What is a contingency fee?
A contingency fee is a contractual form of establishing an attorney’s fees between a client and attorney. Generally, a contingency fee means that there are no attorney’s fees unless there is a recovery and the amount of the attorney’s fee is based on an agreed upon percentage of that recovery. In many other areas of law, attorneys may ask for a retainer before they begin working on your case. A portion of that retainer may be nonrefundable and immediately payable to the lawyer, and the other portion would be held in trust and billed against by the hour as work on your case progresses.
Obviously, there are several benefits to a contingency fee agreement over a retainer or hourly billing agreement. For starters, there is no upfront cost for attorney’s fees. Rather, your attorney’s fees come out of the recovery your lawyer helps you obtain at the end of your case. This is most beneficial when you may be injured and unable to work and cannot afford to pay a retainer to hire a lawyer to help you. In this respect, contingency fees are commonly referred to as “keys to the courthouse door” because no matter who you are, or how much money you have, you may still be able to hire a personal injury lawyer to represent you in your case.
Another factor which can be considered a benefit of contingency fees is that it aligns your interest with your attorney’s interest. Since the attorney’s fees are based on the amount of the recovery, the attorney also has an additional incentive to get the maximum value on your case. Lastly, contingency fees are beneficial for a client because if there is no recovery then there is no attorney fee.