What Is a Contingency Fee?

A contingency fee agreement is an arrangement between a personal injury lawyer and their client. Under a contingency fee agreement, which must be in writing, a personal injury lawyer does not receive compensation for their services until the case settles favourably for the client—or the client receives a favourable court verdict or arbitration or mediation settlement/award. If the claim proceeds to an alternative dispute resolution such as mediation or arbitration or to trial and the client does not obtain a settlement or award, the lawyer typically cannot charge a fee under the terms of the agreement.

Assuming the client does recover compensation for their injuries, the lawyer’s fee will come out of that award at a specific, pre-set percentage depending on the stage of the litigation when the claim is settled. These percentages vary, and you will agree to a specific percentage when you sign a representation agreement.

For example, some lawyers will charge a smaller percentage for a settlement. They may charge a higher percentage if they must file a lawsuit. Check with your lawyer and the written contingency fee agreement about the exact percentage you will pay if the lawyer wins your case.

In any contingency fee agreement, the lawyer is responsible for stating the exact terms of the fee arrangements, including how and when the lawyer will receive compensation for their services. You should make sure that you understand the agreement before you sign it.

Once you sign the agreement, your lawyer will assume that you understood all of the terms and provisions—and that you consented to them. A personal injury lawyer can answer all of your questions about their contingency fee agreement and address all of your legal concerns before signing. Therefore, you should ask your questions as early on in the process as possible.

Determining Factors for Setting a Reasonable Contingency Fee

A lawyer might be in a position to charge a higher percentage for their contingency fee if the nature of the personal injury claim they are litigating is particularly novel or unusual—or if the case requires an extraordinarily high amount of work or expertise. This is discussed in detail with the client. 

If you have questions about the contingency fee percentage in your lawyer’s contingency fee agreement, you should be sure to ask the lawyer, and they can address any concerns that you may have. Also, many lawyers will work with you on the contingency fee and may be willing to negotiate on the percentage, depending upon the circumstances of your specific personal injury case. However, the level of flexibility will vary from lawyer to lawyer. Keep in mind that you often get what you pay for. Look closely at the skill, experience, results, quality of service, background and settlement prowess of a lawyer when assessing fees. 

What Is a Personal Injury Case?

An accident victim can file a personal injury claim or lawsuit if they suffer injuries in an accident that results from someone else’s negligence.

Some of the most common incidents that can lead to a personal injury claim or lawsuit include car and truck accidents, bicycle accidents, motorcycle collisions, pedestrian accidents, slip and fall accidents, negligent security incidents on business premises (including assaults by others on those premises), swimming pool accidents, and amusement park accidents.

Victims of these incidents can suffer extremely serious injuries, ranging from traumatic head and brain injuries to paraplegia and quadriplegia to broken bones to soft tissue injuries. Many of these injuries require medical treatment, surgical procedures, and rehabilitation for the accident victim to recover fully and return to their pre-accident state. All of that treatment can lead to inconvenience and mental distress. All of that is compensable as part of a personal injury claim or lawsuit.

In a personal injury case, the injured accident victim has the legal burden of proof on all elements of the claim, and the at-fault person or entity does not need to prove anything in the case. Specifically, the accident victim must demonstrate that the at-fault party behaved in a careless, unreasonable, or negligent manner under the circumstances—and that the accident occurred as a result. Moreover, they must show that their injury or injuries directly resulted from someone else’s negligence.

If you have suffered injuries in any of these accidents that resulted from another person’s negligence, you should speak with a personal injury lawyer as soon as possible. In addition to reviewing the contingency fee agreement information with you, your lawyer can explain how they may help and can pursue a claim or lawsuit on your behalf. Once you sign the contingency fee agreement and retain a lawyer to represent you, your lawyer can begin working on your case and pursuing the monetary compensation and damages that you need for the injuries you suffered in the accident.

What Does a Personal Injury Lawyer Get Paid to Do?

In addition to a lawyer receiving compensation for their knowledge and experience, their contingency fee percentage also goes towards the numerous services that they can provide in a favourable personal injury case. First of all, after you suffer injuries in an accident, your lawyer can investigate the circumstances of your accident by requesting a copy of the police report, any incident reports, or eyewitness statements.

