The term "contingency fee" means a fee that is contingent (dependent) upon actually collecting something. So, for example, in an automobile injury case, a contingent fee might be collected from the person who caused the accident (or their auto insurance company) after a settlement or a court case, generally a jury trial.
The contingency fee varies, depending on the attorney and sometimes on the type of case. Contingency fees may vary from as little as 10 percent in a case with an expectancy of a very large recovery to 50 percent in some other cases. A typical contingency would be one-third or 35 percent, with the percentage going up if there is a recovery after an appeal (perhaps to 50 percent). Sometimes there is a higher contingency where there is a high risk of not recovering anything.
Contingency fees are not permitted in certain types of cases, for example in domestic relations or family law cases. On the other hand, contingency fees are the norm in cases such as those arising out of automobile accidents and medical malpractice.
When there is a contingency fee, it is important and required for the attorney to have a fee agreement that is agreed to and signed by both the client and the attorney. That agreement must spell out all the terms of the contingency – the event upon which the contingency is based, the amount of the contingency, which will be expressed as a percentage of the total recovery, and the handling of costs involved in order to make the recovery. Generally, the costs (such as expert witness fees, the expenses of depositions, and any court costs) will be the responsibility of the client, and will not be paid by the attorney, although the attorney may advance the costs as the case is pursued, prior to settlement or a trial and then recover the money from the client at the conclusion of the case.
Contingency fees have a very positive aspect in that they permit consumers who would not be able to afford to pay for legal services on an hourly rate basis to have access to our justice system.
By Doris Truhlar