How Do Contingency Fees Work?

In California, lawyers are prohibited from making an agreement for, charging, or collecting an unconscionable or illegal fee. There are many types of fee arrangements that are used by lawyers, some by choice and some that are mandated by law. Contingency fees are one type of fee arrangement used by attorneys. The amount of the fee a lawyer receives is contingent upon the result the lawyer obtains and often on the phase of litigation in which the dispute settles.

Contingency fees are based on a percentage of any award received by a client and derived from a successful jury verdict or settlement. If the case is unsuccessful, the client is not required to pay the lawyer any fees except for the costs of litigating or trying to settle the case. Although contingency fee percentages may vary, one-third (33 1/3 %) has been the common percentage used for several decades, especially for personal injury cases.

Ethical rules governing the conduct of attorneys and statutory law may regulate fee arrangements and set limits on the amount of any contingency fee that attorneys may charge their clients. California prohibits contingency fee agreements for family law matters. Lawyers in California may not condition payment upon

• the securing of a dissolution or declaration of nullity of a marriage or
• the securing of an amount of spousal or child support, or property settlement.

However, the rule does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under child or spousal support or other financial orders.

Attorneys are required to base fees on a written, easy-to-understand fee agreement that they negotiate with clients at the beginning of their representation. It is good practice for lawyers to reduce all fee agreements to some written description of the legal services to be rendered and their cost.

Any fee agreement should include the following terms and not guarantee any specific result:

• the scope of the attorney’s representation;
• the rights, responsibilities, and expectations of both the attorney and the client;
• list of fees and costs; and
• the required method of payment.

A hybrid of this fee arrangement is an hourly fee for some portions of the work and a contingency fee for results related to the performance of some other service. Another variation of the traditional contingency fee is a sliding scale based on the case’s progress before settlement.

A lawyer cannot require payment of the full contingency fee if discharged before obtaining any recovery on behalf of the client. Both the amount of the fee and the result are significant to the determination of a reasonable fee. If a lawyer is prematurely terminated, he or she has no greater right to fees than those available if the representation had continued through a final resolution.

According to the Legal Information Institute, advocates of contingency fees contend that contingency fees: (1) improve access for indigent clients by enabling those who could not otherwise afford an attorney to assert their claims; (2) provide an incentive for attorneys to seek and achieve client success; and (3) enable clients to shift the risk of loss to the lawyer.

Critics of contingency fees assert that contingency fees: (1) encourage too many frivolous lawsuits; (2) encourage lawyers to settle too soon and for too little of a fee; and that (3) contingent fees are usually excessive relative to the risks taken by the attorney in a contingency fee case.

If you have suffered an injury in any type of accident, and another party is responsible for this harm, you have a right to compensatory damages for your losses. The personal injury attorneys at Moss Bollinger can help you assert your valuable right to compensation. Moss Bollinger is dedicated to protecting and asserting the rights of our clients. Call (310) 982-2291 today for a free consultation or contact us online.