If necessary, your lawyer can retain an accident reconstructionist or other expert to ascertain exactly how the accident occurred and who likely caused it. In addition, your lawyer can speak with the at-fault person’s insurance company on your behalf and begin setting up a claim for damages to file with the insurance company.

A personal injury claim begins when your lawyer submits a demand letter for settlement, along with a demand package that includes various documents, to the at-fault party’s insurance company. The settlement demand letter will demand that the at-fault person’s insurer resolve the personal injury case within the established limits of coverage.

In addition to the letter, your lawyer can include various documents, including copies of your medical records, lost wage statements from your employer, eyewitness statements, investigation reports, and photographs. All of this information will become necessary when it comes time for the insurance company adjuster to evaluate your claim and decide on liability and fault for the accident.

If the insurance company accepts liability for your personal injury case, your lawyer can negotiate with the adjuster handling the case. After several rounds of settlement negotiations between the accident victim’s lawyer and the insurance company, the case might settle out of court.

If the case resolves before filing a lawsuit, the lawyer will take a portion of the gross recovery as their lawyer’s fee for this stage. However, in some cases, insurance companies refuse to fully and fairly resolve personal injury claims and the lawyer may need to file a lawsuit against the at-fault party in the court system.

What Does It Mean to Litigate a Personal Injury Claim?

Once a lawyer pursues litigation by filing a lawsuit, they will be working much harder. Specifically, they will need to file a lawsuit with the court and serve it on the at-fault person or entity. Once the at-fault person or entity accepts service, they will refer the complaint to their insurance company, who in turn will appoint a lawyer to represent them and defend them in the case.

The parties will typically exchange documents as part of the discovery phase of litigation, and they will answer each other’s questions, called Questioning. 

Also, litigating a personal injury claim subjects the parties to various court deadlines. Even while the case is in litigation, the parties can still decide to resolve their case by way of settlement—after which time the lawyer will take their fee as the pre-set contingency fee agreement lays out. However, if the case goes to trial or arbitration, the lawyer’s fee percentage will usually increase.

If the case goes to a trial, the judge will decide the outcome of all issues in dispute, including damages. At an arbitration proceeding, a neutral arbitrator will listen to the evidence and decide the damages you may recover. At a mediation, a mediator will assist the parties to get to a settlement. If a party decides to take their case to a trial or to mediation or arbitration, the lawyer’s fee will depend on the outcome. If no award is forthcoming, the lawyer will not recover a fee.

Potential Damages in a Personal Injury Case that a Lawyer can Pursue on Your Behalf

One of the most important benefits of having a personal injury lawyer on board in your case is that they can zealously advocate for your right to recover various types of monetary compensation. The compensation that an accident victim will recover in a personal injury case varies, depending upon, among other things, the circumstances of the accident and the extent of the injuries they sustained.

The total damages award will also depend on the accident victim’s medical condition and whether or not the accident victim suffered a permanent injury or disability in the accident. Therefore, it is very difficult to compare one personal injury case to another.

A personal injury lawyer can advocate for you during settlement negotiations or at a trial or at mediation or arbitration proceedings. Your lawyer can highlight the strengths of your case while downplaying any weaknesses in your case.

It can be a serious mistake not to have a personal injury lawyer advocating for you in your claim. First of all, if the insurance company sees that you are unrepresented, this will likely reflect negatively in any settlement offer that they put on the table.

The insurance company will have a significant incentive to lowball the value of your case if you do not have legal representation. In other words, they will assume that you do not have the necessary knowledge and skills to adequately represent yourself in negotiations—or during litigation.

A knowledgeable personal injury lawyer can recover the compensation you need to put the accident behind you. In addition, your lawyer can help you pursue compensation for pain and suffering, embarrassment, humiliation (such as for visible scarring on the body), mental distress, and inconvenience that resulted from your injuries.

If you suffered a permanent impairment in your accident and lost quality of life, your lawyer can pursue compensation for you in those areas as well. Finally, if your injury or illness prevents you from using a body part, your lawyer can make a loss of use claim on your behalf.

Often, without a lawyer handling your case, the insurance company will not offer anywhere near what you deserve. However, too many people accept offers that seem favourable but, in reality, are grossly inadequate. For instance, you might jump at the chance of receiving a final offer of $50,000 from an insurance company fairly quickly after you file a claim. If all your losses equal $200,000, however, this offer is not even close to what you need. The best thing you can do is hire a lawyer before you accept any amount.

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