Contingency fees offer several key advantages to both clients and attorneys. First, clients don’t need to make upfront payments for legal representation unless their case wins; secondly, attorneys gain motivation from only getting paid if their client does.
Establishing an equitable contingency fee doesn’t need to be complex; you can begin by reviewing pricing data from competitors.
Typical percentages
Contingency fee arrangements come in many shapes and forms. Personal injury lawyers frequently employ percentage-based fees; this ensures they only get paid if their case wins; this also eliminates expenses and disbursements risk for them; this type of fee structure allows more cases to be accepted with larger potential pay-outs.
Contingency-based attorneys typically charge one-third of any damages they recover for a client as their fee. Although this figure may fluctuate depending on the complexity and cost of litigation, one-third is generally an acceptable compensation amount.
At the end of the day, it’s up to both attorney and client to determine whether a particular contingency fee is fair. Furthermore, most states have laws on contingency fees that should be followed closely to ensure clients are informed while staying compliant with legal standards – and to avoid getting an unfavorable reputation as an attorney.
Negotiating a lower fee
Contingency attorneys must carefully consider each case they accept on contingency to decide if it is worth taking on, taking into account associated costs such as court fees and expert witness fees, as well as expenses from other parties involved such as opposing lawyers and insurance companies.
Experience and reputation can have an effect on a lawyer’s fee structure; those with great track records often charge more. Furthermore, clients should keep in mind that fees will be calculated before disbursements and expenses have been subtracted from them.
Contingency fees enable many who would otherwise not have legal representation to access it, but only under appropriate circumstances and not for profit motives. Therefore, lawyers should consult their mentors or colleagues before setting unreasonable fees.
Getting informed consent
Before taking on any case, lawyers should thoroughly explain their fee structure to clients in order for them to make an informed decision about whether to accept a contingency fee arrangement or any potential expenses, such as copy fees or phone calls that could arise. It is also beneficial to outline how percentage fees are calculated so clients fully comprehend any changes if the attorney charges higher fees for riskier cases.
As noted by the ABA, reverse contingent fees will be more difficult to assess in comparison with straight contingent fees which have been used for 100 years, due to lack of “long-term experience”. It is therefore critical that lawyers take into account their clients’ sophistication and experience when discussing reverse contingent fees to prevent claims of overreach or abuse against themselves.
State rules
State laws will provide guidelines on how much to charge in contingency fees, so it’s wise to heed them when setting fees and getting informed consent from clients. Doing this will prevent any surprises later when someone claims your percentage was too high.
As part of their contingency fee, lawyers may also incur court filing fees, expert witness fees and investigation costs that are taken out of any final award or settlement made, decreasing what you actually get as compensation.
As you determine how to charge for a contingency fee, seeking advice from mentors and colleagues is ideal for finding an acceptable balance. Informed consent from clients should also be obtained prior to charging any contingency fees; failure to obtain such consent could result in their license being taken away from you.