Personal injury cases are different from many other legal matters. Accident victims cannot plan for their injuries or save up to pay legal fees. Worse yet, they often require immediate help to pay medical bills and living expenses while they recover. In some cases, they might have permanent disabilities and need additional resources for the rest of their lives.
Contingency fees were created for just these situations. A contingency fee allows an injured plaintiff to secure legal assistance for their fight against at-fault parties and their multi-billion dollar liability insurers.
How Contingency Fees Work
As the name suggests, contingency fees are contingent on the outcome of a case. Specifically, the lawyer only receives a fee when they win or secure a settlement. If they lose the case, they don’t get paid.
Additionally, the amount depends on the settlement or court award obtained by the lawyer. A contingency fee is quoted as a percentage of the compensation recovered. The more compensation you receive, the more the lawyer gets in legal fees.
Clients often view this type of fee as an incentive for lawyers to fight for the maximum compensation possible. However, lawyers are obligated to exercise unbiased and independent professional judgment and provide candid legal advice. The lawyer must put the client’s interests ahead of their own, even if it means taking a smaller fee.
Thus, if you receive a low offer, your lawyer may advise you to continue to fight for your benefit, not their own. When you get a fair offer, the lawyer must explain the benefits and drawbacks of continuing the fight, even though they might receive a smaller fee if you accept it. In other words, your and your lawyer’s interests are always aligned regardless of the fee involved.
Differences Between Contingency Fees And Other Fee Structures
Lawyer billing structures typically fall into three categories: hourly, flat, and contingency. Hourly billing is when a lawyer tracks their time spent on your case and charges you a rate for each hour worked. Lawyers often use this structure when they cannot predict the amount of work a project may require. For example, hourly rates are often used to negotiate and write contracts.
Flat billing happens when the lawyer quotes a fee for the entire project. An attorney may use this billing structure for specific projects with a defined amount of work, like filing a trademark application.
Lawyers rarely charge hourly or flat fees for personal injury or wrongful death cases. Hourly fees can quickly eat up all the compensation you recover, leaving you with nothing at the end of the case except a big legal bill. Since contingency fees are a fixed percentage, there will be money left after you pay your legal costs.
Injury lawyers rarely charge flat fees for cases because they cannot predict the amount of work they will require. An insurer could settle within weeks of filing an insurance claim or after months in court. A contingency fee ensures the lawyer receives fair compensation for the result obtained, regardless of the time needed to get it.
Benefits Of Contingency Fees
Contingency fees are paid at the end of a case when you know its outcome. The lawyer will start on your case without any upfront charges or fee advances. This arrangement allows you to save your money to pay for medical care and living expenses until your case ends.
Lawyers who offer contingency fee representation take a risk in accepting a case. As a result, they will carefully assess the strength and value of a case before agreeing to provide their services. If liability is unclear, they might decline representation. Similarly, a lawyer might decline your case if you only suffered minor losses, such as a chest bruise in a car accident.
However, if a lawyer accepts your case, you know that they believe you have a chance. They think you will win or settle your claim and that your case is valuable enough to justify their time and work.
Services Covered By Contingency Fees
Your lawyer will explain what is and isn’t covered by your fee when you hire them. Typically, the following legal services are included:
- Discussing your case in meetings, emails, and phone calls
- Gathering records and other evidence for your case
- Preparing and filing your insurance claim with the at-fault party’s insurer
- Addressing any claim denials and negotiating to settle your claim
- Filing a lawsuit if the insurer refuses to settle
- Conducting discovery, including depositions, to gather evidence for trial
- Preparing for trial, including filing motions to determine what the jury will see
- Presenting your case to a jury and advocating aggressively for a favorable verdict
Your fee will not cover everything. Your lawyer will incur hard costs during your case. You will reimburse the lawyer for these outlays when the claim is resolved. These expenses might include:
- Court filing fees
- Expert witness fees
- Deposition expenses, such as stenographer fees
Maryland requires written contingency fee agreements. Your contract should outline the services covered and the expenses you will pay.
Contingency Fees And Your Case
A contingency fee provides significant benefits to injured plaintiffs. Consult a lawyer to learn more about these fees.