Whether you have ever needed the services of a personal injury lawyer or not, you have probably heard the term “contingent fee arrangement”. What exactly does the term “contingent fee arrangement” mean and when do lawyers get paid by a contingent fee arrangement? A contingent fee arrangement basically means that your lawyer will receive a percentage of the monetary settlement that you, the client, ultimately receive. Under a contingent fee arrangement, if you do not receive and money at the end of your case, then your personal injury lawyers does not receive anything either. State laws fix the maximum percentage that a lawyer may receive from a settlement; however a standard percentage is around one-third of the final settlement.
Contingency fee arrangements are most common in injury lawsuits and in fact are forbidden in other types of legal matters such as criminal cases and divorce proceedings. Why are contingency fee arrangements allowed in personal injury lawsuits? The idea behind allowing a personal injury lawyer to collect a contingency fee is that without an arrangement where the lawyer gets paid when the case is settled, many people would effectively not have access to the judicial system. Personal injury lawsuits can frequently be very costly after you factor in the administrative costs of the lawsuits, the personal injury lawyers time, his staff’s time, experts testimony fees and other miscellaneous costs. Many people could not afford to pay all of the fees up front even before being involved in an accident. After an auto accident many people are left with no vehicle, a pile of medical bills and less income from lost time at work. If they were required to pay their personal injury attorney up front, or as she worked the case, then most people would never be able to file a personal injury lawsuit and therefore would not receive the compensation they deserve. Another consequence of a system that did not allow injury attorneys to accept contingency fees would be that more people might be inclined to behave negligently if they knew that very few people would actually sue them and force them to be responsible for their negligence.
Another reason for allowing injury lawyers to collect contingency fees is that it encourages the lawyer to fight as hard as possible for his client. If their interests are both dependent on the end result, then the injury lawyer has as much invested in the outcome as the client. This makes for a win-win situation for both the client and the injury lawyer. Likewise, it cuts down on frivolous lawsuits or on negligence claims that have no merit. If a client presents a lawyer with a set of facts that the knows will not amount to a meritorious personal injury lawsuit, then he is more likely to decline to represent the client and thereby avoid a lawsuit that cannot be won. Clients, therefore, can be reasonably assured that if a lawyer decides to represent them that they will recover something in the end.
Finally, if for some reason, lawyer is not able to garner any compensation for the client, then the client owes the lawyer nothing. Again, this allows injured people that otherwise would not be able to risk filing a lawsuit the opportunity to do so without risking anything.