Contingent Fees

Posted by: Oct 09, 2012By Brian Stutheit

A contingent fee is payment to an attorney for legal services that depends, or is contingent, upon there being some recovery or award in the case. The payment is then a percentage of the amount recovered—such as 25 percent if the matter is settled, or 35 percent if it proceeds to trial.

Contingent fee agreements are common in personal injury or matters where the client is seeking money damages.  Contingent fees are not common where there are no money damages being claimed.  It is hard to charge a percentage for writing a contract, or defending claims that the client owes money.  On Social Security Disability claims, attorney representatives will usually work for payment out of past-due benefits if your claim is allowed.  The typical fee agreement for Social Security is that you will pay no more than 25% of past-due benefits, or $6,000, whichever is less.

The Colorado Supreme Court requires that contingent fee agreements be in writing.

A benefit of a contingent fee arrangement is that it rewards attorneys for proficiency and diligence in prosecuting disputed and litigated claims, as opposed to milking the case on an hourly fee basis.  For lawyers, a disadvantage of contingent fees is that it can make stubborn or unreasonable clients.  Since the client is not paying the lawyer, the client may become less willing to settle.

Contingent fee arrangements might end up costing clients more money than hourly or other fee agreements if the agreement is for a high percentage of their eventual recovery.

 Win or lose, you will have to pay expenses for copies of records, fees to file a lawsuit, transcript fees, court reporter fees, expert witness fees, and many others.   Sometimes we agree to front those costs.  Most times we ask that the client pay the costs as they are incurred.
Attorneys do not want to risk of working for free, so we will turn down a contingent fee case if we do not believe there is a good chance we will be successful, or if the case will require more time than it might be worth.  Once in a while, we will take a contingent fee case because it seems the right thing to do for a low or moderate income client who might not get justice otherwise.