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Contingency fees are earned by attorneys only when they win a case, often used in personal injury lawsuits. The terms of the settlement vary, but generally, the attorney receives a percentage of the net income recovered. Attorneys only take cases they feel confident they will win. Clients should carefully review the contract and be aware of regional bar association regulations.
A contingency fee is a fee that an attorney earns only by successfully winning a case. Some attorneys will enter into contingency fee agreements for cases where monetary damages will be awarded, such as personal injury lawsuits. Allowing attorneys to accept emergency payments can create greater access to the legal system for people who don’t have enough money to hire an attorney outright. However, it is possible to enter into a contingency fee arrangement that is not beneficial to the customer, making it important to read the terms carefully.
Contract specifications may vary. Generally, the terms of the settlement provide that the attorney receives a percentage, with one-third ordinary, of the net income recovered. For purposes of determining net income, costs of court documents and other costs related to the case, as well as costs of billable attorney hours are deducted; the attorney earns both a percentage and a regular fee for the hours worked on the case.
An attorney will carefully review a case before accepting it on a contingent basis. As a general rule, attorneys only pick cases they feel confident they will win when their compensation comes in the form of a contingency fee, because they don’t want to spend their time and energy on a case with an uncertain outcome. This means that people who need access to the legal system but have complicated cases may not be able to get an attorney to take the case for a contingency fee, because there may be concerns about the likelihood of a successful outcome.
When a client and an attorney agree to work together on an emergency commission, a contract will be drawn up to spell out the terms of the agreement. The customer should carefully review the contract. If it is unclear or the customer has questions, the customer should seek explanations. People should not sign contracts that appear to violate the law, that contain clauses that they do not understand, or that do not appear to be favorable to them.
People should also be aware that many regional bar associations regulate how and when contingency fees may be used. These organizations consider excessive fees a violation of ethics and will penalize member attorneys who attempt to create an unreasonable contract for contingency fees. Information about contingency fees is available directly from many bar associations, often on their websites, and it is advisable to review this information when developing a contract with an attorney.
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