What Is a Contingency Fee?

A contingency fee refers to a fee an attorney receives if he or she successfully negotiates a settlement or secures court-awarded damages for a client in a personal injury claim. The attorney’s fee is contingent on the outcome of a claim. Contingency fees are the industry standard for personal injury lawyers and law firms. If you recently suffered injuries as a result of someone else’s negligence or intentional harm, it’s in your best interest to hire a personal injury lawyer to advocate for you through the insurance claim and lawsuit process, if necessary.

When you have an initial consultation with your attorney, he or she will likely go over the fee structure and provide you with detailed information. This guide offers in-depth information about contingency fees including different types, advantages, disadvantages, and more, that will answer some questions you might have until you get the chance to meet with a lawyer.

Types of Billing Arrangements Fees

Each law firm operates a bit differently, but most rely on several types of fee arrangements with their clients.

Hourly Contingency Agreements

In these types of contingency agreements, your attorney keeps track of the hours he or she spends preparing your case and representing you. If your attorney negotiates a settlement before trial or a jury rules in your favor and awards you damages, you pay for the total time. For example, if your attorney charges $300 per hour and works on your case for 20 hours, you will have to pay $6,000 if you prevail in your personal injury claim.

Mixed Hourly Contingency Agreements

Mixed hourly agreements are less common. In these types of agreements, clients pay a portion of their attorney’s hourly fees upfront. They pay the rest of the fees if they receive money from a settlement or jury award. For example, if your attorney charges $300 per hour, you might have to pay $75 per hour upfront. The firm will deduct the remainder of the fees from any compensation they secure for you.

Percentage Contingency Agreements

The vast majority of contingency fee agreements with personal injury lawyers are based on a percentage. Clients pay no upfront fees. If their attorney secures compensation for them, the firm deducts attorney fees, pays outstanding medical expenses and other costs, and releases the rest to the client.

Contingency Fee Percentages for Florida Civil Cases

When you have a contingency fee agreement with your attorney, you sign a contractual agreement with the attorney and the law firm. The contract must state the percentage your attorney can keep for fees if you prevail in your personal injury claim. The amount your lawyer can keep for fees depends on how far along you are in the claims process and how much money he or she recovers for you.

The Florida Bar Associations’ Rules of Professional Conduct include the following limits on contingency fees for Florida attorneys. You and your lawyer can agree to a less amount than the maximum listed below. If you agree to a higher percentage, you must go in front of a judge before your attorney files your lawsuit.

Unless the court approves a higher percentage rate for attorney fees, the law assumes anything over the below percentages to be excessive.

• Your lawyer can take 33 1/3 percent of any settlement up to $1,000,000 if your case settles before arbitration.
• Your lawyer can take 40 percent of any settlement or jury award up to $1,000,000 after filing for an answer or demand for the appointment of arbitrators for your case.
• Your lawyer can take up to an additional 30 percent of any settlement or jury award between $1,000,000 and $2,000,000.
• Your lawyer can take up to an additional 20 percent of any settlement or jury award over$2,000,000.
• In cases where liability is clear and the trial is only to determine damages, your lawyer can take up to 33 1/3 percent of your first million, 20 percent between $1,000,000 and $2,000,000, and 15 percent of any jury award over $2,000,000.
• If your lawyer has to help you collect a judgment or your case is appealed, he or she can take an additional five percent of any jury award.

Additional Costs Beyond Attorney Fees

Keep in mind that filing a personal injury claim also comes with other costs over and above attorney fees. Depending on your agreement with your lawyer, you might be responsible for other costs and expenses even if you do not win your case. Florida law requires that your attorney provide you with a written statement describing the outcome of your case.

If you receive a settlement or the court rules in your favor, your lawyer must also provide financial details that include your settlement or jury award, how it was calculated, and an itemized bill that shows all costs and expenses.

Examples of things you might see on your final itemized bill include:

• Court costs and fees for filing the lawsuit and other specific paperwork, which can be a few hundred dollars
• Costs for expert witnesses to review your claim, give a written opinion, and testify in court if necessary, which can be thousands of dollars
• Costs for gathering evidence such as police reports, medical records, and sometimes an outside investigator
• Discovery costs included in most cases such as court reporters, insurance reports, having depositions transcribed, and hours of interviewing witnesses.

Disadvantages to Contingency Fee Arrangements

Contingency fee agreements are usually a positive aspect of hiring a personal injury attorney, as it places the goals of both client and attorney in close alignment, and alleviates most (or all) of the financial risk for the client pursuing a claim. Yet, contingency fee arrangements also have some disadvantages that you should consider. They include:

Not All Attorneys Offer Contingency Fee Agreements

Lawyers and the law firms where they work are especially concerned about the outcome of your case. Many do not want to spend hours building a case, negotiating, or perhaps litigating if they are uncertain of the outcome or are not likely to collect a financial windfall from a case. They want to avoid high-risk cases, especially those that aren’t likely to be easy victories. Depending on the circumstances of your personal injury case, the underlying facts, and your lawyer’s perception of your outcome, he or she may not offer a contingency arrangement.

