What is a contingency fee?

Video Transcription

Interviewer: What is a contingency fee?

Atty. Donig: A contingency fee is an arrangement that a client enters into with an attorney, whereby the attorney’s right to be paid is contingent, dependent if you will, on the outcome. In other words, the attorney takes a risk. The client takes a bit of a risk, but the client goes into it knowing that if there is no successful outcome. If the case turns out to not have merit. If there is no financial result, he does not owe the attorney any money or any fee for the attorney’s time and effort spent on the case because the attorney’s right to get compensated is entirely contingent on getting a result.

Usually, a contingency fee specifies that if there is a positive result, the attorney will receive a fixed percentage of the either net or gross result. To that extent, different attorneys employ different contingency fees. Some charge a percentage of the gross, in other words, the total settlement amount or result. Some the net, in other words, after the costs of putting the case together have been reimbursed, a percentage of what’s left but it’s entirely dependent on there being a successful outcome.

I like the contingency fee because even though there are times when a very, very good result is obtained with relatively little time and effort on the part of the attorney, the client is in control. The client knows how much the client is going to receive and knows how much the attorney is going to receive, and if he thinks that it’s not fair, he can simply say, “I’m not going to accept that settlement. I want more.” So, the client has a great deal of input but if there’s a great result for the client, then the attorney is going to get a very good result for himself as well, usually, both sides are very happy.

I might say that if for some reason, the case doesn’t work out well, even though the client’s not going to be happy with the result, at least you are not ending up paying an attorney a lot of money for work that did not end up benefitting you.