What is a Contingent Fee Agreement?
Hi everybody, Mike Molloy, managing member here at Marcotte Law Firm. Today i wanted to talk a little bit about contingent fee agreements. These are the way that personal injury lawyers get paid for many personal injury suits, whether it's a car accident, a slip on a banana peel, or a medical malpractice case. These are the fee agreements that people sign with their lawyers. A lot of people have a lot of questions on them, so i figured i'd take a few minutes and explain some of the major portions of it.
Going back to a little history, these fee agreements were made so that people who are injured can have a more even playing field with the insurance companies. They’re able to hire experienced and competent lawyers. The way to think about it is the insurance company has deep pockets so they can pay experienced lawyers hundreds of dollars an hour to defend these cases. Most people don't have that same luxury of paying an attorney by the hour. So what lawyers begin to do is say okay well whatever we get for you we're going to get a portion of that. Then people won't have any out of pocket expenses and they're able to hire an experienced lawyer who's going to have motivation and some skin in the game. So that's the premise. There are a lot of nuances with all of these since it is contingent and I'll go over a couple of the main points.
The first main point is the percentage. The standard percentage is a third which is a 33⅓%. That's what the lawyer would get and the client will get the remainder. Every once in a while you see a lawyer who will charge a 40% flat fee and others will say well we'll charge you 33⅓%. unless it goes to trial and that way at that point we'll charge you 40 %. At Marcotte Law Firm, we don’t do that. We charge a straight third no matter how long it takes to get the job done. We find that our clients like the certainty of that.
The only difference would be with medical malpractice claims. Those aren't a straight 33%. They start at 40 percent and depending on how much you get, the fees go lower and lower the more and more you get. If you get millions of dollars you end up only paying closer to 25 % than 40%.
Sometimes lawyers who don't have experience with personal injury cases refer clients to us and we pay referral fees. We pay that out of our percentage. If you have a lawyer who refers your case to us, you're not gonna end up paying any more than the third for your for all the lawyers together.
The other major portion of these are costs. Pursuing these cases costs money. In the short term you have to get medical records and police reports and other sort of investigative fees. Then in the long term if you have to go to court there are court costs. At the same time a lot of cases require experts, a lot of times doctors or other experts depending on the situation. In most cases the lawyer will agree to pay these for you and then get reimbursed out of the end out of the settlement. However some lawyers do ask that clients pay their own costs, but we don't do that here at Marcotte Law Firm. We pay all these things for our clients.
The one thing people always ask is like well what if we lose. Not many people lose, but if you do you're not gonna owe any money. The lawyer takes all the risk in paying these costs. But sometimes what seems like a good case eventually turns out to be not so good. Many lawyers including us reserve the right to stop putting more money into these cases if if we think it's not going anywhere.
Those are the two main portions of it. There are some extra portions that a lot of lawyers have in their agreements about what happens if they take a case from another lawyer not being referred, or if you lose a case to another lawyer just so that everybody can be fairly compensated for whatever work they did if you end up getting a settlement or a jury verdict down the road. Those are very standard as well.
Something to keep in mind is that this is probably one of the most important documents you're going to sign if you end up hiring a personal injury lawyer. It's important that you read the document, have the lawyer explain the document, and ask questions about anything you don't understand because you know the lawyer is the one who wrote this and you have an obligation and the opportunity to learn everything about what you're signing. You should be confident that you know what you're signing and that the attorneys explain to you to your satisfaction.
If you have any questions about anything concerning contingent fee agreements feel free to call or contact me or any of the lawyers here at Marcotte Law Firm. We hope that this was informational. Thanks for watching.