Legal cases cost money, and you may not have the resources available to pursue a personal injury case. Between medical bills and lost time at work, your finances may be stretched to the breaking point. Contingency fees help people in this situation – you only pay your personal injury attorney if you win a settlement. While this pay structure certainly seems appealing, lawyers are often particular about which cases they take on contingency. Learn more about the pros and cons of the fee are so you can be prepared to make the best decision regarding your legal action.

What Is a Contingency Fee?

Attorneys fees may based on an hourly fee or a set arrangement, depending on the situation and the law firm. Generally, whether clients win or lose, they must pay their attorney. When an attorney works on a contingency basis – which means payment depends on the outcome – he or she only gets paid if they win the client’s case. This arrangement calls for the lawyer to agree to a static percentage payout of the amount his or her client won, usually 33%.

When clients win or take settlement offers, they pay their personal injury lawyer from the money the courts awarded them. If they lose, no one gets paid – neither the client nor the attorney. Many people misunderstand this to mean they pay nothing if they lose, which isn’t the case. They must still pay court fees and other costs the attorney may incur, including witness depositions or legal document drafting. The process of going to court still costs money, though when your case is contingent on winning, your attorney’s fees won’t be part of the cost if you lose.

Does the Payout Amount Change by Various Settlements?

Fee changes only occur if both you and the lawyer agree ahead of time. Many PI cases never get to court, because insurance companies prefer negotiated settlements. In this instance, your attorney will be doing less legal work, so you could negotiate for a lower percentage payout if the lawyer succeeds in settling quickly or outside of court.

Can I Reduce Legal Expenses?

You have several options for cost-cutting when it comes to legal proceedings. First, always answer all questions from your lawyer completely and honestly. The more accurate and complete the information, the easier your counsel’s job will be.

Legal ethics bind your lawyer to keep whatever you reveal confidential, so be sure to include all the information you have – even if it puts you in a negative light. Your attorney isn’t there to judge you but rather to help you through this crisis. The more the counsel knows, the better prepared he or she will be to represent you in the event this information comes out in negotiations or at trial.

What Are the Pros/Cons of Contingent Fees?

The contingency fee system provides access to legal resources at a minimal guaranteed cost, which benefits those otherwise unable to afford the costs of retaining a lawyer. Lawyers also have increased motivation to only accept cases when they are confident they can win a settlement for their client. By the same token, the lawyer will have a very strong incentive to pursue the best course for his client, given that his fee is dependent on a successful outcome.