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What is a Contingency Fee?

What Are Contingency Fees?

A contingency fee is a payment structure commonly used in personal injury cases where the legal fees are contingent upon the client winning the case. This means that the lawyer gets paid only if they successfully obtain a settlement or win a judgment on behalf of their client. At PhillyLaw, we handle cases on a contingency fee basis only, which means that we never charge a fee unless we win.

Most Personal Injury Lawyer Fees are Handled on a Contingency Basis

What is meant by contingency fees?

Contingency fees are essentially a form of risk management for clients. When a lawyer agrees to handle a case on a contingency basis, they are taking on the financial risk of the litigation. If the case does not result in a favorable outcome for the client, the lawyer does not receive any compensation for their services.

Contingent Fees Better Serve Injured Parties

Contingent fees align the interests of the attorney and the plaintiff, potentially leading to better outcomes for the plaintiff. This payment model motivates attorneys to work diligently on the case as their payment is directly tied to their success in obtaining a favorable settlement or judgment. It also enables individuals without financial resources to afford hourly legal fees upfront to seek justice and legal representation. Consequently, this can level the playing field between individual plaintiffs and larger, well-funded defendants, ensuring everyone has access to the legal system regardless of economic status.

What is a Contingent Fee?

The term “contingent fee” refers to an agreement between a lawyer and their client where the lawyer’s payment is conditional upon the successful outcome of the client’s case. Essentially, it is a performance-based payment structure where the lawyer assumes a significant portion of the financial risk. If the case is lost, the client is not obliged to pay any attorney’s fees. This arrangement aligns the lawyer’s incentives with the client’s success, encouraging legal representation for individuals who may otherwise be unable to afford it upfront.

Contingent Fees in Pennsylvania

In Pennsylvania, contingency fees in personal injury claims operate on a no-win, no-fee basis. This means that most personal injury lawyer fees do not have upfront fees or hourly rates. Instead, attorneys collect a predefined percentage of the amount awarded through a settlement or court verdict. This percentage is typically discussed and agreed upon in a contingency fee agreement before the attorney starts working on the case.

What is a Contingency Fee Agreement?

A Contingency Fee Agreement is a formal contract between a lawyer and their client, detailing the specifics of the financial arrangement for legal services. It explicitly states that the lawyer’s fees will be contingent upon the successful resolution of the client’s case, such as obtaining a settlement or a favorable verdict. The agreement outlines the percentage of the recovery that will be allocated to the lawyer as their fee, along with how other case-related expenses will be handled. It also ensures transparency between the client and attorney about the financial aspects of pursuing the case, including the scenario where the case does not result in a financial award. This agreement is crucial as it provides a clear understanding of the financial obligations and rights of both parties involved in the personal injury claim process.

Determining the Value of a Personal Injury Claim

The experienced lawyers at PhillyLaw will assess the value of your personal injury claim based on an array of factors, including the severity of your injuries, the extent of your medical expenses, lost wages, and any long-term repercussions of the incident. They’ll also consider noneconomic damages like pain and suffering. To arrive at an estimated value, an experienced personal injury lawyer will meticulously review medical reports, consult with medical professionals if necessary, and evaluate other losses to ensure your claim accurately reflects the physical, financial, and emotional toll of your injuries. This thorough process enables your lawyer to advise you on a realistic expectation of the claim’s worth and strategize the best approach for negotiating with the insurance companies or presenting your case in court. Communication is key during this phase, as your lawyer will keep you informed and ensure you have a comprehensive understanding of how your claim’s value is determined.

Initial Consultation Fees and Contingency Arrangements

When considering a contingency fee arrangement for your personal injury case, it’s common to wonder whether you will need to pay for an initial consultation with your attorney. Contact an experienced personal injury attorney at PhillyLaw for a free consultation where you can discuss the specifics of your case, and our skilled personal injury lawyers can determine its viability. This policy allows potential clients to seek legal advice without the upfront financial burden, promoting access to legal representation.

This initial consultation with a personal injury lawyer is beneficial not only for evaluating your case but also for establishing a rapport with our team and ensuring we are the right fit to represent your interests.

How Much of the Settlement or Award Will Go toward Legal Fees?

