Created: 18 December 2020
Many potential new clients understandably want to know how the lawyer in a personal injury case gets paid. The same thing is true on medical malpractice cases where injured patients ask about how the attorney for the patient is compensated. Whether it is a brain injury case, an automobile collision claim, or a medical malpractice lawsuit, lawyers who handle these types of cases on behalf of the plaintiff are typically paid on what is referred to as a “contingency fee” basis. That is simply a fancy way of saying they are paid on a commission. Simply put, under this type of arrangement, the lawyer is only paid an attorney fee out of any amount recovered for the client. The attorney fee is a percentage of the amount collected, with the percentage usually depending on the difficulty of the case and the stage in the process it reaches.
Clients usually want to know what the justification for a continency fee is, in other words why is it fair? The main alternative to a contingency fee is to pay a lawyer on an hourly basis, which is very expensive, anywhere from, for example, $200 per hour up to $500 per hour our more depending on the location, which can equate to thousands upon thousands of dollars over the course of a case (which is usually how large corporations or big insurance companies pay their teams of multiple lawyers from larger law firms). Most people understandably cannot afford this, or are simply not in a position financially to where they are willing to pay that much to a lawyer to take on a complex and lengthy case with hundreds or thousands of hours of attorney work. Another reason for a contingency fee arrangement is that it transfers some of the risk of loss to the lawyer. In other words, some cases present a risk of loss; nothing is certain in litigation. An experienced lawyer may be willing to take on that risk in exchange for a percentage of the outcome for attorney fees, rather than have the client pay hourly and risk paying a large amount for attorney fees yet losing the case. So, the lawyer agrees to potentially get paid later, if successful, in the future, based on an uncertain outcome. There is also the matter of litigation costs and expenses, such as for expert witnesses, depositions, and trial costs. These out of pocket costs must be paid as the case moves forward and can amount to many thousands of dollars. Typically, under a contingency fee arrangement, the lawyer advances these to be paid out of any amount recovered for the client. So, the continency fee provides some incentive for the lawyer to take on the business risk of advancing these litigation costs.
The bottom line is that contingency fee arrangements allow lawyers to help people who are otherwise not in a position to pay hourly, or who are unable to advance thousands of dollars of litigation expenses and costs, or who cannot incur the financial strain of potentially losing the case. This type of payment arrangement therefore makes sense and allows ordinary people to take on much larger adversaries who are attempting to avoid reasonability and deny justice based on perceived economic superiority. Mahoney Law of Idaho has a track record of success in representing ordinary Idahoans wage extraordinary battles. Call us for a free and confidential consultation.