Most successful personal injury attorneys work by contingent fee. A contingent fee is paid only when the case is won or settled. Because the attorney works for a percentage of the result, his interests are nearly always aligned with yours to get the maximum value for your case. If you make more, he makes more.
Be wary of any attorney who insists on an hourly fee. It suggests an attorney unfamiliar with personal injury litigation and/or may suggest an attorney with little confidence in the outcome.
Contingent fees vary as to percentage and how that percentage will be calculated. Some attorneys calculate the percentage fee on the gross recovery. Others calculate the contingent fee only after expenses of litigation have been deducted from the recovery, what is called the net recovery. The latter calculation works somewhat in the client’s favor.
Contingency on Gross Recovery
Let’s assume there is a contingent fee of 40% on the gross recovery. A gross settlement is negotiated for $200,000. There were $20,000 in expenses of litigation. The $20,000 in expenses is deducted from the gross recovery, but the 40% fee is also calculated on the gross recovery.
Contingency on Recovery After Expenses
Now, let’s assume there is a contingent fee of 40% on the net recovery after expenses. This time the ultimate net recovery to the client is calculated after deduction of expenses.
What is a proper percentage? In a general sense, a percentage fee is based on the attorney’s risk. How much time is the case likely to take? How much will it cost? How long will it take? What are the chances of success? All these factors are considered by a contingent fee attorney.
Some clients are willing to advance some or all the expenses. Since the attorney’s risk is correspondingly lower, he may be willing to work for a reduced percentage fee. Percentage fees vary based on jurisdiction, experience of the attorney, type of case and risk. Fees should never exceed 50%, whether calculated on the gross or the net. 40% fees are common, and some attorneys are willing to work for less if the case is settled before trial.
Do not select an attorney based on the quoted percentage. Many times, you get what you pay for. A good attorney with experience in sexual abuse cases, working on a 40% contract, may get you more money resulting in a better net recovery for you than the attorney who offered to handle your case for 25%.