What is a contingent fee agreement, and what should I look out for?

A contingent fee agreement with an attorney is an agreement that the attorney will not earn a fee unless he or she is able to make a recovery for the client. If the attorney is able to make a financial recovery for the client, then the fee is typically a percentage of the overall recovery. Thus, the fee is “contingent” or conditional upon recovering of some money for the injured client as compensation.

Attorneys use contingent fee agreements when representing clients on personal injury matters, including auto collision injuries, third-party claims arising from Oregon Workers’ compensation cases, or Employer Liability Law claims related to construction or logging accidents. Although contingent fee agreements are great because they allow an injured person access to legal representation, there are a few things to look out for when reviewing a contingent fee agreement.

These agreements provide that the fee is a percentage of the "recovery" or "settlement."  The typical fee many people see calls for a fee of 33.3% of the recovery amount, depending when the case resolves. When reviewing a contingent fee agreement, you need to determine what is considered to be the “settlement amount” or the “recovery.” For example, in an auto collision case, many people have personal injury protection coverage, and regardless of fault, their own insurance company is going to pay medical expenses. The at fault driver’s insurance company will reimburse your insurance company as part of the settlement.  Should an attorney include this as the "recovery" on a contingent fee agreement.  This is a good question to ask.

Another part of the agreement addresses expenses, or "costs." Many attorney’s contingent fee agreements provide that the client is responsible for any costs incurred in preparing the case. Some attorneys may require that the client deposit funds into the attorney client trust account, and others will offer to pay the costs in advance, and then seek recovery at the case’s conclusion. It is a good idea to get a clear understanding of how costs are handled in the case. Also, a prospective client should ask what items are considered “costs.” Some attorneys will charge for long distance calls, photocopies, and postage.

Many fee agreements will have a graduated fee schedule. Generally, the fee goes up depending on how far forward the case moves along.  If a case is filed in court, the costs are going to go up, and the fee amount may increase as well.  This only makes sense, because trials are risky, labor intensive, and expensive.  Our office has seen fee agreements from other attorneys that charge 50% of any recovery should the case go to trial. Frankly, that’s ridiculous

Finally, we tell all potential  clients that they can fire us if they are unhappy with our work. However, our fee agreement provides that we are entitled to be compensated for the time we have in working on the case. Any client consulting with an attorney needs to know what the fee agreement says if either the client or the attorney decides to dissolve the relationship, and move on.

When we meet with a potential client, we go through the fee agreement paragraph by paragraph, and explain every part of the agreement. If you are concerned about whether not you can afford an attorney, or whether you even need an attorney in the first place, call us at 503-325-8600. We will explain our fee agreement, and help you decide whether you even need to have an attorney in the first place.