The contingency fee agreement is the single most powerful tool a client has in pursuing a claim and engaging in a legal battle with an insurance company.
Retaining a lawyer can be extremely expensive. Depending on the area of practice, the experience of the lawyer and the city in which you live, an attorney’s fee will often be $200 - $600 per hour. The significant difference between a personal injury or wrongful death case and other types of cases is the fee arrangement. It would be unusual for a lawyer to represent a client in personal injury or wrongful death case using an hourly fee agreement. Attorneys that represent clients for personal injury and wrongful death cases almost always do so under a contingency fee agreement. Any other fee structure would remove the ordinary person from pursuing their claim.
A contingency fee agreement is a fee structure whereby the client is responsible for the attorney fees only if the attorney is actually able to obtain compensation for the client. If the client is compensated, then the fees owed to the attorney are taken from the compensation the client receives. The amount of the fee is based on a percentage of the compensation the attorney is able to secure for the client. The traditional fee is 33 1/3 % of the total amount the client’s recovery, though this specific percentage is often modified in the modern practice of personal injury law. Often attorneys agree to less or to more or to a sliding percentage depending upon the changing nature of the case. A now common contingency fee structure is one that “scales” with the risk and workload of the case. Thus, the client and attorney may agree to a 33 1/3 % fee if the attorney is able to secure the client compensation before having to file a lawsuit. The fee may increase to 35% if the attorney must file the lawsuit. The fee may increase again if the case is actually litigated in court. The most important part of the contingency fee arrangement for a client is this: If the client loses the case (i.e. the attorney is unable to obtain compensation for the client), then no fees are owed by the client.
All cases, no matter the fee arrangement, require various costs to be expended by the client. These consist of filing fees, deposition fees, expert fees, copy costs, etc. In an hourly fee arrangement, a client will usually be obligated to pay a retainer to the attorney that the attorney may use to pay costs as they are incurred. In a contingency fee arrangement, the attorney will usually agree to advance the costs on behalf of the client. While normally it is unethical for an attorney to loan money to a client, many jurisdictions, including Arizona, allow attorneys to advance costs that arise in a client’s case, provided that the client agrees to be responsible for paying the costs should the client obtain compensation. Often attorneys will agree to waive these costs at the end of the case, should the client lose the case or otherwise fail to obtain compensation. The costs do not affect the attorney’s contingency fee as costs are paid by the client after the attorney fee is paid and before the client is compensated. The contingency fee percentages often seem high to clients, but it is because the attorney bears the entirety of the financial risk of the case, including the time spent in the case.