What is a Contingency Fee

What if a major government agency decides that your property would make the perfect space for a new four lane highway? Say, for example you are riding your motorcycle, and through absolutely no fault of your own, you are involved in a bad motorcycle accident leaving you with exorbitant hospital expenses. What is the next course of action? How will the injured party be made whole? Shortly after, an attorney hands a business card and makes the promise that they will sue the offending party, but no need to worry about their fees, because they are paid solely on a contingency fee. This is a not a new concept, but rather one used in eminent domain law and personal injury law.

What is a Contingency Fee?

According to the American Bar Association, in an arrangement based upon a contingency fee structure, the attorney will agree to accept a fixed percentage (often one third) of the recovery, which is the amount finally paid to the client. This is something that is normally common in personal injury or cases involving real estate, primarily eminent domain law. In the case of real estate, an eminent domain attorney would get involved to help to protect the rights of the landowner by making certain that the landowner received Fair Market Value for their property. Surprising enough, eminent domain protection is a right of protection guaranteed by the Fifth Amendment of the US Constitution.

fee only win

How is a Contingency Fee Paid?

In a traditional legal contingency fee arrangement, the plaintiff attorney will agree to accept a fixed percentage, which can be anywhere in between one-third up to forty percent of the recovery, if successful. The remainder, after any other fees that were not covered are paid, is an amount paid to the client. So essentially, if the plaintiff were to win the case, the attorney or law firm fee comes out of the money awarded in the lawsuit.

What Do Contingency Fees Cover?

In most cases, contingency fees only cover the attorney’s fees. Other costs of the litigation fall on the client, which include:

  • Court costs
  • Copying costs
  • Filing costs
  • Expert witness testimony costs
  • Deposition costs