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What is a Contingent Fee Agreement and Is it Always 1/3?

| May 7, 2012 | Personal Injury

Asking what a contingent fee agreement is may be the most obvious question in the world of personal injury law even though I have never really discussed it before in detail. Every personal injury attorney in Rhode Island or Massachusetts will tell you that there is no fee until you receive money either by settlement or by jury verdict. My office also adheres to the same policy of no fee unless successful. This arrangement is the so called contingency fee agreement. But what does that really mean and how does it work?

It can cost several thousand dollars in legal time and expenses to handle even a minor car accident. Cases with major injuries such as broken bones, scarring, hospital stays or even death, may cost tens of thousands of dollars to properly and aggressively handle, especially if the case goes all the way to trial. This is especially true in cases of medical malpractice and product liability.

Personal injury attorneys understand, however, that accident victims may not be able to afford such high legal fees just to receive the compensation that they deserve. In fact, many people are most vulnerable after a car accident or slip and fall because they are forced to miss work and lose wages. For this reason, many attorneys agree to take the case for free unless and until there is a settlement or jury verdict. At that time, the personal injury lawyer will take his share of the settlement according to your contingent fee agreement. The overwhelming majority of attorneys, including my office, charge 1/3 of the total settlement fee. Some attorneys now charge 40% of the total settlement. This 1/3 fee is not written in stone and it is not a law.

A 1/3 contingent fee became the standard and it is what most attorneys adhere to for personal injury cases. 1/3 may be a very small amount of money or it may be a very large amount of money. Generally, the 1/3 is a fair and accurate representation of the time and effort that went into preparing and winning your case. Also, the 1/3 reflects the fact that your personal injury attorney takes the risk that he or she may never receive any money. If the case is lost or some other circumstance prohibits recovery for your case, then your lawyer worked for nothing. To avoid making costly errors, bodily injury attorneys are very particular about the types of cases that they take and will only take your case if it seems fairly certain that another party is liable to you and that that party has insurance. For example, a personal injury attorney is unlikely to take an auto accident case in which you appear at fault.

The contingent fee is not a law written in stone and you should talk to your personal injury attorney about the fee. Under certain circumstances, I have reduced my contingent fee for my clients, particularly in large cases where the potential settlement was high. Also, if you are fortunate enough to be in a position to pay your attorney his or her legal fees without the need for a contingent fee agreement, then you may be able to pay your attorney in that manner. An attorney will be much more likely to take a tricky or difficult case if you can pay the hourly wages and costs because the attorney does not risk a financial loss if the case is unsuccessful.