There are various types of agreements that may be used when filing a case in a court of law. The type of agreement, however, depends on the type of case brought forward, the attorney’s preference, and the target is accomplished. For example, a client may be seeking legal representation but doesn’t have enough adequate funds. Therefore, they may reach an agreement with an attorney through a Contingency Fee Agreement.
What is a Contingency Fee Agreement?
Simply put, a Contingency Fee Agreement refers to an agreement made between the lawyer and the plaintiff, which allows the lawyer to be paid after the successful handling of the case. The agreement helps describe the lawyer-client relationship by defining their roles, responsibility, and payment terms. Usually, the contingency fee agreement demands that the lawyer provide legal services for free until the client wins the case and is awarded the funds. As such, if the client loses the case, the lawyer won’t be paid any penny. Likewise, if the client emerges with victory, the lawyer will be paid according to the agreed percentage.
Why is the Contingency Fee Agreement So Important?
Contingency Fee Agreement is one of the most important agreements in the judicial system. It allows a client to retain a lawyer regardless of their financial situations. Once the Contingency Fee Agreement is reached, the client will always be assured of justice and compensation. Unlike other agreements, the Contingency Fee Agreement doesn’t require upfront or any other advance payments.
Additionally Contingency Fee Agreement has been found to offer motivations to attorneys. Since the payment depends on the winning, most attorneys tend to offer their best to offer settlements for their clients who couldn’t afford the attorney fees in the first place. Therefore, if you reach a Contingency Fee Agreement with your attorney, you can win the case much faster.
Under What Circumstances is the Contingency Fee Agreement Used?
Despite its benefits, clients need to know that the Contingency Fee Agreement isn’t the right fit for every case. It is mainly used in cases where money damages are evident, and there are expected awards upon winning.
The following are some examples of cases that the agreement may be used:
- When handling personal injury cases such as car accidents, work-related accidents, and consumption of substandard products, mention a few.
- When handling a case against a nursing home or any other medical malpractice. This can be in the form of poor medical diagnosis, improper prescriptions, failure to conduct surgeries in a rightful manner, among other cases of neglect.
- Cases regarding poor debt collection services, a violation against creditors, etcetera.
- When handling cases related to employment law and other wage issues. For instance, failure to meet the employee minimum wages, failure to pay overtime charges, improper dismissal from the workplace, and violation of workplace policies, among others.
- In a few situations, the Contingency Fee Agreement can be used when handling business litigations or even real estate issues.
Type of Cases where Contingency Fee Agreement isn’t used
A Contingency Fee Agreement may not be used under the following cases:
- When handling cases related to bankruptcy
- Cases to do with abortion
- Immigration cases
- Copyright or patent cases
- Divorce cases
- Criminal defense cases such as drug handling, traffic misuse, and violations, among other charges.
What to Know When Operating Under a Contingency Fee Agreement
When a client has presents his/her case to the attorney for legal representation, the two will agree on the way forward. If the case involves money damages, then a Contingency Fee Agreement may be reached. After the agreement, the attorney will take up the case to his/her hands. They will pay all the expenses involved in the lawsuit. These may include filing fees, payment depositions, payment for medical records, or copies. Keep in mind that upon settlement, the agreement will control how your funds are dispersed. While some Contingency Fee Agreement will operate under an agreed percentage of the whole compensation, others will be limited to a certain amount. Also, there are some agreements which provide a percentage fee plus the expenses all accrued together.
Let’s take a look at this example:
Assuming that Mr. Daniel is involved in an accident and decides to sue the perpetrator in a state court. Daniel agrees to work with an attorney who succeeds in winning $100,000 at a jury trial. The attorney’s overall expenses sum to $20,000. In this case, the attorney is entitled to recoup his $20,000 used as expenses and distribute the remaining $80,000 for the contingency fees. Note that the fees charged as contingency will depend on the set agreement.
Frequently Asked Questions
Well, this will depend on the rules set by different states. Generally, the fees are always negotiable between the client and the attorney.
In most cases, the Contingency Fee Agreement will range between 30% and 40%. This percentage, however, depends on the strength of the case, the potential amount the client could win, and other factors. On rare occasions, the Contingency Fee Agreement could reach 50%.
Neither you nor the attorney will get paid upon losing the case. However, you should be aware that other charges such as court filing fees, the cost associated with deposing witnesses will be paid regardless of whether you win or lose.
Generally speaking, attorneys won’t take any case they know they won’t do anything to help the client. Therefore, they will only consider cases with adequate facts, evidence, and good damages.