Contingency Fees: How You Pay Your Lawyer Matters

On Behalf of | Feb 7, 2013 | Civil Justice System

In the past few years, big corporations, medical associations, and the insurance industry have urged legislators to put a cap on contingency fees.  These special interests launched their attack against contingency fees through hired lobbyists and PR experts who portrayed the contingency fee as a way to enrich trial lawyers while cutting into the pockets of the victims.  In reality, contingency fees are a valuable part of our civil justice system.

Contingency fees provide access to justice for those injured or wronged regardless of their financial situation, by allowing those with legitimate injuries to obtain skilled and efficient representation.

The value of contingency fees is explored in a new study by the Center for Justice & Democracy called Courthouse Cornerstone: Contingency Fees and Their Importance for Everyday Americans.

Contingency fees allow an attorney to take a case without charging the victim anything up front.  The attorney pays the costs and expense associated with the litigation, which alone can act as a financial bar from the courthouse from most victims.  Once the case is finished, the attorney collects a percentage of the recovery as compensation for professional services only if the case is successful.  What does this mean?  It means the attorney will work diligently because he will not get paid unless he is successful; he will work efficiently because he is fronting the costs; and he will only take cases with real merit because frivolous cases are unsuccessful.  Essentially, the attorney assumes the financial risk involved in seeking justice for his injured client.

Other fee arrangements, like hourly rates and retainers, force clients to pay attorney’s fees and expenses up front, regardless of the success of the lawsuit.  This encourages lawyers to drag out the litigation process in order to collect a larger fee, which they collect even if they are unsuccessful.  While this arrangement may work fine for big companies and the wealthy, most Americans simply cannot foot this bill or risk paying huge litigation costs and high attorney’s fees only to lose in the end.  Contingency fees shift the risk from the injured client to the attorney.  Statutory caps on these fees result in less access to the courts because fewer attorneys are willing or able to assume the risk involved in pursuing a claim without the chance of receiving fair compensation.  Ultimately, the so-called goal of caps on contingency fees –allowing clients to keep more of their recovery–results in keeping legitimate victims  from getting any recovery at all.

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