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What Is a Contingent Fee?

September 11, 2014 by Howard Slusky Leave a Comment

What Is a Contingent Fee?

For the average person, one of the biggest concerns they have when faced with a legal problem is how to afford the services of an attorney. After all, experienced and skilled legal representation is not usually free. Fortunately, for certain types of legal matters attorneys routinely accept payment in the form of a contingent fee instead of charging a flat fee or charging by the hour. Understanding what a contingent fee is and how it applies to your case is important if your attorney is accepting a contingent fee as payment.

Attorneys typically collect their fees using one of three methods – flat fee, hourly rate, or a contingent fee. A flat fee payment arrangement means that the attorneys has agreed to represent you for the duration of a case, or to complete a legal matter, for a pre-determined fee that will not change regardless of the time it takes to conclude the matter. An attorney might, for example, charge you X dollars to prepare a Last Will and Testament or to represent you in a criminal prosecution. You may be required to pay the entire fee upfront or be allowed to make payments.

When an attorney charges you an hourly rate it means the attorney will keep track of all the time your attorney as well as his or her staff spends on your legal matter. You are then charged for that time at the agreed upon hourly rate. Typically, when you are charged by the hour you will be required to pay a retainer fee up front. Time spent on your case is then charged against the retainer fee until it runs out at which point you will need to replenish the fee fund. Most civil litigation is charged using an hourly rate fee.

In both the flat fee and hourly rate arrangements a client must have money up front for the attorney. When an attorney’s fee is based on a contingency fee arrangement, however, the client is not required to pay anything up front. Personal injury cases, for example, usually use a contingency fee. Instead of paying anything up front you agree to give the attorney a percentage of the settlement or award money if the attorney is successful. For example, imagine that you were in a car accident and you hired an attorney to sue the at fault driver. The attorney is able to negotiate a settlement for $80,000. Your contingency fee arrangement calls for the attorney to earn 30 percent, or $24,000. Keep in mind, however, that doctor bills and other expenses may need to be paid first.

Contingency fee arrangements are also common in workers’ compensation cases and federal benefit cases, such as SSI and SSDI. Although the rate cannot change once it has been agreed upon, it is not unusual for an attorney to charge a higher percentage if the case goes to trial or is appealed to a higher court. If you enter into a contingency fee arrangement with a Michigan personal injury attorney be sure that you understand the terms before moving forward.

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Howard Slusky
Howard Slusky
Howard Slusky is a licensed attorney with the State of Michigan with professional association memberships with the Workers’ Compensation and negligence section of the State Bar of Michigan, Michigan association for Justice, and the National Organization of Social Security Claimants’ Representatives.
Howard Slusky
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About Howard Slusky

Howard Slusky is a licensed attorney with the State of Michigan with professional association memberships with the Workers’ Compensation and negligence section of the State Bar of Michigan, Michigan association for Justice, and the National Organization of Social Security Claimants’ Representatives.

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