Why Personal Injury Lawyers Use Contingency Fee Contracts Instead of Charging Clients Upfront

After a car accident or serious injury, most people are already dealing with enough financial stress. They may have medical bills, missed paychecks, vehicle damage, prescription costs, and other unexpected expenses. Requiring an injured person to pay a large attorney retainer and ongoing hourly legal bills could place quality legal representation beyond that person's reach.

That is why personal injury lawyers commonly represent clients under a contingency fee contract. This arrangement allows an injured person to hire a lawyer without paying an attorney fee upfront. It also requires the lawyer to accept a substantial financial risk when taking the case.

What Is a Contingency Fee?

A contingency fee means that the lawyer's attorney fee depends on the outcome of the case. Instead of charging the client by the hour, the lawyer receives an agreed percentage of any settlement or judgment recovered for the client.

If the lawyer does not obtain a financial recovery, the lawyer generally does not receive an attorney fee under the contingency fee contract. The exact terms, including responsibility for case expenses, should always be explained in the written agreement.

Louisiana requires contingency fee agreements to be in writing and signed by the client. The agreement must explain how the attorney fee will be calculated, the percentage that may apply at different stages of the case, how litigation expenses will be handled, and whether the client could be responsible for any expenses if there is no recovery.

A contingency fee does not mean that the legal work is free. It means the lawyer agrees to delay payment and accepts the risk that the lawyer may never be paid for the work performed.

Why Personal Injury Lawyers Usually Do Not Charge an Hourly Fee

Personal injury cases are different from many other types of legal matters. An injury case may require months or even years of investigation, negotiations, medical-document review, discovery, depositions, motion practice, mediation, and trial preparation.

Under an hourly arrangement, a client could receive legal bills every month regardless of whether the case eventually results in compensation. Many injured people simply could not afford to pursue a valid claim under that system.

A contingency fee removes that immediate financial barrier. It allows the injured person to obtain legal representation while the lawyer assumes the risk of investing time and resources into the case without any guarantee of payment.

The Benefits of a Contingency Fee for the Client

The Client Does Not Have to Pay a Large Attorney Fee Upfront

One of the greatest benefits is access to legal representation. A person does not need thousands of dollars available before speaking with a Louisiana personal injury lawyer.

The ability to hire an attorney does not depend entirely on the client's savings, income, or ability to obtain a loan. Instead, the strength and potential value of the claim become important factors in whether the lawyer can accept the representation.

The Client Does Not Receive Hourly Legal Bills

Under a contingency fee arrangement, the client is not billed each time the lawyer reviews a medical record, speaks with an insurance adjuster, conducts legal research, drafts a demand, takes a deposition, or prepares for court.

This allows the client to ask questions and participate in the case without worrying that every conversation will create another hourly charge.

The Lawyer's Fee Depends on Obtaining a Recovery

The lawyer does not earn a contingency fee merely by opening a file or working a certain number of hours. The lawyer's payment depends on obtaining compensation for the client.

That gives the lawyer a direct financial interest in properly investigating the claim, identifying available insurance coverage, documenting the client's damages, and pursuing the strongest recovery supported by the evidence.

A contingency fee does not guarantee a particular result. It does, however, mean that the lawyer's right to a fee is tied to producing a recovery rather than simply spending time on the file.

The Client Can Focus on Medical Treatment and Recovery

An injured person should be able to concentrate on medical care, returning to work, and caring for family. The client should not have to personally manage insurance adjusters, medical-record requests, legal deadlines, evidence preservation, and settlement negotiations while also recovering from an injury.

Hiring a personal injury attorney allows the client to place those responsibilities in the hands of someone who regularly handles injury claims.

It Helps Level the Playing Field

Insurance companies and corporate defendants generally have the resources to investigate claims and retain experienced lawyers. A contingency fee gives an injured person a practical way to obtain legal representation without first having to match those financial resources.

The client receives the benefit of a lawyer's time, experience, staff, and case preparation before the lawyer has received an attorney fee.

What Risk Does the Personal Injury Lawyer Accept?

The contingency fee system provides significant benefits to the client, but it also places substantial risk on the lawyer and law firm.

The Lawyer Is Not Guaranteed to Be Paid

A personal injury lawyer may invest substantial time into investigating, developing, negotiating, and litigating a claim. Even after that work, there is no guarantee that the case will produce a settlement or judgment.

A case may be affected by disputed fault, conflicting witness testimony, unavailable insurance coverage, medical-causation issues, unexpected evidence, or a jury's decision. When the case produces no recovery, the lawyer will receive no attorney fee for all the time invested.

The Law Firm Must Continue Operating While the Case Is Pending

While the case is ongoing, the law firm must continue paying employee salaries, office expenses, technology costs, and the other expenses necessary to operate a legal practice.

The lawyer may work on a personal injury case for an extended period without receiving any payment. The firm is essentially investing its professional services into the case based on the possibility of a future recovery.

Accepting One Case May Mean Turning Down Other Work

Every case requires time and attention. When a law firm accepts a significant personal injury case, it commits resources that could have been devoted to other clients or matters.

