The Dirty Little Secret About Contingent Fee Agreements

Contingent Fee Agreements Explained

If you have been in a car accident, you know what contingent fee agreements are. A lawyer agrees to take your case for a share of the proceeds.  It is usually one third. The theory behind contingent fee agreements is that it allows people who cannot pay hourly fees to obtain representation. Further, it is suggested that the arrangement ensures that the lawyer’s interests are the same as the client’s. The common interest is they share proportionally in whatever settlement is obtained, so they are in the same boat.

How Do Contingent Fee Agreements Really Work?

It doesn’t quite work out that way. The dirty secret about contingent fee agreements is they create an incentive for the lawyer to settle the case early and cheaply. Let’s say a lawyer who works hard on a case and gets it nearly to trial settles it for $100,000 after putting 300 hours of work into it. Now suppose a different lawyer arranges to get the same case settled early for $50,000 after putting 30 hours of work into it. Although he’s getting less money, the lawyer who arranged to settle the case early is doing far better on a per hour basis.

What About That Guy on TV?

Lawyers who do a large volume of cases, especially those appearing on TV, have an incredible incentive to settle cases early and cheaply, and go on to the next one. This is not to say that all high-volume contingency lawyers look out for their own interests instead of the interests of their clients. Some of them, however, are clearly too focused on settling cases fast.

So What Should I Do?

Contingent fee agreements are still a good idea in many situations. However, make sure that you have a lawyer focused on your interests. The mere fact that you are sharing the recovery in a contingent fee agreement does not guarantee this.

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Sam Ventola has a wide variety of experience in litigation, legal education, and mediation. He has been an attorney on both sides in business litigation, employment disputes, probate litigation, and personal injury cases. When he is not fighting for his clients, he likes to volunteer in the community and spending time with his family, especially his grandson, Jack.

 Ventola Law serves the Denver Metro area including Arvada, Aurora, Boulder, Brighton, Commerce City, Castle Rock, Golden, Lakewood, Littleton and Arapahoe, Adams, Douglas and Jefferson Counties.