How Do Contingency Agreements Typical Work?

A Contingency Agreement is a type of agreement that is typically used in various types of arrangements between client and lawyer. For example, personal injury cases. It allows individuals to hire a lawyer without having to pay out any funds until the case is either settled or a judgment is granted against the person responsible for causing the injuries.

The fee is payable only if there is a favourable result. It is generally defined as a fee charged for a lawyer’s services only if the lawsuit is successful or is favorably settled out of court…. contingent fees are usually calculated as a percentage of the client’s monetary settlement/award.

How does it work?

The usual form of this agreement is that the lawyer will take the case on the understanding that if lost, no payment is made to the lawyer (except for expenses). If the case is won, the successful lawyer then earns a percentage of the damages awarded in favor of his client.

This makes it easier for people to pursue their civil rights since otherwise, to sue someone for a ‘tort’, one must first be wealthy enough to pursue such litigation in the first place. However, because of the high risk, few lawyers will take cases on a contingency basis unless they feel the case has good merit. Contingency fees also provide a powerful motivation to the lawyer to work diligently on the client’s case

Typically, your lawyer will also pay for the costs and expenses of running the litigation. These costs/expenses are often called ‘disbursements’. Typical disbursements are things like medical charts and medical reports. Often the lawyer will be able to recover disbursements during the course of the file from the other sides’ insurance company. Whatever disbursements are not recovered during the course of the claim will be recovered as part of any settlement or judgment.

Like any other contractual arrangement, try to get a sense of whether the person you are entering into a contract with is someone that you trust.