Contingency Fees — what are they and how do they work?

A contingency fee is the most typical fee used by lawyers in personal injury cases. The fee agreement is the first step in legal representation between lawyer and client and thus is important to understand before the start of any case.

A contingency fee is an agreement between you (the client) and a lawyer where the lawyer agrees to accept a set percentage of the recovery of your case as the lawyer’s fee.

The recovery in a case is the final amount paid out to the client at the conclusion of the case. (In a typical car wreck case, this is the amount paid out by the insurance company). If your case results in a recovery (you win the case), the lawyer is paid a percentage of the recovery. This percentage of the recovery is the lawyer’s fee for the case. If you do not recover in your case (you do not win), the lawyer is not paid for working on your case.

When a contingency fee is used, the lawyer is only paid if you win your case. As mentioned, this fee arrangement is most typically used in personal injury cases whereby the injured individual and attorney representing the individual agree to a contingency fee structure.