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What is a Contingency Fee?

When you are faced with a problem where you may need legal representation, the first thing that enters your mind may be “how am I going to afford this?”  The answer typically depends upon what type of legal issue you have.  With respect to personal injury cases—car accidents, slip and falls, dog bites, etc.—you enter into a contingency fee arrangement with your attorney.

Contingency Fee

Quite simply, a contingency fee is a form of payment to an attorney for his/her services.  Instead of paying an attorney hourly, the payment is calculated as a percentage of any money awarded to you as a result of the case—whether it be a settlement or a court judgment (winning a case at trial).  Typically, the percentage used is one-third (1/3).

Does my case have other costs associated with it?

The simple answer to this is: yes, but the amount may vary from case to case.  When pursuing legal action, there are litigation fees (amount of money spent on a lawsuit).  Examples of these fees are: court and filing fees, discovery fees, expert witness fees, fees for obtaining records (e.g., medical records), postal fees.  These fees, commonly known as disbursements, are taken out of the recovery amount.

In addition, if there are certain liens (legal claim/right to a sum of money) on the recovery amount, those will be taken off the top.  Medicaid liens tend to be the most common in personal injury cases.  With respect to Medicaid liens, if you receive any assistance from Medicaid arising from your injury, they have a claim to the funds that they expended.

How is my portion of the recovery amount ultimately calculated?  

The means by which these other costs are paid depends upon the arrangement entered into with your attorney.  There are two options that we provide: (1) costs and disbursements taken out of the recovery amount before the 1/3 percentage is paid; or (2) costs and disbursements take of out of the recovery amount after the 1/3 percentage is paid.

Option 1: For example, say you are awarded $100,000.00, and there are $10,000.00 in costs and disbursements.  The costs and disbursements would be taken out first ($100,000.00 – $10,000.00 = $90,000.00).  From there, the attorneys fees would be calculated from that amount ($90,000.00 x 1/3 = $27,000.00).  Your total net recovery would be $63,000.00, for instance.

Option 2: For example, say you are awarded $100,000.00 and there are $10,000.00 in costs and disbursements.  The attorneys fees would be calculated first ($100,000.00 x 1/3 = $30,000.00).  You would be left with $70,000.00.  From there, you would deduct the costs and disbursements ($70,000.00 – $10,000.00 = $60,000.00).  Your total net recovery would be $60,000.00.

NOTE: These calculations do not take into account any sort of Medicaid lien.

Contingency Fee: Bottom Line

In a contingency fee arrangement, if you lose you will not have to pay any attorneys fees.  However, that does not mean you are totally off the hook.  In conclusion, win or lose, you will probably have to pay the costs and disbursements associated with the lawsuit.


Contingency FeeCall 716-855-3761 To Speak to One of Our Attorneys Today.

If you would like to discuss Contingency Fees or any other legal matter, turn to  LoTempio P.C. Law Group. Call 716-855-3761 or use our Online Contact Form to set up a free consultation with a lawyer in Buffalo, New York.

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