Understanding Contingency Representation: What You Need to Know
When navigating the legal world, you might come across the term "contingency representation." This type of legal arrangement offers a unique payment structure, particularly for those who can't afford upfront legal fees. Car accident cases are the most common examples of claims that are pursued on a contingency basis. Think of the commercials where the attorney says, “we don’t get paid unless you do.” The key idea here is our payment being contingent on securing a recovery for you.
Who carries the risk in pursuing my case on a contingency basis?
We carry the risk, since there is no guarantee that we will win. We risk not being paid for any of the work we do on your case, including any of the costs or expenses we incur along the way. This is helpful for those who cannot afford to pay an attorney to help them, or the ongoing costs associated with pursuing a case. We handle the costs of pursuing your case, and you only owe a fee if we secure a recovery for you. Our compensation is based on a percentage of what we recover, as outlined in the contingency agreement.
What does a gross recovery mean?
A gross recovery is the monetary and/or non-monetary recovery that we obtain on your behalf. It includes the then present value of any monetary payments and the fair market value of any non-monetary damages. It also includes any attorneys’ fees awarded to you, whether by settlement, arbitration award, court judgment, or otherwise.
Does my attorney get paid if they only recover non-monetary damages for my case?
Sometimes, compensation isn’t in the form of cash. Non-monetary damages might include property or services you’ll receive as part of the settlement. So, yes, we are paid for the work we do to recover anything on your behalf, whether the recovery be monetary or non-monetary. Any non-monetary damages we recover on your behalf are based on the fair market value of said property and/or services to be transferred or rendered to you.
How is my attorney’s contingency fee calculated?
The contingency fee owed to our firm is calculated by multiplying the gross recovery by the fee percentage stated in the contingency agreement. For example, if we recover $100,000.00 in monetary damages for your case and our agreed fee percentage is 33% of the gross settlement amount, then we are paid 33% of the $100,000.00 we recovered on your behalf.
Similarly, if we recover $100,000.00 in fair market value for non-monetary damages, and our agreed fee percentage is 33% of the gross settlement amount, then our fee would be 33% of the $100,000.00 gross settlement.
If we recover both $100,000.00 in monetary damages and $50,000.00 in fair market value for non-monetary damages, and our agreed fee percentage is 33% of the gross settlement, then our fee would be 33% of the $150,000.00 total settlement amount.
How is my share of the gross settlement calculated?
Your recovery is based on the net settlement amount after our fees, costs, and expenses are deducted from the gross settlement amount. For example, if the gross recovery is $100,000.00, our fees are 33% ($33,000.00), and the costs and expenses are $7,000.00, then your share of the recovery would be $60,000.00.
How do you determine if your attorney’s contingency fee is reasonable?
Attorneys’ fees in contingency cases range anywhere between 33% to 40% of the gross recovery. Usually, attorneys charge 33% before a lawsuit is filed and up to 40% if the case goes to trial. These rates are set based on several factors set forth under Texas Disciplinary Rules of Professional Conduct, such as the time and labor required, the fee customarily charged in the area for similar legal services, and the experience of the lawyers performing the services.
What services are included in the scope of my contingency representation?
The scope of our services is limited to the matter that is defined in the contingency agreement. We will perform the reasonable legal services necessary to represent you in the matter. These services may include investigating your claim, preparing and responding to correspondences we receive from the opposing party, engaging in settlement negotiations, filing a lawsuit, preparing and responding to discovery requests, taking and defending depositions, attending hearings, and preparing for and attending trial. Because we are working on a contingency basis, we try to limit costs and focus our efforts on performing the legal services that are most likely to push your case towards a resolution. If you need services outside of the scope of your contingency representation, you will need to enter a supplemental engagement letter that provides for such services.
When do I get updates on my case?
Just as with any of our other cases, we provide you with case updates on a weekly or biweekly basis, depending on the stage of litigation or prelitigation. These updates include providing answers to any questions you may have regarding the status of your case. We do not provide daily updates because it takes away from time that we could otherwise spend on tasks that move the case forward. We will contact you if we need any information from you.
How long will it take for my case to resolve?
We do not have a crystal ball for how long it will take for your case to resolve (we wish!). There are a number of factors that go into determining how long it will take your case to resolve. For example, delays can be caused by a party’s failure to respond or cooperate, an unexpected discovery issue, and the court’s availability to hear your case. This is why we provide updates along the way to give you a better idea as to the amount of time it may take to resolve your case.
By understanding how contingency representation works, you can make informed decisions when it comes to your legal representation. We’re here to take on the risk so that you can pursue your case with confidence, knowing you won’t be burdened by upfront costs. If you have questions about how contingency representation could work for your case, or if you’re ready to discuss other legal options, don’t hesitate to reach us at (512)374-4922 or email us at [email protected].