For many people, the concept of only paying an attorney after you secure a favorable settlement or verdict is exciting because most cannot afford to pay out of pocket. However, it is crucial that plaintiffs understand the ins-and-outs of such agreements before signing them. A contingency fee agreement is a contract that stipulates the percentage an attorney will make from your settlement minus expenses. Did you get that? The percentage your attorney takes only comes after you have covered the trial expenses. While that is a fair arrangement, as your attorney is taking all the risk initially, it is still necessary to understand, so you’re not shocked at the conclusion of your trial.
Typical Contingency Fee Agreement
Most attorneys request a 30/40 agreement, meaning they receive 30% of the settlement or 40% of a jury verdict. The reason they ask more for jury verdicts is that more work goes into a trial. Settlement negotiations require less time and fewer resources. A trial, alternatively, mandates the use of expert witnesses, more research and all-around more working hours. However, while the 30/40 agreement is the standard, an attorney may negotiate depending on the specifics of your claim and the potential reward.
Necessity of a Contingency Fee
Not all cases warrant hiring an attorney, and some may not even be worth arguing at all. If the defendant in your claim does not have insurance and there are no reasonable means for recovery, then a trial is likely a waste of time. However, if the potential for significant damages exists and the defendant’s insurer is not willing to communicate in good faith, then hiring a lawyer on a contingency is probably wise.
Attorney Fees Versus Costs
If you hire an attorney and agree to the contingency terms, make sure you know the difference between costs and attorney fees. The percentages discussed before only relate to the attorney fees. Costs are the expenses accrued during the trial. These expenses will often refer to paperwork, research and any necessary expert witnesses.
Agreeing on Costs
As with negotiating an attorney’s fee, you can debate the costs you will cover. While most costs are typical and referenced in the initial agreement you make, you can stipulate that other expenses receive your approval first.
Contingency fees are a beneficial way to file claims showing a strong chance for success. However, for claims that may require trial over mediation, contingency agreements get expensive. If you would like to discuss a potential personal injury claim, then contact a local attorney.