorney’s Contingency Fee

Most personal injury attorneys charge at least a 33.33% contingency fee to handle automobile and other personal injury type cases. Depending on the complexity of the area of law, the fees can go to 40 -45% in product liability and medical malpractice cases.

A contingency fee means that the lawyer does not get paid unless a recovery is made. In other words, the lawyer’s fee is contingent upon getting a recovery.

The lawyer charges his fee on the total amount recovered. Thus, in a case where the lawyer recovers $100,000 for his client, the lawyer’s fee would be $33,333 or 33.33% of $100,000. This is the lawyer’s fee for his time and effort. In addition to the lawyer’s fee, the client is also obligated to reimburse the lawyer for any out of pocket expenses incurred in prosecuting the successful case.

In the above example, a client would pay the lawyer a $33,333 fee plus his out of pocket expenses. The expenses are paid out of the remaining $66,667 the client recovers. Many people ask the question why do the expenses come out of the client’s portion of recovery instead of the lawyer’s portion of the recovery?

The answer is simple. If the lawyer was reimbursed his expenses out of his portion of the recovery, and the case expenses were high, he would have taken all of the risk, performed all of the work and received little or nothing in return. He would have effectively acted as a bank to finance the case without compensation for his time. The only service a lawyer offers is his time and he must be compensated fairly for it.

This explanation raises the question that if the lawyer takes 33.33% of the recovery and the costs of litigation must be paid large sums from the client’s recovery, the client’s will then recover almost nothing. A reputable lawyer will work hard to keep costs down to increase a client’s net recovery.

In short, contingency fees must reflect the degree of risk and the time and expense involved in handling your case. Remember, generally when a lawyer spends his own money on the case and you lose, you owe the lawyer nothing. On the other hand, lawyers who defend cases get paid whether you win or lose. By working on a contingency fee basis your personal injury attorney has incentive to move the case as efficiently as possible since he is not paid until the case resolved.