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What are Contingency Fees and How Do They Work?

contingency fee agreements

A contingency fee is a standard way to pay attorneys for legal services rendered.  No fee is earned or owed unless your case is resolved by agreeing or by the court.  If there is no recovery to you, nothing is owed in attorney’s fees.

Before any attorney is paid, you must agree to the resolution of your case by a formal written settlement agreement contained in a release or is presented to the court by a decision from the court outlined in a written; recorded document called a judgment.  This is where the judge tells the person you brought suit against to pay you a specified amount of money.  A jury decides the exact amount if one is requested or judged if a jury is not requested.

Payment to the attorney is usually a percentage ranging from 33 1/3 to 40 percent of the recovery either by settlement or judicial decision.

In the United States, we have the American system of justice.  In most situations, anyone can bring a claim by demand through an attorney or by litigation filed with the court and not be responsible for the legal fees of the person or entity the case is brought against.  This is in contrast to how things are done in England, where the loser of any litigation has to pay the winner’s legal costs.  Our system allows our courts to be available to all, irrespective of their financial status.

Contingency fee agreements are often used in personal injury cases like dog bite lawsuits.

Is Everything Entirely Free for the Client in a Contingency Fee Arrangement?

Sometimes there are special charges associated with cases.  Almost always, there is the need to get medical records and special expert reports on the nature and extent of the injuries.  Attorneys usually do not ask for reimbursement of these special charges if the case they are handling is not successful.  If there is a recovery, almost always reimbursement is requested.

The Benefits of Contingency

If a person tries to file a lawsuit on their own, they will likely be dealing with insurance companies.  These people are professionals and are very familiar with Ohio law and use it to their company’s advantage. Their goal is to get the best settlement for their employer, the insurance company and avoid trial.  They do not want the jury to decide the case because they will usually end up paying more.

If a dog has seriously injured you, securing competent legal representation will help you take on the insurance company and get fair compensation for your injuries.  Contingency arrangements provide a way for you to have that help without paying upfront fees.  You pay when your attorney wins a verdict or settlement, and if he does not, you do not have to pay.

How Contingency Fees are Calculated

All lawyer’s fees, including contingency fees, are governed by the reasonableness standard outlined in the Ohio Rules of Professional Conduct, Rule 1.5 (a).  These rules are important because:

  1.  They help ensure attorneys are pricing their services fairly.
  2.  They show the different factors the attorney should consider in setting his fee.

The reasonableness standard bases an attorney’s fee on eight factors:

  1. Time and labor, novelty and difficulty of questions involved, skill required to perform legal services i.e. the amount of time and expertise required for your case
  2. Likelihood acceptance of representation of the client will preclude other employment by the lawyer who must decide if a case is worth taking on
  3. The fee customarily charged in the locality for similar services
  4. The amount involved for results obtained (time and labor)
  5. Time limitations imposed by the client and circumstances.  This would include whether a client may have limited time to file a case because a statute of limitations is pending or if the case needs to be resolved quickly for some other reason.
  6. Nature and length of professional relationship with the client
  7. Experience, reputation, and ability of the lawyer
  8. Whether a fee is fixed or contingent

Where are Contingency Fees Typically Used?

Contingency fees are used in civil cases where the plaintiff is seeking money for injury or other damages.  The cases are generally personal injury or medical malpractice cases.  If there are legal limits on how much the client can recover, a lawyer may not offer a contingency arrangement.

Areas Where Contingency Fees are Not Used

Contingency fees are not permitted in criminal cases in Ohio and domestic relations matters.  If the fee is dependent upon the attorney securing a divorce, it could be against public policy.  Additionally, contingency fees are not used in alimony, child support, or property settlement in a divorce case.

Are Contingency Fees Unfair?

Some may think it unfair that the attorney receives part of the settlement in a contingency case and may wonder if this gives the attorney an advantage in claiming payment.  Contingency fees are highly regulated in Ohio, and the “reasonableness” rules, discussed earlier in this article, state that the lawyer must charge a reasonable fee.  He must also let the client know the contingent fee before any work begins and must present that information in writing to the client.  There shouldn’t be any surprises with a contingency fee arrangement.

Contingency Is Important For Society

Contingent lawyers make up the most powerful force we have to right the wrongs committed against us.  Without them, most grievous wrongs committed by businesses and individuals would go on without correction.  The contingent attorneys help prevent racial and sexual discrimination, faulty and unsafe items being placed into the stream of commerce, professionals practicing in negligent ways, and dogs attacking innocent children.  Contingency is the equalizer.  Every important decision made in the personal and business world is affected by thoughts of ‘If I do this, will I be sued by one of those contingent lawyers?’  If this uncertainty did not exist, our society would be less enjoyable and less safe.  All this comes about by skilled attorneys willing to take on legal challenges for individuals on a contingent basis.  It is not by accident we have the American justice system as opposed to the English system, where the loser has to pay.  Our forefathers planned it this way.  They experienced the other way and chose not to follow it.

Contingent attorneys allow all of us to have a more level playing field.  They make an important difference for everyone.  Many poke fun at attorneys until they are the victim.  Only then do they realize what a vital role contingent lawyers play in our society and how fortunate we all are for their help, and the hope they give to those victimized by the improper conduct of some person or some business.

How To Find and Hire an Attorney Who Will Work on Contingency

Be sure to ask your attorney if he will take your case on a contingency basis, as some lawyers may fail to mention they offer contingency arrangements in certain areas.  Here is a list of other questions you may want to ask an attorney you are considering hiring:

  • How many cases of this type have you handled?
  • Did these cases settle or did you go to trial?
  • Were any cases dismissed?
  • How often have there been jury verdicts in similar cases? (If the attorney has taken a few cases to trial, it may mean he prefers to negotiate with an insurance company, and he will be less bold about getting compensation for you than someone who will take a case to trial.)
  • What are the strengths of my case?
  • Do you see any weaknesses?
  • Is there anything I can do or information I can provide to help overcome any weaknesses in my case?
  • Ask him what his clients have to say about him.

Our law firm offers contingency fees if we represent you in a personal injury case, such as a dog bite case.  We have offices in Akron, Canton, Cleveland, Columbus, and Cincinnati, but our personal injury attorneys have represented clients in 55 counties and 157 cities and towns throughout Ohio.  We have been in business for more than 30 years, and more than 40,000 personal injury clients have entrusted us to handle their cases.  Verdicts and settlements have been more than $150 million.

Our lawyers work tirelessly to assure our clients get the compensation they are entitled to when others have acted negligently or recklessly and caused serious injury.