Whether you’re injured in a car or slip-and-fall accident, you have damages that can quickly become expensive. Suddenly you’re facing medical costs and property repair bills. You may also be dealing with lost wages and this isn’t helping your financial situation.
The at-fault party’s insurance company is making it difficult to recover compensation. You need an accident attorney, but how can you afford their fees? You may be able to enter into a contingency fee agreement. However, understanding a lawyer’s contingency fee agreement isn’t always easy but it’s necessary.
If you’re new to contingency fee agreements, here’s everything you should know about the payment structure.
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What is a Contingency Fee Agreement?
Before we get into the specifics of a contingency fee agreement, it helps to know a little bit about the payment structure.
Contingency fees are a payment structure personal injury attorneys can offer their clients. No, criminal defense lawyers can’t charge contingency fees. Neither can tax lawyers or other types of corporate attorneys. The reason contingency fees are pretty much limited to personal injury attorneys is how they work.
Retaining an attorney on a contingency fee basis means you owe nothing upfront. That’s right, you may be able to hire a personal injury lawyer without putting a dime down upfront. You also don’t need to worry about flat rates or hourly fees. Instead, your attorney is working on the promise of receiving an agreed-upon percentage of your claim settlement amount.
In a nutshell, contingency fees make it possible to hire an attorney without putting any money down first. Your attorney is only paid if they successfully settle your accident claim. This is also why only accident lawyers can charge contingency fees. Other types of attorneys aren’t working towards winning their clients a monetary settlement. Therefore, contingency fees don’t apply in their type of law.
Standard Contingency Fee Agreement
Let’s get one thing out of the way, it’s an important legal requirement. A contingency fee agreement can’t be based on a handshake and verbal promise.
The agreement must be in writing and signed by both you and the attorney. This isn’t a suggestion, it’s a legal requirement set down by the court. If the court learns that your contingency fee agreement isn’t in writing, it may invalidate your partnership with your attorney. Now, your accident claim is back to the beginning and you may even need to find another attorney.
Along with having the agreement in writing, there are a few details it should provide. The agreement should clearly outline the contingency fee percentage, this is the amount you pay your attorney. The agreement should also list any extra charges that aren’t covered by contingency fees.
Typically, contingency fees don’t cover additional costs like expert witness testimony and even court filing fees. Don’t forget to date the agreement and you may even want to have it signed by a third-party witness.
What are the Average Contingency Fee Rates?
Before entering into a contingency fee, it’s a good idea to know what you’re paying. This way, you can avoid any unpleasant surprises after settling your accident claim.
A few factors go into determining contingency fee rates. The complexity of your claim, the attorney’s experience, and even the type of accident can all affect contingency fee amounts. With that being said, most contingency fees range from 25% up to 40%.
Personal injury claims typically have lower contingency fees compared to class action lawsuits. If you’re dealing with gross negligence, contingency fees are typically at the higher end of the spectrum. This is usually due to the additional work the attorney will need to put in. Gross negligence claims are typically lawsuits that end up going to trial. Punitive damages may also factor in.
Potential Additional Fees
We noted earlier that contingency fees don’t always cover everything. Remember, these fees typically only cover the attorney’s time. So, what other costs may be added to contingency fees?
Every accident claim is different so all of the potential additional fees may not apply to your case:
- Court filing fees
- Fees for expert witnesses like accident reconstruction specialists or medical experts
- Costs for obtaining medical and police reports
- Deposition costs
- Administrative expenses (for example, copying, postage)
Since these extra costs can quickly add up, it’s a good idea to include any potential costs in your contingency fee agreement. You also want to stay in contact with the attorney so you can stay on top of any additional charges.
Can a Contingency Fee Agreement Be Changed?
What happens if you sign a contingency fee agreement and suddenly have second thoughts? Can you get out of the agreement or make changes? The answer is both yes and no.
Georgia law is pretty clear about attorneys changing the terms of a contingency fee agreement. Simply put, it’s illegal in Georgia for an attorney to make any adjustments to a signed contingency fee agreement.
There really aren’t any exceptions. However, if an attorney can no longer work on your claim the contract can be voided if both involved parties agree. An example of when an attorney may want to terminate a contingency fee agreement is if they suddenly discover they have a conflict of interest. An attorney can also terminate the agreement if they learn their client is being untruthful.
A client can also terminate a contingency fee agreement for the same reasons. If both parties agree, you can also walk away from the legal partnership.
If you’re wondering if you’ll owe the attorney for their time if a contingency fee agreement is terminated, the answer depends on your situation. If the attorney cancels the agreement due to your dishonesty, you’ll probably owe the attorney the regular rate. If the attorney cancels the agreement because of a conflict of interest, you may not owe anything.
Ask Your Accident Attorney About Contingency Fees
Contingency fees can make hiring an accident attorney for your case more affordable than you might have thought. However, make sure to get everything in writing before agreeing to a contingency fee payment structure.
Don’t forget to ask about any potential additional charges. Sometimes, these charges can be more than what you owe in contingency fees.
