Contingency fees, in the words of a recent court decision, provide “access to counsel for individuals who would otherwise have difficulty obtaining representation”. Litigation is expensive and time consuming. Those injured by the negligence of another, while on the job, or simply disabled, often cannot afford to hire an attorney on an hourly basis. Under a contingency fee agreement, no advanced lump sum fee is paid to the attorney and no hourly charges are billed to the client on a monthly basis. Simply stated, a contingency fee is entirely dependent upon the lawyer achieving a successful outcome through settlement or trial. The amount of the fee (percentage of the recovery) will depend on the type of case, its complexity and its anticipated value. The amount of the fee is agreed upon when the written agreement is signed.

Contingency fees have a lengthy history in our country. Described as the first “no win, no pay” arrangement, contingency fee agreements trace back to the early 19th century. As early as 1823, one Missouri state court noted that without the contingency fee, an injured person might never be able to “sue for his right, not having otherwise the means to employ counsel”. By 1876, Missouri Judge Robert Bakewell stated,  “Many a poor man with a just claim would find himself unable to prosecute his rights, could he make no arrangement to pay his advocate out of the proceeds of his suit… If [such agreements] are immoral or illegal, there are perhaps few attorneys in active practice amongst us who have not been habitual violators of the laws.”

As a result, contingency fee agreements today are the number one type of client-attorney relationship in the field of personal injury law. Kennedy, Kennedy, Robbins & Yarbro, LC, uses contingency fees in personal injury, medical malpractice, wrongful death, workers compensation and social security disability cases. We do not use a contingency fee agreement in cases that involve criminal defense or family law. Missouri law prohibits  contingency fees for these matters. The contingency fee agreement is in writing and signed by the client and the firm.

Missouri court rules state that the legal expenses involved in a lawsuit are the client’s responsibility. However, many times, clients are unable to fully pay for the expenses necessary to pursue their lawsuit. Because litigation is expensive, Kennedy, Kennedy, Robbins & Yarbro, LC, usually tries to advance these costs on behalf of our clients, which will be reimbursed in addition to the contingency fee when a settlement or verdict is obtained. We may ask for assistance in paying for these expenses as the case progresses. Expenses can include such items as medical record fees, expert witness fees, court filing fees, deposition costs, mileage and travel expenses. These expenses vary from case to case and may be several hundred dollars or tens of thousands of dollars, depending upon the complexity and duration of the lawsuit. If we do not recover any funds on your behalf, we may ask for reimbursement of these expenses.

Contingency Fees – Percentage

Using a contingency fee agreement to hire an attorney requires the percentage to be agreed upon in advance. The factors that go into setting the percentage include:

1. the number of hours and effort required to win the case;
2. the likelihood that someone is legally responsible for your damages;
3. the risk that you are responsible for contributing to cause the injury;
4. the probability that your case would win; and,
5. the percentage set by statute, if any.

Sometimes, the contingency fee includes a sliding scale. A quick settlement or mediation may command a lower percentage. However, a lengthier trial would require more legal resources and a higher payment amount. If the evidence is clearly in your favor, paying an average contingency fee would make sense. A complicated case may require a higher fee because there is a lesser chance of recovery. As a result, the lawyer could lose all of their time and financial investment in your case.

The typical contingency fee is a third, or 33%. Likewise, medical malpractice and other cases may be 40% or higher depending upon the facts and the risks of the case. While these fees are customary, some contingency fees are statutory. The workers compensation statute sets fees at 25%. Some other statutory fees are set as low as 20%.

Contingency Fees – Often Attacked

A study performed by The Center for Justice and Democracy favorably discussed contingency fees. The study found that contingency fees align an attorney’s interest with that of their client’s. The fee agreement further allows clients to get the best lawyer for their claim possible.

The study criticizes anti-consumer groups who introduce and back measures to limit contingency fees under the guise of being pro-consumer. For instance, the insurance industry often backs legislation which caps attorney’s fees. This looks like it is pro-consumer as it would reduce the attorney’s fees clients would have to pay. However, it limits consumers ability to get lawyers to handle their cases. If a lawyer can only charge 10%, instead of 33%, the lawyer can only take cases that have a larger value. Smaller value cases are no longer economically viable. The study notes that insurance companies do not seek reciprocal limits on their attorneys. In other words, attorneys working for the insurance company can charge more than the consumer’s lawyer. The insurance industry wants the best lawyers it can get while limiting the fees the plaintiff’s lawyer can receive.

Knowing what to do and how to protect your potential personal injury claim is important.  As a result, you should discuss your case with our experienced attorneys. If you plan to pursue damages or need legal assistance, please contact us or call Kennedy, Kennedy, Robbins & Yarbro, LC, at (573)686-2459.