Legal Definitions - contingent fee

A contingent fee is a payment arrangement for legal services where a lawyer's fee is entirely dependent on the successful outcome of a case. This means the lawyer only gets paid if their client wins the case or reaches a settlement, and their compensation is typically a pre-agreed percentage of the monetary award or recovery the client receives. If the client does not win or recover money, the lawyer generally receives no fee for their time.

This fee structure is often used to help individuals who might not otherwise be able to afford legal representation, as it shifts the financial risk of litigation from the client to the attorney. While the lawyer's fee is contingent, clients are usually still responsible for covering case-related expenses, such as court filing fees, expert witness costs, and deposition expenses, regardless of the outcome. Contingent fee agreements must always be in writing, clearly outlining the percentage the lawyer will receive and detailing any expenses the client will be responsible for. It's important to note that contingent fees are generally prohibited in certain types of cases, such as criminal defense matters and most family law cases like divorce.

• Example 1: Defective Medical Device Lawsuit

  Scenario: Sarah underwent surgery and received a medical implant that was later recalled due to a manufacturing defect, causing her severe complications and requiring additional surgeries. She wants to sue the device manufacturer for damages but cannot afford the substantial upfront legal fees typically associated with complex product liability litigation against a large corporation.

  Illustration: Sarah's attorney agrees to represent her on a contingent fee basis. This means the lawyer will only be paid if Sarah wins her lawsuit or settles out of court, receiving a pre-determined percentage (e.g., 33%) of any compensation she recovers. If the lawsuit is unsuccessful, the lawyer will not charge Sarah for their time, though Sarah would still be responsible for specific litigation costs like expert witness fees or court filing charges. This arrangement allows Sarah to pursue justice without needing to pay hourly legal fees upfront.

• Example 2: Unpaid Sales Commissions

  Scenario: David, a former sales executive, believes his previous employer owes him a significant amount in unpaid commissions that were contractually due upon the completion of several large deals. The company refuses to pay, and David, now unemployed, lacks the funds to hire an attorney at an hourly rate to pursue a potentially lengthy legal battle.

  Illustration: David finds an attorney willing to take his case on a contingent fee. The attorney agrees to represent David, taking a percentage of any unpaid commissions or settlement amount recovered from the former employer. If the attorney successfully recovers the commissions for David, they will take their agreed-upon percentage. If they are unable to recover any money, David will not owe the attorney for their legal services, making it possible for him to seek his rightful earnings without financial risk.

• Example 3: Environmental Contamination Claim

  Scenario: A small community discovers that a nearby industrial plant has been polluting their groundwater for years, leading to widespread health issues and property value depreciation. The residents want to file a class-action lawsuit against the plant but, as a group of ordinary citizens, they lack the collective resources to fund the extensive legal research, scientific testing, and expert testimony required for such a complex environmental case.

  Illustration: The community's chosen law firm agrees to represent them on a contingent fee basis. The firm will invest its own resources and time into the litigation, only receiving payment if the community wins a settlement or judgment against the industrial plant. Their fee would be a percentage of the total compensation awarded to the community members. This contingent arrangement enables the community to challenge a powerful corporation, as the financial burden of the legal fight is initially borne by the law firm.