If the case is unsuccessful, the lawyer cannot recover the time that was spent or replace the other work that may have been declined.

The Lawyer May Advance Case Expenses

Personal injury cases can require expenses for court filing fees, medical records, depositions, transcripts, investigators, expert witnesses, photographs, electronic evidence, and other case-specific needs.

Louisiana's professional rules permit lawyers to advance reasonable court costs and litigation expenses, with repayment potentially depending on the outcome of the case. The client's responsibility for those expenses must be addressed in the written agreement.

The lawyer may therefore risk not only unpaid professional time but also money advanced to develop and prosecute the claim.

Attorney Fees and Case Expenses Are Not the Same

Clients should understand the difference between an attorney fee and a case expense.

The attorney fee compensates the lawyer for legal services. Case expenses are amounts paid to third parties or incurred specifically to investigate and pursue the claim. Examples may include:

• Court filing fees

• Medical-record charges

• Deposition and transcript costs

• Expert-witness fees

• Investigation expenses

• Charges for producing photographs, video, or other evidence

• Medical treatment 

The contingency fee contract should explain whether the client could owe any expenses if the case does not result in a recovery. Louisiana's rules specifically require these subjects to be addressed in the written agreement. Attorney Rut waives all expenses in the event of no recovery, not just the attorney fee. 

A client should read this portion of the contract carefully and ask questions before signing.

Does the Lawyer Control Whether the Case Settles?

No. A contingency fee agreement does not give the lawyer the right to accept a settlement without the client's permission.

The lawyer can investigate the claim, negotiate with the insurance company, explain the advantages and risks of an offer, and recommend whether an offer should be accepted. However, the decision to accept or reject a settlement belongs to the client. Louisiana's Rules of Professional Conduct expressly provide that the lawyer must follow the client's decision concerning settlement.

Why Personal Injury Lawyers Carefully Evaluate Cases

Because the law firm is accepting the risk of not being paid, a personal injury lawyer must evaluate a potential case before agreeing to handle it on a contingency fee basis.

The lawyer may consider:

• Who caused the accident

• What evidence is available

• Whether the claim was reported and preserved

• The nature of the injuries

• Whether the medical evidence connects the injuries to the accident

• What insurance coverage or other sources of recovery are available

• Whether the responsible person or business can satisfy a judgment

• Whether any legal deadlines are approaching

• The anticipated time and expense required to pursue the case

A lawyer's decision to accept a case does not guarantee a recovery. It means the lawyer is willing to invest time and resources based on the information available at that time.

Questions to Ask Before Signing a Contingency Fee Contract

Before hiring a personal injury attorney, the client should understand:

1. What percentage will be charged if the case settles?

2. Does the percentage change if a lawsuit, trial, or appeal becomes necessary?

3. How will case expenses be paid?

4. Could the client owe expenses if there is no recovery?

5. How will medical bills, liens, and other obligations be handled at settlement?

6. Will the client receive a written settlement statement showing all deductions?

A reputable lawyer should be willing to explain the contract in plain language before the client signs it.

The Bottom Line

Contingency fee contracts make it possible for injured people to obtain legal representation without paying a large attorney fee upfront or receiving hourly legal bills while the case is pending.

The arrangement benefits the client by improving access to legal representation and tying the lawyer's fee to the recovery. At the same time, the lawyer assumes the risk of investing substantial time, work, and potentially case expenses without any guarantee of being paid.

At the Law Office of David Rutledge, clients do not owe an attorney fee for personal injury representation unless the firm obtains a settlement or judgment in their favor, subject to the terms of the written agreement. The firm represents injured people in Lafayette and throughout Louisiana. (davidrutledge.com)

Were you injured in a car accident, trucking accident, slip and fall, or another incident caused by someone else? Contact the Law Office of David Rutledge to discuss your rights and legal options.

Remember: In a Rut? Call Rut! 337-CALLRUT

Frequently Asked Questions About Contingency Fees

How much is a personal injury lawyer's contingency fee?

The percentage depends on the written contract and may change depending on whether the claim settles before litigation or proceeds through a lawsuit, trial, or appeal. Louisiana requires the fee to be reasonable and the applicable percentages to be disclosed in the signed agreement.

Do I have to pay a personal injury lawyer before my case begins?

Under a contingency fee arrangement, the client ordinarily does not pay an attorney fee upfront.

What happens if my personal injury case does not result in compensation?

Under a no-recovery contingency agreement, the lawyer does not receive an attorney fee if there is no settlement or judgment. Whether the client is responsible for any case expenses depends on the language of the signed agreement. Attorney Rut waives all expenses in addition to his attorney fee if he does not obtain a settlement or judgement on behalf of the client. 

Can my lawyer accept a settlement without my approval?

No. The lawyer may recommend whether an offer should be accepted, but the final settlement decision belongs to the client.

Is a contingency fee available in every type of legal case?

No. Contingency fees are commonly used in personal injury matters, but Louisiana prohibits them in certain matters, including representing a criminal defendant and certain domestic-relations cases.

This article provides general information and is not legal advice. Attorney-fee and expense obligations depend on the terms of the written agreement and the circumstances of the particular case.