Sticker Shock

Even though you’ve signed an agreement with your personal injury attorney and you are aware of the percentage coming out of your settlement or court-awarded damages, protracted litigation can grow expensive; you may feel surprised to see the amount you receive after attorneys fees, costs, expenses, and unpaid medical bills are subtracted off the top. Even after paying your lawyer, however, the amount of money you recover will in most cases greatly exceed what you would have collected without the lawyer’s help.

Contingency Fees Can Amount to More than the Hourly Rate

If your case is simple and your attorney resolves it quickly without putting loads of hours in to build your case, you might feel like you got the short end of the stick because a percentage-based contingency fee is likely more than an hourly rate agreement. Once you sign the agreement, you owe your attorney the amount you agreed upon whether they resolve your case in three months or three years. It’s important to thoroughly discuss your case with your lawyer before making a choice. Some attorneys offer flexible arrangements based on their clients’ cases.

Advantages of Contingency Fee Arrangements

While contingency fees have some drawbacks, many clients enjoy the advantages they offer, such as:

No Upfront Payment

When clients have to worry about making payments for legal bills during the lawsuit process, it can be cost-prohibitive. It’s not uncommon that those who have suffered personal injuries have medical bills accumulating at the same time they can’t work. Clients who deserve compensation for their injuries can hold negligent parties liable without having an added layer of financial stress. Also, clients that simply could not afford any upfront fees before injury have better access to the legal help they need.

Increased Incentive

Lawyers want to win, but they also want to get paid. Contingency fee agreements give your attorney incentive to work as hard as they can for you to get you the maximum compensation for your claim. This leads to a more thorough investigation, better case preparation, stronger negotiation, and litigation when necessary.

Losing Doesn’t Hurt as Much

Full contingency fee agreements without upfront payments mean that clients do not have to risk paying large attorney fees. As mentioned above, you still might be responsible for some expenses, court costs, and administrative costs, but you won’t have to pay attorney fees if your lawyer does not secure compensation in your case. You can also feel at ease knowing your lawyer does not want to work for free. Most lawyers will not take a case on contingency if they aren’t fairly certain they have a good shot at winning.

Special Situations Concerning Contingency Fees in Florida

Above we have covered the most common aspects and information about contingency fees, but some cases have unique circumstances that lead to special situations with contingency fees. Examples include:

Sharing Fees

Sometimes lawyers need to consult with colleagues from another law firm to help with a claim. Your attorney cannot do this without your permission; but, if you agree, the attorneys who work on your case will share attorney fees. According to the Florida Bar Association, the lawyer who is primarily responsible for your claim gets a minimum of 75 percent of the contingency fee and the other lawyer receives a maximum of 25 percent of the fee. When firms equally share responsibility for a client’s case, they must let a judge decide how to divide the fees.

Judges Setting Fees

Florida law contains more than 200 statutes that give judges the authority to award attorney’s fees in certain situations. This is more likely to occur in a wrongful death lawsuit when probate and estate issues are involved than a standard personal injury case. Judges examine several factors to determine attorney fees, such as time, labor, the complexity of the case, the going rate in the area, and the experience and skill of the lawyer(s) involved in a particular case. The Florida Bar Association states that judges place the most weight on case results when they set fees.

Ultimately, you can avoid some of this hassle by coming to an agreement with your attorney, signing a contract that lays out the appropriate contingency fee structure, and letting the judge grant approval.

Court-Awarded Fees

If someone else caused you to suffer injuries in a traffic accident or some other event, you shouldn’t have to shoulder the burden of attorney fees. In some cases, Florida courts award attorney fees as part of the damages suffered related to injuries. The court might also award more or less than the amount you agreed to in a contingency agreement. This makes it crucial that you discuss this possibility with your lawyer and make sure the terms in the contingency agreement are agreeable before you sign it. If you address these situations early, you will not have to worry about disputes later on.

More Questions? Consult a Personal Injury Attorney

Setting up a free consultation with a lawyer is in your best interest after you have suffered harm. Initial consultations give you and your lawyer a chance to ask questions, share information, discuss strategy, and overall ensure a good fit for both of you. This is also the time to discuss attorney fees and different fee structures that might work best for your individual situation.

Michael T. Gibson, P.A., Auto Justice Attorney
2420 S. Lakemont Avenue
Suite 150
Orlando, FL 32814
Phone: 407-422-4529