Before you hire an attorney on a contingency fee basis, make sure you understand the risks to you and how to protect your rights. This article provides some considerations to protect your interests.
Learn which areas of law generally involve contingency fees and what you should consider before hiring a contingency fee lawyer.
A contingency fee is a payment to an attorney that is only owed if the attorney wins money for you.
Contingency fees can be frustrating to either the client or the attorney. Often, one of them gets a bad deal:
In other words, contingency fees are rarely accurate: Either the attorney or client gets shorted. Attorneys understand this risk, so they are selective in the cases they take, improving their odds. Still, clients paying a large fee to an attorney may feel frustrated.
No. Some people think contingency fees are available for any legal area. Their impression of attorneys is shaped by attorney TV commercials with slogans like
The truth is, contingency fees are only available for a few areas of law, which happen to be presented frequently on TV.
Lawyers often dislike contingency fees for a number of reasons:
For these reasons, many attorneys avoid contingency fee work.
Here are some of the factors lawyers consider when determining whether to accept a case on a contingency fee basis.
The lawyers who frequently accept contingency fee cases
That last factor is a big one. A lawyer will accept contingency fee cases where the lawyer is likely to be paid well. Lawyers can’t stay in business if they accept a bunch of weak cases.
In general, contingency fee percentages range from 33% to 40%, depending on the amount the client could potentially win, the strength of the case, and other factors. I have seen contingency fees as high as 50% (for small cases) and 15% (for very large cases).
A fair percentage depends on the circumstances and risk involved. It is based on a number of factors.
One factor affecting contingency fees is the amount of out-of-pocket expenses the firm will need to cover the case. These include mediation fees, court reporter fees, transcript fees, expert witness fees, filing fees, etc. Although the client may ultimately be responsible for these expenses, the firm may not ever recover them, resulting in losses of both time and money if the case does not result in enough money.
Under Minnesota law, the factors to be considered in determining the reasonableness of a fee include the following:
In other words, since every case is different, these factors will need to be applied to the individual facts and circumstances of your case.
Normally, people who hire a lawyer on contingency do not have the option of paying the lawyer’s hourly rates because they simply can’t afford them. To seek justice, they must accept a contingency fee arrangement.
If you are hiring a lawyer on contingency, keep in mind that the lawyer is first concerned about ensuring the lawyer benefits from the deal. In general, lawyers are far more experienced with contingency fees than clients, so lawyers know better how to calculate contingency fees so the lawyer is not disadvantaged.
Experienced attorneys do not take contingency fee cases if it is a bad deal for them. For example, attorneys routinely reject being paid on contingency for small financial cases, complex cases, and time-consuming cases. However, attorneys routinely accept contingency fee cases that have the potential to win a lot of money, are simple, and will not take much time.
Attorneys who are selective about the contingency fee cases they accept will succeed financially. Attorneys who take small or difficult cases on contingency may struggle financially. As a result, people may feel frustrated because their lawyer makes a lot of money from little work, or people feel frustrated because no lawyer will take their case.
In conclusion, contingency fees are generally a very inaccurate (some would say “unfair”) way to pay attorneys, but since people may not have the funds to pay usual attorney rates, our justice system permits the use of contingency fees. Only in rare circumstances will our firm take a case on a contingency basis.