Contingency Fee Arrangements in Auto Accident Cases

Contingency Fee Arrangements in Auto Accident Cases

When a person, who is injured in an automobile accident, needs an attorney to file a lawsuit against those who caused the person's injuries, the attorney's fees could prevent the injured person from proceeding. Most injured persons cannot afford to pay an attorney's hourly fee to bring a lawsuit to recover damages that could include medical expenses, lost wages, pain, future medical needs, and other expenses. To make litigation affordable for an injured person, attorneys in automobile accident cases do not charge an hourly rate or a fixed amount for legal fees. Instead, the attorney and injured person agree that the attorney's fee will be determined by the amount of the settlement awarded to the client. This is called a contingency fee arrangement.

In contingency fee accident cases, the attorney's fee is set at a pre-arranged percentage of the compensation amount received by the injured person. If the injured person does not win the case, the attorney receives no fee. However, even if the case is lost, the injured person must pay for the expenses to bring the case to court. Those expenses might include medical reports, court costs, witness fees, court reporter costs, and other non-attorney fee expenses. The expenses can be quite high. The injured person may be asked to pay some or all of the expenses before the case is over.

Some people believe that contingency fee arrangements violate an attorney's ethical principles by providing an illegal or excessive fee for the work performed. Also, large contingency fees can undermine the public's confidence and respect for attorneys. Those people would eliminate contingency fee arrangements across the board.

Others see that the non-recovery of a fee, if the case is lost, is a justification for the percentage contingency fee arrangement. They contend that the fee arrangement is a risk-sharing joint venture in which the attorney adds time, effort, and talent to the injured person's claim. Because there is a real risk of non-recovery on the injured person's claim and for nonpayment of the attorney's fee, the rate of payment under a contingency fee that exceeds an hourly rate for an attorney with similar qualifications is appropriate. However, they agree that when there is little risk of non-recovery, a contingent fee should be correspondingly low.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.