What is a Contingency Fee Agreement?

By Mario E. Lopez, Esq.

In certain types of lawsuits, the lawyer who represents the person suing may agree to accept a part of the money the client recovers as the fee for services. This is called a contingent fee agreement. The standard contingency fee for an attorney is a percentage amount rather than a fixed amount. An additional percentage may be added if the matter is tried again or appealed to a higher court.

A lawyer who enters into an arrangement for, charges, or collects any fee in an action for personal injury, property damages, death, or loss of services resulting from personal injuries based upon the tortious conduct of another, including products-liability claims, whereby the compensation is to be dependent or contingent upon the successful prosecution or settlement may do so only if certain requirements are met. Basically, in a contingency fee contract, you and your lawyer agree that the lawyer will not get paid any fees unless you win your case. However, you may be charged for costs such as court filing fees or expenses paid to witnesses. If you win, these expenses may be deducted from your share of the recovery. You will have to pay these costs, even if you lose your case, unless your contract specifically says that you do not owe the costs if you lose.

Limitations

Most states limit the amount of contingent fees that can be charged. Without prior court approval, any contingent fee that exceeds the statutory standards is presumed, unless rebutted, to be clearly excessive.

If the case is settled before the filing of an answer or the demand for appointment of arbitrators, then the following limits apply:

  • 33 1/3% of any recovery up to $1 million
  • 30% of any portion of the recovery between $1 million and $2 million
  • 20% of any portion of the recovery exceeding $2 million

If the case is settled after the filing of an answer or the demand for appointment of arbitrators (or if no answer is filed or no demand for appointment of arbitrators is made, then after the expiration of the time period provided for such filing or demand), then the following schedule applies:

  • 40% of any recovery up to $1 million
  • 30% of any portion of the recovery between $1 million and $2 million

At times, the person you are suing may admit that they are liable but may disagree with you on the amount of damages that they owe you. If all of the defendants admit liability when they file their answers and only want a trial on the question of damages, the lawyer may charge up to 33 1/3 percent of any recovery up to $1 million, 20 percent of any recovery between $1 and $2 million, and 15 percent of any recovery over $2 million. If after the trial or settlement your case is appealed or your attorney has to seek post-judgment relief or file an action to help you collect your judgment, an additional 5 percent of the recovery may be added to the fee.

To learn more about our contingency-fee structure, and for a no-cost and no-obligation confidential review of your case, contact one of our experienced attorneys. FPJL will aggressively represent you to ensure you get the money you are owed without any further delay by the insurance company. Our team of attorneys have decades of experience providing affordable representation to Individual and Corporate policy holders facing a wide range of denied, delayed or underpaid insurance claim issues.

Contact our law firm today at (305) 300-3000 for a free consultation!