What is a Contingency Fee and How Does It Affect Your Personal Injury Case?

When you decide to reach out to an attorney for your personal injury claim, you likely have a lot of questions—and you’re likely to come across a lot of unfamiliar terminology. The vast majority of personal injury lawyers you consider will work on a contingency fee structure—but what does that mean?

Learn more about attorneys who work on a contingency basis and what that pay structure means for your personal injury claim. When you’re ready to get started on your claim, call Nowell Law Firm at 864-707-1785.

What is a Contingency Fee?

A contingency fee is a type of payment arrangement between a lawyer and their client. The lawyer’s fee is contingent upon—dependent on—the outcome of the case. If the lawyer is able to recover compensation for the client, their payment is taken out of that compensation. If the lawyer is unable to secure compensation for the client, they receive no payment. This essentially shifts the financial risk of the court case from the client to the attorney, which makes legal representation an option for everyone—not just those who have the money upfront to pay for an attorney.

The alternative to a contingency fee structure is a conventional billing structure. The client pays a retainer—usually at least $1,000 and up to $10,000 or higher, depending on the type and complexity of the case—and the lawyer informs them of their hourly billing rate. Once the retainer is spent, the client is then billed for all hours worked on their case. This could go a few different ways. 

If the case is simple and only requires a handful of hours, the client could get a successful outcome for minimal cost. If the case is complex, the amount the client spends on recovering compensation could far exceed the amount they get back in compensation. They could also spend a substantial amount on legal fees and still lose their case. There’s a lot of risk involved, which is enough to put many people off from seeking legal help.

How a Contingency Fee is Paid

In a personal injury case, a lawyer’s fee is a percentage of whatever they ultimately recover for their client. For example, imagine someone is involved in a serious car accident. They retain a Spartanburg personal injury lawyer, who recovers $100,000 in damages for them. The lawyer’s fee is 35%. The lawyer’s fee—$35,000 in this case—is taken out of the settlement before the remainder is given to the client. Any other fees that must be paid are also taken out of the settlement first. This may include reimbursement to your health insurance company for any costs they covered and any reimbursement owed to your insurance company.

Other Costs to Consider

Before you retain a lawyer for your personal injury claim, find out if you’ll be accountable for any other costs that your claim may incur. For example, some attorneys require clients to pay them for filing fees, expert witness fees, and other expenses that arise during the course of a claim, even if the injured party ultimately does not receive any compensation. These expenses can be enough to cause significant financial difficulty for someone, especially if they’re currently out of work and facing a stack of medical bills they alone are responsible for. It’s important to know what you’ll be on the hook for if your claim is unsuccessful.

How the Fee May Affect Your Case

In many ways, a contingency fee structure is beneficial for clients. When an attorney’s fee is based on how much they recover for their client, they have significant additional motivation to get as much as possible for them. However, if a client has a case that is unlikely to win, they may struggle to find an attorney who will take their claim—and that can be frustrating when they’re up against medical bills, lost wages, and other significant losses. That’s why it’s helpful to have as much evidence as possible when you begin looking into attorneys.

Start Your Claim Today with Nowell Law Firm

The team at Nowell Law Firm is here to help you fight for full and fair compensation after an injury. Let’s sit down, talk more about your injuries, and discuss your next steps. Reach out online or call us at 864-707-1785 to get started.