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What Does “Contingency Fee” Mean?

Generally referred to as a “no win no fee”, a contingency fee, or conditional fee, is an agreement for a client to pay their lawyer only if the lawyer handles a case successfully. The lawyer agrees to accept a fixed percentage, usually, one-third of the recovery if no suit is filed, which is the amount finally paid to the client. If you win the case, the lawyer’s fee comes out of the money awarded to you. If you happen to lose the case, neither you nor the lawyer will get any money and you will not have to pay for work done on the case.

This is so that those seeking to pursue their civil rights are able to do so without financial concerns. However, attorneys usually will only take cases if they believe the case has good merit. To understand whether or not your case is of merit, you need to determine the value of your case. Consulting an attorney can help in this evaluation and help you to decide whether you should pursue filing a claim.

Common myths associated with contingency fees:

1. Contingency Fees Are Uniquely American

Contingency fees, “no win-no pay” fees, are not unique to the United States. There is at least some form of legally accepted “no win-no pay” fee that exists in a number of other countries.

2. Most Contingency Fee Cases Involve Little Risk for Lawyers

Most contingency fee cases do yield some recovery and therefore some fee. However, this assertion misses the real contingencies such as the uncertainty about the amount that will be recovered, the uncertainty about what it will cost in both effort and expenses, and the uncertainty about how much time will pass before the recovery is obtained. These factors can pose a great risk for lawyers in determining whether the case was settled successfully.

3. Plaintiff’ lawyers obtain a significant portion of their clients through advertising, particularly media advertising and direct mail.

Despite modern advertising, most lawyers representing clients on a contingency fee basis get the vast majority of those clients through the means of referrals, either from satisfied clients or from other lawyers.

4. Lawyers Accept Anyone Who Contacts Them with a Potential Claim

Lawyers evaluate potential cases in terms of the risks involved and the potential returns associated with those risks. An attorney will not take any potential claim and reject cases that do not satisfy the attorney’s acceptable case criteria.