Personal Injury Claims: What is a Contingency Fee Agreement?

A contingency fee agreement is a legal arrangement often used in personal injury claims where the lawyer’s fees are contingent upon the outcome of the case. Here’s how contingency fee agreements work: 

1. No Upfront Payment: With a contingency fee agreement, you don’t have to pay your lawyer any fees upfront. This can be beneficial if you’re unable to afford the costs of hiring a lawyer. 

2. Percentage of Recovery: Instead of paying hourly fees, the lawyer’s compensation is typically a percentage of the amount of compensation recovered in your case. The percentage may increase incrementally from time to time to reflect certain milestones that occur in a given legal claim, as well as increased risk and increased legal work as the file progresses.  The percentage(s) is/are agreed upon between you and the lawyer before the case begins and set out in a Contingency Fee Retainer Agreement.  

3. Fee Paid from Recovery: If your case is successful and you receive compensation for your injuries, the lawyer’s fees are typically deducted from the compensation amount before you receive your portion.  

4. No Recovery, No Fee: One of the key features of a contingency fee agreement is that if you do not win or recover any money in your case, you generally don’t owe the lawyer any fees. This can provide some assurance that the lawyer will be motivated to work diligently to obtain a favorable outcome for you. 

5. Additional Costs: While lawyer’s fees are contingent, other costs related to the case (such as court filing fees, expert witness fees, medical records retrieval, etc.) may still need to be covered and paid regardless of whether you recover compensation.  In many cases, the lawyer will initially cover these operating costs and then deduct them from your compensation recovery after a successful outcome.  Often, the lawyer in a personal injury case will also agree to incur operating costs on a contingent basis such that if you do not win or recover any money in your case, you will not owe the lawyer payment for those operating costs. 

6. Percentage Varies: The percentage of the recovery that the lawyer takes can vary based on the lawyer/law firm as well as the complexity of the case, the potential risks involved, and the amount of work that is anticipated to be required. It’s important to discuss and agree upon the specific percentage before entering into the Contingency Fee Agreement. 

7. Review the Agreement: Before signing a Contingency Fee Agreement, carefully review its terms and make sure you understand the details of how fees will be calculated, as well as any additional costs for which you might be responsible. 

Contingency fee agreements can be advantageous for individuals who might not have the means to afford legal representation upfront, especially in personal injury cases where the outcome is uncertain and/or where a considerable amount of legal work will be involved. It’s important to work with a reputable lawyer and discuss the terms of the agreement thoroughly to ensure that both parties are clear on expectations and responsibilities. Keep in mind that laws and regulations regarding contingency fees can vary by province, so it’s advisable to consult with a legal professional familiar with the laws in your area.