A contingency costs agreement or contingency fee agreement is an arrangement that some lawyers use with their clients where they agree to only be paid if they are successful in obtaining a monetary recovery for their clients. This type of agreement is most commonly used in personal injury cases, but it can also be used in other types of cases such as employment law or medical malpractice cases.
The contingency fee agreement is typically structured as a percentage of the amount recovered, often ranging from 33% to 40%. This percentage is negotiated between the lawyer and the client upfront, and it is outlined in the agreement. If the lawyer is successful in obtaining a recovery for the client, they will receive the agreed-upon percentage of that recovery as their fee. If the lawyer is not successful in obtaining a recovery, they will not be paid anything.
The advantage of a contingency fee agreement is that it allows clients who may not have the financial means to pay for legal fees upfront to still have access to legal representation. It also aligns the interests of the lawyer and the client, as the lawyer only gets paid if the client is successful in their case.
However, it is important to note that a contingency fee agreement may not be the best option for every client. Depending on the specific circumstances of the case, it may be more cost-effective for the client to pay attorneys` fees upfront rather than agreeing to a percentage of the recovery.
In addition, some states have limitations on the percentage of the recovery that a lawyer can receive as their fee in a contingency fee agreement. It is important to research the laws in your state if you are considering entering into a contingency fee agreement.
Overall, a contingency fee agreement can be a beneficial arrangement for both lawyers and clients in certain types of cases. However, it is important to carefully weigh the costs and benefits before entering into such an agreement. As with any legal matter, it is also important to consult with an experienced attorney before making any decisions.