In Pennsylvania, the exact percentage allocated to a lawyer’s contingency fees can vary depending on the case’s complexity and the agreement between the attorney and client. Commonly, contingency fees are a percentage of the settlement or judgment awarded. For instance, in many personal injury cases, it is typical for the agreement to stipulate that the lawyer will receive 35-40% (depending on the type of case involved) of the final settlement amount or court award. Clients must discuss and fully understand this percentage before signing the contingency fee agreement, as it significantly impacts the final amount the client will receive.

Understanding the Typical Costs of a Personal Injury Lawsuit

Besides the lawyer’s fees, pursuing a personal injury lawsuit involves various costs, many of which are covered upfront by the lawyer under a contingency fee agreement. These include court filing fees, costs associated with gathering evidence (such as obtaining medical records or expert witness fees), and expenses for conducting depositions.

Key costs include:

Medical Examination Expenses

Medical evaluations are often needed to substantiate claims of injury, with specialists charging for their services.

Expert Witness Fees

If your case requires the testimony of experts in fields such as accident reconstruction or medical specialties, these professional fees can be significant.

Court Costs

Filing a lawsuit incurs costs, which can vary depending on the court and the complexity of the case. This may include fees for filing documents, summons, and subpoenas.

Administrative Expenses

These can encompass a range of necessary expenditures, from the cost of obtaining medical and police records to postage and copying fees associated with compiling and submitting evidence.

Travel Expenses

In some cases, legal action may require travel for the client or attorney to attend depositions, hearings, or meetings with experts.

Cost of Mediation or Arbitration

Some personal injury claims may be resolved through alternative dispute resolution methods before reaching court, which can also involve costs.

Clients should discuss with their personal injury attorney how these expenses will be managed. Many lawyers who work on a contingency fee basis may choose to advance these costs on behalf of their client, to be reimbursed from any settlement or judgment money recovered. However, practices can vary from one law firm to another, making clear communication and understanding of the arrangement essential from the outset.

In many cases, these costs are reimbursed to the attorney from the settlement amount or court award before the calculation of the contingency fees. These expenses can add up, which can ultimately affect the net amount a client receives from any compensation awarded. The contingency fee agreement should outline how these lawsuit-related costs are handled to avoid any surprises. Clients should ask their attorney for an estimation of these costs at the outset, understanding that while some expenses can be anticipated, others may arise as the case progresses.

What If You Don’t Win Your Case?

At PhillyLaw, we never charge any upfront fees, and you don’t pay anything unless we win or settle your case. Since payment is contingent upon winning the case or securing a settlement, no fees are typically required if the case is unsuccessful. The contingency fee arrangement will clearly outline any situation where a client might still be responsible for other case-related expenses. These can include filing fees, costs associated with depositions, and payment for expert testimony.

Alternates to Contingency Fee Agreements for Personal Injury Claims

In contrast to the contingency fee model, personal injury lawyers may offer alternative fee arrangements, including hourly rates and flat fees. Personal injury lawyers and their clients may agree to an hourly rate model or a flat fee structure.

Hourly Rate Model

Under the hourly rate model, clients are billed for each hour the attorney works on their case, regardless of the outcome. This arrangement for an hourly fee requires clients to make regular payments throughout the legal process, which can add financial pressure, especially in protracted cases.

Flat Fee Structure

Alternatively, some attorneys may opt for a flat fee structure for cases they perceive to be straightforward, requiring a predefined amount of work. Due to their unpredictable nature, this fee structure is less common in personal injury cases but may be suitable for specific, less complex claims.

Both of these alternative fee arrangements place a greater financial burden on the client from the outset of the case, contrasting the contingency fee’s no-win, no-fee promise.

At PhillyLaw, There is No Fee Unless We Win.

At PhillyLaw, we will provide you with a free initial consultation. We never charge any upfront fees. We believe you deserve an experienced Philadelphia personal injury lawyer who can provide the best guidance after carefully reviewing your case. Our skilled legal team is well-versed in Pennsylvania’s negligence laws. It is dedicated to fighting for the rights of injured people, ensuring they receive the justice and compensation they deserve. By representing you, our goal is to lift the legal burden from your shoulders, allowing you to focus on recovery. If you or a loved one has been injured or killed as a result of an accident, we encourage you to contact us for a free consultation. Together, we will explore your options and diligently work toward securing the most favorable outcome for your case.