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How Does a Contingency Fee Agreement Work?

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lawyer and client agreement hand shake

If you are filing a claim or lawsuit you probably want to enlist the help of a skilled attorney. Studies have shown that having a lawyer leads to a better outcome and higher compensation for the average person’s case. But what if you can’t afford a lawyer? That is where a contingency fee agreement comes into play. For more information on contingency fee agreements and other payment options, reach out to a skilled New Jersey personal injury and worker’s compensation attorney for help.

What is a Contingency Fee Agreement?

A contingency fee agreement is a payment plan that you and your attorney agree on before beginning to work on your case. In your client contract, you will agree that you do not owe the lawyer any financial compensation unless you win your case. If you end up winning your case, you will already have an agreed-upon percentage of your awarded compensation that will be paid to your lawyer.

Your attorney’s payment is contingent upon the outcome of your case. If you lose, they do not get paid for their services. The more compensation you are awarded, the more payment they will receive. It is important to note that if you lose your case and do not receive compensation you may still be responsible for paying some administrative costs.

When Should I Use a Contingency Fee Agreement?

You should consider a contingency fee agreement for various reasons, namely that you cannot afford to pay your lawyer upfront. Contingency lawyers typically take cases that they are confident they can win and get you some form of compensation. Some cases that contingency lawyers typically take can include:

  • Personal injury cases
  • Class action lawsuits
  • Employment cases
  • Discrimination cases
  • Sexual harassment cases
  • Malpractice cases

There are also cases where you should never hire a contingency fee agreement. You cannot hire a contingency lawyer for criminal or family cases as they may cause a conflict of interest. Additionally, if it is a simple case that you believe will be resolved quickly it is probably in your best interest to pay by the hour for the lawyer’s services instead of committing to a percentage of your compensation.

How Much Will I Have to Pay?

The percentage of damages that you will have to pay your lawyer will depend on the circumstances of your case. You and your lawyer will agree to that number when you sign your contract. Industry standards show that average contingency fee rates are 30-60% of the client’s total awarded compensation, the most common number being 33%.

Your percentage may be more or less depending on the complexity of your case and how much time and research your attorney will have to put in. The actual dollar amount that you will end up paying your lawyer is impossible to guess as it will depend on how much compensation your lawyer is able to get you.

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