What Is a Contingency Fee?


Attorney fees can come in the form of flat fees, retainers, deposits, and contingent fees. This article addresses the contingent attorney fee – by far the most common type of personal injury lawyer fee arrangement for personal injury and workers’ compensation cases. Additionally, we will discuss how a settlement number is the first step in determining what you actually receive after a case.

What Is a Contingency Fee?

A contingent fee is an agreement where the client pays for the lawyer’s services at the end of the representation. Virtually all personal injury and workers’ compensation attorneys operate on the contingent fee basis. This means that no matter which attorney you choose, you should not have to pay anything out of pocket to get the compensation you deserve. “No fee until you win” is a common slogan for these attorneys, but make no mistake ALL personal injury and workers’ compensation attorneys will offer the same deal.

The lawyer’s fees are taken out of the amount awarded to the plaintiff, whether by settlement or jury verdict. Contingent attorney fees are generally allowed by Missouri Supreme Court Rule 4-1.5(c). This is a special type of fee that allows people to get compensation for what they rightfully deserve without forcing the injured person or family to pay out of their own pocket before receiving their compensation allowed by law.

How Much Are Personal Injury Lawyer Fees?

In personal injury cases (cases not under Worker’s Compensation rules) there is no cap on the amount of attorney fees allowed. However, rule 4-1.5 requires that the attorney fee be REASONABLE. Reasonableness is determined by the amount of time and attention the attorney spends on the case. Therefore, the limit of reasonableness depends on each case.

Contingency fees are usually ⅓ (or 33.3333%) of the plaintiff’s total recovery in car wreck, slip & fall, and general injury cases. Other types of cases, like medical malpractice and product liability, are more complicated and require more attention. These cases could result in up to 50% in attorney fees.

In Missouri Workers’ Compensation cases, attorneys usually charge contingent fees of 25%. There is no Missouri law that limits the amount of the attorney’s fee in work comp cases, but the attorney fee must be stated when settling a case and it must be approved by the administrative law judge.

Can a Lawyer’s Fee Vary Depending on My Case’s Outcome?

Yes. Sometimes a lawyer’s contingency fee agreement varies, depending on if your case is settled before filing suit or after. A fee agreement like this could allow for a 25% fee if settled before filing suit, for 33.333% if settled after filing suit, and for 40% if the case is tried.

Is It Worth Hiring an Attorney if I have to Pay a Contingency Fee?

In most cases, yes. Hiring a lawyer on a contingent fee basis increases the total amount an injured person or family will receive in the end. This is because the insurance company expects you not to understand the law. They also know that the average injured person or family member will likely accept less than full value of their case. Hiring an attorney can help you get your full, deserved amount during settlement.

What about costs?

An important part of understanding a contingent fee agreement is understanding case expenses (commonly referred to as “costs”). There are two types of costs: Litigation Expenses and Taxable Costs.

Litigation expenses generally refer to the costs incurred while the case is being investigated and prosecuted. These include fees for obtaining records (i.e. crash reports and medical records), expert fees, and other fees incurred by the lawyer in order to prepare the case for trial. Taxable costs include filing fees, deposition costs, and service fees.

One of the largest costs in a personal injury case is the cost of an expert. Experts are commonly retained by both plaintiffs and defendants in injury cases. Experts are hired in order to give their opinion of why something happened based on their specialized or scientific knowledge. Because the experts have specialized knowledge, they are in high demand and therefore charge high fees. Pettit Law Office has seen experts charge fees up to $50,000 to give their opinion in a case – appearance to testify at trial is extra.

How is the Fee Calculated?

When a case is settled or a jury awards a plaintiff compensation, then the calculation can begin. Usually, the attorney fee is calculated on the whole award, next, costs and other bills are deducted. For an example, we will go through a hypothetical settlement.

Let’s assume John was in a car crash, hired an attorney, and reached a settlement amount of $50,000. John hired a lawyer for a ⅓ contingency attorney fee and that the lawyer incurred $2,500 of costs while working on the case. Let’s also assume that John didn’t have health insurance and has outstanding medical bills of $2,000. The following is how the settlement memorandum would read:

Net Amount To John$20,833.33
Settlement Amount$50,000
Attorney Fee$16,666.67
Costs Advanced by Attorney$2,500
Medical Bills$2,000

When the settlement money comes in, the fee is paid to the attorney, the costs are also repaid to the attorney, the medical bills are then paid out of the client’s net amount. In the end, John received a check for $20,833.33. Not too bad. If you have any questions about this, general attorney, or contingent attorney fees, feel free to contact your local lawyer at Pettit Law Office.

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