What is a contingency fee?

Attorney fees are the center of most lawyer jokes.  Some people do not know, or understand, how lawyers are paid.  While there are many new payment methods breaking through, there are a couple of traditional ways that lawyers get paid – by the hour, and on a contingency fee basis.  The hourly rate of a lawyer depends on many factors and includes the experience, skill, and abilities of the lawyer.  One important rule named “The American Rule” provides that each party is responsible for paying its own attorney’s fees.  As with almost everything in the law, there are a few exceptions to the rule in certain cases such as breach of contract cases and specific lawsuits based on state and federal statutes.  If you are the prevailing party in those cases, you can recover your attorney fees in certain circumstances.

How does a personal injury lawyer get paid?

Our firm handles injury cases exclusively on a contingency fee basis.  We do not get paid unless we get a recovery for you.  In workers’ compensation cases, the contingency fee is 20% of any amount recovered.  This is set by state law.  In most personal injury cases like automobile accidents, the contingency fee is 1/3 of any amount recovered.  Some cases require a higher contingency fee because of the time, effort, and skill necessary to prosecute the case.

Some people get confused and think the attorney fee covers everything.  That is not the case.  In addition to the fee, the personal injury lawyer usually advances all case expenses and recovers them at the end of the case if it is a success.  This does not mean the lawyer makes more money – it is getting reimbursed for money spent prosecuting the case.

Why a contingency fee?

Contingency fees provide access to the courts for those who cannot afford to pay the attorney fees and costs of litigation.  Litigation is expensive and risky.  Most people cannot afford to pay a lawyer up front and continue paying them throughout a case.  Injury victims have been hurt and in some cases rendered completely unable to work and provide for their families.  If there was no contingency fee arrangement, the court house doors would be closed to a large percentage of the population.

Contingency fee arrangements also encourage efficient, hard work by the lawyer.  The more successful the lawyer is for the client, the more the client and the lawyer will receive.  A common criticism of the billable hour lawyer is they may not be financially encouraged to resolve the case quickly and efficiently as they get to bill every time they work on a case.  A contingency fee arrangement does not suffer from that problem.

Is the contingency fee too high?

The Tennessee Rules of Professional Conduct require a lawyer’s fee and charges for expenses to be reasonable.  Some of the factors in determining the reasonableness of the fee include the time and labor required, the difficulty of the questions involved, the skill required to perform the legal service properly, the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer, the fee customarily charged in the locality for similar legal services, the time limitations imposed by the client or by the circumstances, and the experience, reputation, and ability of the lawyer or lawyers providing the services.

With a contingency fee, the lawyer assumes the risk of not being paid in order to make legal services available to someone who otherwise could not afford them.  Sometimes cases can last a few years.  The lawyer works on the case throughout the employment not knowing what the final outcome will be or when it will resolve.  The lawyer assumes the risk of spending many hours of his or her time and staff time in exchange for a percentage of the result that lawyer can obtain.  The percentage is agreed upon and spelled out at the beginning of representation so there is no confusion.

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