When you need to hire a lawyer, you may be concerned about the cost. It can be expensive, but often the result of not hiring a lawyer when you need one costs more.

Lawyers charge in different ways. Some types of lawyers will charge an upfront fee known as a retainer, and then when you’ve exceeded the services covered by that cost, they might charge you by the hour.

Lawyers may also charge a flat fee for pretty straightforward, routine work.

Then, there’s a contingency fee. Personal injury attorneys will often work on a contingency fee basis.

What this means is that when you hire a personal injury lawyer to represent you after an accident, they get paid only if your case is successful. As a result, personal injury attorneys are often careful in the cases they take and will only take on a case if they believe its’ something they can win. Otherwise, they may work hundreds of hours and not receive any compensation.

The following are key things to know about a contingency fee and how it works if you hire an attorney to represent you.

Personal injury attorneys will often work on a contingency fee basis. Here are key things to know about a contingency fee and how it works.

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What is a Contingency Fee?

Contingency fees are a fee arrangement that is beneficial for you as a client because you can avoid out-of-pocket costs altogether. A contingency fee is an agreed-upon percentage of a settlement or judgment you receive for damages.

Your lawyer gets paid only if you do, and it does create an incentive for your lawyer to provide you with the best representation possible because of their own risk in the situation.

The idea, as the name indicates, is that your lawyer’s payment for your case is contingent on you receiving compensation.

The percentage in most cases is 1/3 of your settlement or judgment, which is 33%.

There may be some variation in this percentage depending on the complexity of your case and who covers litigation costs.

If your lawyer is taking on a case that is very complex or high-risk for them, they may require a 35% or 40% contingency fee. A simple case likely to result in compensation for you as the client may mean a contingency fee of 20% or 25%.

What Types of Lawyers Use a Contingency Fee?

The most common type of lawyer who uses a contingency fee is a personal injury attorney.

This scenario can only be used in civil litigation, however, involving a financial settlement. It couldn’t be used by a criminal lawyer.

Variations

There are two main variations to the traditional contingency fee situation.

There’s a contingency hourly arrangement in which you don’t pay your lawyer until you recover damages. However, your attorney will track their hours worked, and then, if you receive compensation, your lawyer charges you based on their hourly rate.

Another option is a mixed hourly contingent arrangement. Initially, you pay for part of the lawyer’s normal hourly rate, and then you only pay the rest if you obtain a recovery.

What Are the Benefits of a Contingency Fee Arrangement?

The primary advantage for you as a potential client of an attorney is that there are no upfront fees with a contingency arrangement. You don’t have to pay your lawyer out of pocket, and you’re not going to be facing big bills while your case is ongoing.

This can create a sense of equality in the legal system because you aren’t barred from recovering the damages you’re entitled to for financial reasons.

This was mentioned above, but there’s also an incentive for your attorney to dedicate adequate time and attention to your case if they’re getting paid on a contingency fee basis. Your attorney is more likely to go above and beyond to recover damages.

Also, if you lose, you don’t incur losses as a result.

When you pay a lawyer on an hourly basis, for example, what you owe doesn’t change depending on the outcome. You can lose and still owe your lawyer a significant amount of money.

The primary advantage for you as a potential client of an attorney is that there are no upfront fees with a contingency arrangement.

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Are There Downsides?

Finally, as with anything, there can be downsides to a contingency fee.

First, it could cost you more ultimately than an hourly fee. If your case is settled very quickly, you could end up feeling like you paid your attorney too much if you compare it to their hourly fee.

Also, it can be tougher to get an attorney to take your case because it represents more of a risk for them. They’ll be pickier about the work they’re willing to take on.