Contingent Fee

Definition - What does Contingent Fee mean?

A contingent fee, more commonly known as a contingency fee, refers to an agreement between attorney and client where a fee is charged for a lawyer's service only if the lawsuit is won at trial or is favorably settled outside of court. The payment to the attorney is then a percentage of the amount recovered at trial or in the settlement. If a lawyer working on a contingent fee basis collects nothing for his or her client, that lawyer receives no payment for the services rendered. However, there still may be a charge to the client for things such as copies and other fees associated with preparing the material for trial or settlement.

A contingent fee is also known as a contingency fee or conditional fee.

Justipedia explains Contingent Fee

Contingent fee arrangements are common for plaintiffs in the United States receiving legal services for some types of civil cases (such as tort and personal injury cases) in which money is being sought. In a contingent fee arrangement, a plaintiff does not pay anything to the lawyer if the claim is not successful; if the claim is successful, the client pays the lawyer a pre-decided fixed share of the settlement or judgment amount. In most jurisdictions in the United States, contingent fee as a payment arrangement is limited by what the case's jurisdiction considers reasonable. The limit varies according to the jurisdiction, case type, and whether the recovery is made through settlement or verdict.

Contingent fee agreements may only be used in civil cases and are frequently used in personal injury cases. However, they cannot be used in family law or estate law cases. These agreements are usually entered into when the party seeking recovery cannot afford to retain an attorney for the lawyer's hourly fee. It is thought that the existence of contingency fee agreements make justice and access to the courts accessible for everyone. Furthermore, contingency fees also provide the lawyer with powerful motivation to work diligently on a client's case. Because the lawyer assumes the financial risk of litigation, contingent fee arrangements also reduce the number of speculative or unmeritorious cases.

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