What Does “Contingency Fee” Mean in Legal Billing and How Does it Work?

Nov 4, 2020 | Legal Topics

A contingency fee is a billing agreement between a client and their attorney where the attorney receives pay as a percentage of any awarded money. Rather than an hourly legal fee, a contingency fee arrangement means that the attorney will not receive any payment until the completion of the lawsuit and only if the suit is successful. As such, the law firm’s fee is contingent on winning the case and receiving financial compensation from a third party.

Law firms are businesses, and though they may take on a select few pro-bono cases, attorneys need to be paid for their services. A contingency fee allows for these expenses to be paid only later once the money is available. This type of arrangement is especially common with a suit involving a workplace accident, car accident, or wrongful death.

When is a contingency fee used?

Contingency fees are advantageous in situations where a client has limited funds. Law firms are almost always willing to take on a case in an instance of clear liability or fault and where there is a meaningful way to collect compensation, as with an insurance policy. Since the law firm accepts the risk that they may not be paid unless they succeed, it is at their discretion whether to take on the case or not. Contingency fee agreements are almost exclusively used in civil matters such as workers’ compensation or personal injury. In fact, law firms such as Williams Hart & Boundas work only on a contingency fee structure.

How does a contingency fee work?

Following an initial consultation with an attorney, you will normally sign an agreement stating the percentage their law firm will receive of any amount recovered for compensation in your case. The percentage can vary depending on the specifics of your case, how long it will likely take for your attorney to complete it, the amount awarded, and whether your case is settled or goes to court. Not unlike any other service, you get what you pay for, so more experienced law firms with better reputations may charge a higher contingency fee. However, these firms may also have the knowledge needed to get you higher compensation.

Are expenses included in contingency fees?

The signed agreement should also state how administrative fees will be paid. At times, the expenses for document copying, court filing fees, travel, and calling upon experts may be fronted by your legal team, whereas sometimes, the client needs to pay upfront. Nevertheless, these expenses will need to be paid, so even if your legal team fronts the bill, it would be reimbursed from any compensation awarded to you.

What does an attorney charge for a contingency fee?

Contingency fee payments in Texas, by law, must be reasonable. The exact amount depends on a vast number of factors, including the complexity of your case, the time and labor required, the experience of the attorney, and circumstances, to name but a few. Regardless, contingency fees generally range from 25-45%, but payment will solely depend on winning your case.

Williams Hart & Boundas believes that everyone is deserving of a top-quality attorney. This is why our Houston-based law firm only accepts cases on a contingency basis, so you and your family can be assured the best legal representation.

Disclaimer: This material is provided for informational purposes only. The provision of this material does not create an attorney-client relationship between the firm and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this newsletter are not a substitute for legal counsel. Do not take action in reliance on the contents of this material without seeking the advice of counsel.

The information contained in this blog may or may not reflect the most current legal developments. Accordingly, information in this blog is not promised or guaranteed to be correct or complete, and should not be relied upon as such. Readers should conduct their own appropriate legal research.

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