When hiring a lawyer, understanding how you’ll be charged is just as important as the legal issue itself. Most attorneys use either hourly rates or contingency fees, depending on the type of case and the client’s financial situation.
If you have an accident or personal injury claim and are not in a position to pay upfront, hiring a contingency basis lawyer can help make justice less expensive since they only get paid if you win.
Contingency Fees: Pay Only If You Win
In this arrangement, the lawyer represents you in exchange for a percentage of the money when your case is won. This percentage, typically 25% to 40%, is agreed on in advance. In case of defeat, you pay the lawyer nothing for time spent, but may be responsible for court costs or fees of expert witnesses.
Common Uses:
Contingency fees are common in cases where financial compensation is being pursued:
- Personal injury and wrongful death claims
- Medical malpractice lawsuits
- Product liability cases
- Workers’ compensation
- Employment discrimination or wage claims
Pros:
- No upfront payment required: Ideal for clients who cannot afford hourly rates, especially in unexpected situations like accidents or medical errors.
- Incentive to win: Attorneys are motivated to secure the largest possible award since their payment depends on your success.
- Less financial risk: You don’t have to worry about draining your savings to cover legal bills if the case takes a long time.
Cons:
- You give up a share of your compensation: Even if you win a large settlement, a substantial portion goes to your lawyer.
- Not applicable to all case types: Lawyers usually won’t take contingency cases that have low chances of success or don’t involve monetary damages.
- Out-of-pocket expenses may still apply: Filing fees, medical records, and expert analysis are often billed separately from the contingency fee.
Hourly Fees: Pay-as-You-Go Legal Services
On an hourly rate basis, lawyers bill a fixed fee for each hour worked, generally from $150 to over $500, depending on experience and location. You may have to pay an advance retainer, a deposit from which your attorney deducts hourly fees as they are earned.
Common Uses:
This type of billing is typical in law cases that do not involve the recovery of money:
- Divorce and custody conflicts
- Business formation and conflicts
- Defense of criminal cases
- Real estate transactions
- Probate and estate planning
Pros:
- Pay for work really done: You pay just for time spent on work, whether it’s phone time, drafting, research, or court time.
- More control over legal strategy: You can choose when to bring in your attorney, potentially saving money by doing some of the less complex work yourself.
- Proper for ongoing legal advice: Hourly billing is typically best for long-term advisory matters, such as business clients with frequent legal input.
Cons:
- The fees can readily escalate: If the case is complicated, your lawyer’s bill can swell unassumingly.
- Every minute counts: Even superficial emails or glancing phone calls are billed, so paying attention costs something.
- You pay no matter what happens: If you win, lose, or settle, you pay all fees.
Which Is Right for You?
When deciding between hourly and contingency fees, consider:
- Your financial situation: Can you afford to pay as the case proceeds, or do you need to delay payment until there’s a settlement?
- Type of case: If you’re seeking compensation for injuries, contingency may be better. If you need ongoing legal counsel, hourly billing may work best.
- Risk tolerance: If you’re unsure of the outcome, a contingency model may offer peace of mind by removing financial risk.
For example, a person injured in a car accident might not be able to afford an hourly attorney but can still pursue justice through a contingency agreement. Meanwhile, a business owner needing contract help might prefer paying hourly for short, clear legal tasks.
