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What Are Contingency Fees?

POSTED BY
November 25, 2021
Tips

People think of lawyers as charging their clients by the hour and, in most cases, that is exactly how the legal profession works. Personal injury attorneys, however, work on contingency fees. This means that you pay nothing until your case is settled. Then, your Denver personal injury attorney is paid a percentage of your settlement.

There are a lot of reasons this is beneficial to clients. Let me outline a few.

Equal Playing Field

If you were the victim of a car crash and had to go up against a Goliath insurance company while paying your attorney by the hour, you may have to choose an attorney with a low hourly rate. Often, the best attorneys charge the highest hourly rates. Why should victims have to choose representation by a cheaper, less experienced attorney just because their case may take a long time? With contingency fees, you can hire the best attorney to represent you and not fear mounting legal bills.

Breathing Room

Personal injury cases go on for months and sometimes years, depending on the complexity of the case. If you had to pay an attorney by the hour, you could go bankrupt before your case is settled and there’s a very good chance your settlement wouldn’t even cover your attorney’s fees! With contingency fees based upon the amount of your settlement, your attorney will never earn more than your case is worth. In fact, he or she should only earn a fair percentage of your settlement.

Your Attorney Hires the Experts

When you hire an experienced personal injury attorney, it is their responsibility to pay for all the experts they need to prove your case. These can include accident modeling experts, medical experts and more. Ultimately, those fees will come out of your settlement, so your attorney should get your approval before committing any resources to your case. But those experts have to be paid in the “normal” way – at the time of service. And that is your attorney’s risk to take on. If for some reason your case is never settled, you do not pay for those experts.

Do Not Work with a Personal Injury Attorney Who Charges a Retainer

If you ever talk to a personal injury attorney who requires a retainer to take your case, run the other direction. This is a cue that he/she cannot afford to represent you from their own financial resources. You need an attorney with enough financial stability to take on all of the up-front costs related to your case.

For example, at any given time, my personal injury law firm in Denver has paid hundreds of thousands of dollars in case costs. These are the costs I plan for and expect to make on behalf of my clients. You want an attorney who can afford to be aggressive. However, you also don’t want an attorney who spends unnecessarily where they don’t need to.

Also, make sure your attorney handles as much of your case in-house as possible. For example, they shouldn’t be subbing your case out to independent attorneys or other professionals when their own staff and attorneys should be able to do the work themselves, at a lower cost to you. We don’t even sub out our background checks because we can do that ourselves. In the end, that means our clients get more money. And that matters a lot to us.

Contingency Fees Can Protect You But Keep an Eye Open for Neglect

In the end, contingency fees are designed to incentivize personal injury attorneys to work as hard as they can on every case. When their clients make more money, the attorneys make more money, because their fee is a percentage of the final settlement.

However, there are some big personal injury law firms that have stacked their business models against clients. Instead of working as hard as they can on each case, they instead try to bring in a huge number of cases and settle quickly. For these firms, which I call “personal injury mills,” the math only works if they have a huge quantity of cases. Their attorneys are not rewarded for spending more time with a client. Therefore, if you notice that you are not speaking with your attorney, and you feel neglected, it may be a sign that your attorney is overwhelmed with cases and does not have your best interest at heart.

Only Spend More if You Can Earn More

At The O’Sullivan Law Firm, we keep one goal in the balance: We will only spend more on a case if it will enable us to earn more for our clients. And we always communicate every spending decision with our clients so that they have the final say in how their case proceeds.

If you have any questions about how contingency fees work, I’d happily chat with you about it… no fee!

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