If you have a legal case, one of the biggest concerns may be in regards to money. As a plaintiff, you understand that you need to hire an experienced attorney to improve your changes of settling your case or being awarded a judgment. However, hiring an attorney can cost you a pretty penny if you do not understand the terms of compensation. Contingency fee arrangements have become a popular method of compensation in a number of different types of cases. Understanding what contingency fees are, how contingency agreements work, and when a law firm may be willing to take a case on a contingency basis is important before you retain a lawyer.
What Are Contingency Fees and Why Do Some Law Firms Accept Cases on a Contingency Basis?
Often, the average person cannot afford to pay a lawyer out-of-pocket before his case has been settled. While some lawyers do charge flat fees or hourly rates for their services, more and more law firms in Missouri are leaning towards accepting cases on a contingency basis. A contingent fee is a conditional fee, where the client is only required to pay the lawyer or the firm if the lawyer handles the case successfully. If the firm is not able to get the client a settlement or a judgment, the client does not recover any money and is not required to pay the law firm for their time. On the other hand, the client will agree to pay the law firm a fixed percentage of the total amount recovered and paid to the client. A typical contingency fee is between 25% and 35% of the total recovery amount.
How Does the Contingency Basis Benefit the Plaintiff?
There are obvious benefits to retaining a law firm that is willing to accept cases on a contingency basis. Because some lawyers have hourly rates ranging from $100 per hour to $1000 per hour, many plaintiffs with a case cannot afford to pay a lawyer for all of the hours that they will spend on their case. The only real alternative is to find an attorney who does not charge an hourly rate for their services. The client is not expected to pay the firm until the client actually recovers money. At that time, a percentage of the settlement or award will be transferred to the law firm.
Another less obvious benefit is that law firms that are working on contingency fee arrangements are more likely to collect on the case. The lawyer will only get paid if he successfully collects, and this is incentive enough for the lawyer to work hard on the case for the client. If a lawyer is paid hourly, he knows he is getting compensated for his time regardless of the outcome. If a lawyer will only be compensated based on the outcome of the case in question, it can benefit the client as he may be able to expect a higher settlement or judgment. After all, contingency fees are a percentage of the amount recovered. The higher the recovery, the more the firm will receive for the case.
When Can a Law Firm Take on a Case on a Contingency Basis?
Not all law firms can take all cases on a contingency fee basis. Because there is a risk that the law firm will not be compensated, the law firm must feel good about the case and do their own investigating before a retainer is signed. Some law firms may also require that the prospect of recovery be a minimum amount before taking on a case. A common minimum prospect of recovery for cases accepted on a contingency basis is $50,000.
This billing method arrangement is only used in cases where money is being claimed. Personal injury cases and worker's compensation cases, where the prospect of recovery are high, are common types of cases that are accepted by lawyers. Commercial disputes, auto accidents, product liability, and medical malpractice cases can also be taken on this type of fee arrangement.
Why Won't a Law Firm Offer a Contingency Arrangement?
Because of this risk involved with this type of billing method, some attorneys are very careful when taking on contingency cases. If the prospect of recovery is very low or the senior attorney with the firm does not believe the case is strong enough for a settlement or award, the law firm may decline even accepting the case. The firm could accept the case and require that the client pays an hourly rate.
State laws do not allow law firms to accept contingency basis cases in all areas of law. It is against the law for firms that are taking on any type of family related matter, like a divorce or a child custody case, on a contingency fee basis. Therefore, family law practices will never offer this type of payment arrangement.
While contingent fee arrangements may end up costing the plaintiff more than standard billing in the end, these types of billing arrangements do have their advantages. For one-third of the award, individuals can hire a lawyer who will fight for them to get the compensation they are owed. Typically, when an individual files a legal case with a firm on a contingency basis, he has a good chance of winning the lawsuit. This provides some peace of mind in knowing that the law firm will be highly motivated to work hard for a recovery.
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