Negotiating Attorney’s Contingent Fee Agreements
1 Understand a contingent fee arrangement. In a contingent fee agreement, an attorney agrees to accept a fixed percentage of the amount recovered in your case. The percentage may be between 33% and 40% of the amount recovered. Typically, personal injury cases are handled on a contingent fee basis.
In a contingent fee arrangement, you will also be responsible for paying the costs of the case from any recovery. However, if the lawyer loses you will not owe the lawyer any money for the time spent working on your case. Some of the costs related to a case may include:
?? The cost of an expert witness.
?? The cost of depositions.
?? The cost of trial materials.
?? The cost of court filing fees.
2 Gather relevant documents. Before you meet with an attorney, gather all of the relevant materials for the case, such as medical records, police reports, earnings information, and other information that demonstrates your injuries and your damages. You should bring these documents with you to your first meeting. This will allow the attorney to better understand the particulars of your case and save the attorney time in gathering all of this information.
?? If you have gathered most or all of the documentation relevant to your case, ask the attorney to lower the contingent fee percentage.
?? Because of the work and time that you have saved the attorney, an attorney may be willing to take your case for a 33% fee rather than a 40% fee.
3 Propose a reduced fee arrangement. Even if you haven’t gathered any documents, you should attempt to negotiate for a lower contingent fee. An attorney is unlikely to offer to reduce the fee without prompting from a potential client. If the attorney thinks that you have a strong case with a likely positive outcome, the attorney may agree to reduce the fee.
4 Discuss a reduced “settlement negotiation only” fee. If you have a strong case that is likely to settle, you could negotiate for a two-part contingent fee agreement. If the case settles and the lawyer only had to negotiate a settlement without having to take the case to trial, you can suggest a 25% fee. If the attorney has to begin trial preparations and take the case to trial, you could negotiate a fee between 33% and 40%.
?? An example of a case likely to settle is an automobile case where you were rear ended while you waited at a red light. An insurance company will want to settle that case as soon as possible and unless you are claiming outrageous and unsupportable damages, the case will most likely settle.
5 Request a reduced fee up to a specified settlement amount. If your case does not have the possibility of generating a large recovery, you can try to get the attorney to have a structured fee agreement that is based on the amount of your recovery. For example, you can negotiate that the attorney only takes a 25% fee if your settlement is 10,000 or less but if the settlement is greater than 10,000, the lawyer will get a 33% fee.
?? These negotiations can unfold in many different ways. For example, some attorneys may want a larger chunk of smaller awards and a smaller chunk of larger awards. In addition, if punitive damages are in play in your case, you may be able to keep a larger percentage of your regular judgment in return for giving up a larger portion of your punitive damages award (and vice versa). Negotiate with the attorney and see what works.
6 Establish when the costs are deducted from your recovery. In addition to negotiating the percentage of the fee, you should also negotiate when the attorney deducts the costs of the case from the recovery. Specifically, request that the costs of the case be deducted before the attorney takes his or her fee.
?? For example, if you recover $12,000 and the attorney takes a 1/3rd fee, the attorney receives $4,000 and the remainder is $8,000. If you deduct $2,100 in fees, you are left with a recovery of $5,900.
?? If you deduct the fees first, you will be left with a greater recovery. For example, a $12,000 recovery less $2,100 in fees leaves you with $9,900. If you deduct the attorney’s 1/3rd fee ($3,300) you are left with a recovery of $6,600. In this scenario, you and the attorney share a portion of the costs of the case versus the client paying the entire portion.
?? You can also ask to pay the court and expert fees yourself. If you do this, you will not have to worry about taking the fees out of your reward. In return, you could ask that the attorney take a smaller percentage of the winnings.
7 Negotiate a sliding scale for fees. If you have a case that is likely to produce a very large recovery, you can negotiate a sliding scale for the fees. This allows you to retain more of your recovery while the attorney is still well compensated for his or her effort.
?? An example of a sliding fee would be that you agree that the attorney is entitled to 33% of the first $200,000 recovered. Beyond 200,000 the attorney would be entitled to 25% of any recovery from $200,000 to $400,000. You could state further that any amount recovered beyond $400, 000, the attorney is only entitled to 15% of that amount.
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