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Contingency Fee Agreements: How to Negotiate
Types, Cases Covered, and How to Negotiate
Everyone deserves justice, even when they cannot afford the cost of representation. Don't let the fear of legal fees keep you from going after what you rightfully deserve, especially if you've been in an accident with far-reaching health and lifestyle implications.
If your attorney's flat fees or hourly fees seem unattainable, you can always negotiate a suitable contingency fee agreement. Contingency fee arrangements provide several benefits, the most notable one being the fact that you don't have to put up any money upfront or pay anything if the case doesn't go your way. Read on to learn about the various types of contingency fee agreements, the kind of cases they're good for, and what to look out for when negotiating a contingency fee agreement.
Types of Contingency Arrangement Fees
A contingency fee is an agreement in which an attorney agrees to receive payment only after winning the case. In most cases, the payment is deducted from your compensation, thus significantly reducing your out-of-pocket expenses for the case.
Since your attorney gets paid only after winning the case, a contingency fee agreement can serve as a safety net. It is also a suitable option for anyone who cannot afford legal representation fees but has a strong case to present in court.
There are three types of contingency fee agreements. They include:
Fixed Percentage Contingency
A fixed percentage contingency fee is typically applied for relatively straightforward cases with a high chance of getting settled quickly or before they get to court. In this agreement, the attorney receives a fixed percentage of the settlement regardless of the length and number of proceedings.
Staged or Graduated Contingency Fees
Staged or graduated contingency agreements work much like fixed agreements but with one key difference. The percentage of compensation your attorney receives depends on the stage in which the legal matter is resolved.
For instance, if the matter is resolved before the case goes to trial, your attorney may receive a significantly lower percentage compared to what they would have received if the case went the full nine yards.
Partial Contingency Fees
In a partial contingency fee agreement, you're required to pay for some legal representation fees in addition to the contingency fee. These fees typically apply for riskier cases where you don't have a high chance of winning.
In this case, your attorney recognizes that the other side may want to fight and that your possibility of winning is limited. Therefore, you may agree to pay the disbursement fees in addition to a higher contingency fee percentage.
What Kinds of Cases Are Contingency Agreements Good For?
Despite the allure of contingency fee agreements from a financial standpoint, they're not appropriate in all legal cases and situations. The fact that your attorney only gets paid from the contingency fee means that these agreements are only feasible in cases that involve a monetary settlement with the defendant.
Some of the most common cases where a contingency agreement could be applied include:
Personal Injury Cases
Personal injury claims typically involve a situation where someone is hurt as a result of another person's negligence or misconduct.
This can be:
- Car accidents
- Workplace accidents
- Product defects
- Food poisoning
- Animal attacks
- On-property accidents
That said, not all personal injury cases qualify for a contingency agreement. Typically, your attorney will review the case and provide appropriate evidence. If they see that the case may have a chance, you can then present it to court, whereby the court will determine whether your injury meets the legal backing to receive monetary compensation.
Medical malpractice cases are quite similar to personal injury cases, with one key difference: The latter is caused by negligence on the part of a healthcare professional or organization that treated the plaintiff.
Additionally, unlike personal injury cases, several criteria must be met to ensure that the injury was caused by negligence or malpractice rather than good-faith treatment or medical advice.
As such, a medical malpractice case is valid only in the following scenarios:
- The standard of care was violated.
- There are damages resulting from the injury.
- The injury was caused by negligence.
The various types of incidents that meet this criteria include unnecessary surgery, discharging a patient too early, failure to order necessary testing, prescribing the wrong medication or inappropriate dosage, and much more.
Court cases fall under two categories: criminal cases and civil cases. Civil cases encompass a broader range of damages and situations, some of which are included in personal injury and medical malpractice cases.
Other situations that warrant a civil case include:
- A report presented to the court to enforce an action or to prevent an action from being taken
- A claim by tenants against a landlord or a landlord trying to evict tenants
- A wrongful act that resulted in damage to property or physical injury
- A breach of contract to deliver a product, service, or payment that is owed
How to Negotiate a Contingency Agreement With Your Attorney
Contingency agreement fees can vary greatly depending on the stage at which the legal matter is resolved. Therefore, it is important to ask your lawyer to explain every stage of your case. Depending on the legal matter at hand, you can negotiate a lower fee, with the possibility of increasing it if the case gets closer to trial.
For instance, a lawyer may accept a lower fee of about 33% if they think the case can be resolved before making it to trial. In this case, the client will end up receiving a bigger piece of the settlement. However, if the case does make it to trial, the lawyer may have to do some heavy lifting, prompting them to ask for a higher rate, say 40%.
Alternatively, you can get into a sliding scale agreement depending on the amount the attorney recovers. In this case, the attorney may be willing to take a lower percentage of the settlement for higher damages. For instance, a lawyer may agree to take 40% for the first $500,000 and 25% for anything above one million dollars.
You should also consider whether the fees will be calculated before or after the costs. For instance, if you are awarded a $500,000 compensation with $50,000 in costs and 25% in lawyer fees, your lawyer will get $125,000 if the fees are calculated before costs. On the other hand, if the fees are calculated after cost, then your lawyer will get $112,500 in compensation.
Contingency agreements allow you to seek legal representation when you don't have enough money to pay your lawyer upfront. They can also incentivize your lawyer to seek a higher settlement since they have a stake in it. Before getting into an agreement, it is important to first evaluate your case together with an attorney to negotiate a suitable agreement.