Attorneys charge their fees either as hourly or contingency fee. These are two different fee formats under which attorneys usually charge plaintiffs for the services rendered.
Contingency fee is charged as a percentage of the compensation that a plaintiff receives at the end of a jury trial or when a matter is settled via alternation dispute resolution methods such as mediation, arbitration. Hourly fee is billed according to the time an attorney devotes to the case.
There are certain basic rule that govern determination of contingency fees and payment of the fees and other charges to attorneys. Read on to know these basic.
When Contingency Fee Is Charged?
Contingency fee is charged when there is some monetary benefit at the end of the case.
Criminal cases are barred from charging contingency fees as there is no monetary benefit in the end.
As a rule of thumb, personal injury claims, class action lawsuits and auto accident claims are the cases where contingency fee is charged.
What Percent Is Charged As Fee?
Attorneys usually charge between 25-30% of the compensation received by the plaintiff.
There is a catch though; during contracting the attorney under contingency fee, it is prudent to ask for services that are covered under the fee and whether the fee will be charged on the gross or net compensation received.
What Is Included in the Fee?
Contingency fee usually includes
- attorney’s fee,
- case filing fee,
- investigation fee,
- expert witness fee and
- any other incident charges related to the case.
These charges are initially borne by the attorney and paid after the settlement of the suit.
When Is The Contingency Fee Paid?
At the end of the trial or mediation once settlement amount is awarded, attorney will deduct his fee, other fees and charges mentioned in the previous point and then the money is disbursed to plaintiff.
If the contingency agreement stipulates expenses being paid first then first expenses will be deducted and then attorney’s fee is calculated.
How Fee Is Calculated?
Plaintiff receives damages to the total amount $100,000, total expense incurred by the attorney is $10,000 and attorney’s contingency fees is 30%. Now there are two scenarios here:
Expenses and fees are taken together as a part of attorney’s fee then
$100,000*30% = $30,000
$30,000 – $10,000 (expenses incurred) = $20,000 attorney’s fee
$70,000 compensation received by the plaintiffs.
In this case, attorney will earn $20,000 as fees and plaintiff receives $70,000 as their final compensation after paying all fees and charges.
Expenses and fees are separate and expenses to be deducted first and then attorney’s fees is to be calculated.
$100,000 – $10,000 (expense incurred) = $90,000(fee to be deducted from this amount)
$90,000*30% = $27,000 (attorney’s fee)
$90,000-$27,000 = $63,000
In this case attorney fee increase to $27,000 as expenses are a separate from the fees and plaintiff receives $63,000 as damages.
As there are various ways to form payment terms, it is advisable to discuss them first with your attorney as how he would like to be paid.
There are contingency agreements that stipulate in case of losing a case, plaintiff is suppose to make good of the expenses incurred during trial.
In such a scenario, it is prudent to ask your attorney for an itemized bill every month so that you can keep your expenses in check.
Contingency fee allow for legal remedy for those who cannot afford lawyer’s fee and go through costly trials.