A contingency fee agreement is a legal contract between a client and a lawyer. In this agreement, the lawyer only gets paid if the case is won, providing clients access to legal services they may not otherwise afford. Lawyers’ fees are a percentage of the money they recover, typically ranging from 25% to 40%.
What Is a Contingency Fee?
A contingency fee is a method of obtaining services from an attorney based on the outcome of the case. Unlike other attorney fees for each hour of service provided, a contingency fee is paid only when your case is resolved successfully.
Here are the key points:
- No Upfront Costs: You don’t pay hourly fees while the case progresses.
- Shared Risk & Incentive: Your lawyer invests time and resources in your case without guaranteed payment. This aligns their success with yours, motivating them to achieve the best possible outcome.
Common Uses of Contingency Fees
Contingency fees are frequently used in cases where the potential financial recovery is uncertain, such as:
- Personal Injury: Car accidents, medical malpractice, slip-and-fall injuries.
- Employment Law: Wrongful termination, discrimination lawsuits.
- Consumer Law: Product liability claims, deceptive business practices.
Contingency Fee Example
Contingency fees are commonly used in personal injury cases. After a car accident, for example, an attorney agrees to take on the case, providing the victim with legal support to seek financial compensation for their losses.
With a contingency fee agreement, the attorney is only paid for their services if the victim receives a settlement or payment from the other party.
If they lose the case and the victim does not receive payment, the attorney does not receive full compensation.
What to Include in a Contingency Fee Agreement
A contingency fee agreement template can help create a comprehensive, well-organized document. It should typically include the following:
- Identification:
Complete the clarification points at the top of the form, including the names and addresses of those involved. Include the date.
- Legal Matter:
Include a description of the legal matter for which the attorney will provide services and the date that will occur.
- Fee and Retainer:
In the fee and retainer service, read through the options and select the best one for when the contingency fee and retainer will apply and the specific percentage of recovered funds owed to the lawyer. Next, list the retainer fee agreed to.
- Settlement:
Agree to the settlement amount for any of that work or other work hourly.
- Demand Notice:
Costs of pre-litigation negotiations and hourly services if the case doesn’t proceed.
- Client Responsibilities:
Discuss and cover all pre- and post-litigation responsibilities.
Fill in the hourly rate related to the demand notice and then for any out-of-pocket costs for which the client will be responsible.
- Termination and Withdrawal:
In the termination section, outline the circumstances if the agreement ends for work already completed or either party can withdraw.
- Acknowledgment:
Agree that the client received all the information from the lawyer.
- Dispute Resolution:
Define the resolution methods to be used in case of any dispute, such as court litigation, binding arbitration, or mediation.
- Waiver and Integration:
Confirmation of the document as a binding agreement.
- Disclaimer:
Limitations on legal services provided and no guarantees regarding the case’s outcome.
- Signatures:
Signatures are then placed at the bottom and should be notarized.
How Does a Contingency Fee Work?
- Research Lawyers: Search for an attorney they wish to work with, checking references
- Consultations: Discuss your case with potential lawyers (many offer free consultations).
- Compare Fees: Understand the contingency fee structure and compare offers.
- Choose Your Lawyer: Select someone based on experience and your comfort level.
- Sign Agreement: Review and sign the contingency fee agreement.
Contingency Fee Agreement Sample
