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The Pros and Cons of Contingency Agreements

A contingency agreement is an arrangement between a plaintiff and a lawyer, stating that the lawyer will represent the plaintiff without money to pay up front. In these situations, the plaintiff pays the lawyer only if the lawyer wins the case. In the event of a settlement agreement for the plaintiff, the lawyer keeps the percentage of the award agreed upon beforehand.

At first glance, contingency agreements seem like a win-win for the plaintiff: The plaintiff pays nothing out of pocket, and the lawyer works hard to win the case in order to receive a paycheck. However, depending on the circumstances, it may not be the best fee agreement for your case.

Advantages

One of the biggest draws for contingency agreements is if you lose the case, you don’t pay the attorney for the work done. It’s also a plus because in many cases, the plaintiff can’t afford a lawyer unless the case is won. This also provides an incentive to the attorney to do the best work that they can, otherwise they miss out on payment.

Usually, a contingency agreement comes into play in cases where the plaintiff has been injured and is seeking money damages for the injury. A plaintiff can request many types of damages from the defendant, including:

  • Economic damages – lost wages and medical bills.
  • Non-economic damages – non-monetary losses, such as pain and suffering.
  • Compensatory damages – a combination of economic and non-economic damages.
  • Punitive damages – served to punish the defendant for a lack of care of others.

In any of these cases, the plaintiff can qualify for a settlement. After winning a settlement under a contingency fee agreement, the attorney will pay the expenses of the lawsuit.

Disadvantages

The main problem with a contingency fee agreement is that it could cost the plaintiff more than standard hourly rates for a lawyer if the case settles quickly. A standard contingency fee can range between 30-40% of the final award. Whether your lawyer works for one week or one year, he or she will get the same amount of your settlement.

If you have a “risky” case, a lawyer may negotiate a higher fee. Lawyers who use contingency fees can be very selective about the cases they take and avoid cases that appear to have low odds of winning. They do not have to accept a contingency agreement if they aren’t satisfied with the nature of the case, or if the state has imposed a cap on the amount of damages the plaintiff is able to claim.

Also there may be additional fees associated with your cases, such as filing fees, discovery costs, and service of process fees. Be sure to scrutinize the full agreement to know what costs you are responsible for, on top of the percentage of the overall award at the end.

Furthermore, laws vary state by state when it comes to placing caps on compensation. Here in Massachusetts, there is a damage cap on certain medical malpractice claims of no more than $500,000 in non-economic damages. Our state places an even stricter damage cap on charitable organizations: $20,000. Many hospitals in Massachusetts are legally charitable organizations. This damage cap comes into play often in the courtroom. It’s one of the lowest damage caps in the country and lawmakers have been fighting about repealing it; however, this cap remains for now.

In the event your case qualifies for a damage cap, it’s possible that a lawyer won’t agree to partner on a contingency agreement, since he or she will be limited in what they can earn. However, the right lawyer can challenge damage caps and win you the compensation you deserve.

Your Personal Injury Lawyer

Sweeney Merrigan Law ‘s Boston personal injury lawyers are experienced in injury cases in Massachusetts and can help you fight damage caps in our state. Call us today at (617) 391-9001, or schedule a free consultation to see if we can set up a contingency agreement that works for you.

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