What is a contingency fee?
A contingency fee is a payment when services or products have been provided that have hit one or many targets. It means that, even though a party has provided a service, or has provided a product, they may still not get paid, unless other criteria was met. Those criteria could be to deliver a service or product within a certain time frame, or it could be that those services and products had to be delivered to a certain number of people, should the party want to be paid for their work.
When it comes to a contingency fee lawyer, such a lawyer does not get paid unless they win or achieve a good result for their client. Sometimes that means that they will receive a percentage of the financial remuneration awarded to their client in a lawsuit. Often this means that these lawyers only take on cases that they truly believe have a very high chance of not only winning, but also being awarded a high enough financial amount to make it economically worthwhile to take such a case on.
How does contingency fee work?
Contingency fees work in the way that is clearly laid out in a contract where two parties agree to a contingency payment structure. In the case of a contingency fee lawyer, that lawyer will not charge any fees to their client if they lose the case. However, should the client be awarded damages from a lawsuit, they will be paid a fee.
What that fee is will be stipulated within the client-lawyer agreement that was signed before any work between the parties occurred. Importantly, however, the fees charged must be ethical and reasonable - yet they can still be a high percentage of any financial awards won.
Advantages of contingency fee
One of the biggest advantages of a contingency fee - particularly with respect to a contingency fee lawyer - is that contracts are entered into even though the result is still not clear. It means that there could be financial reward on the horizon which can act as a fantastic motivator for those having to deliver a service or product.
When it comes to a contingency fee lawyer, what’s great about their fee structure is that they are more willing to take on cases from people who may not otherwise have the funds to hire them. It means that those without a high income can still access the help of the legal system.
Contractbook and contingency fee
At Contractbook, we believe in the power of a contract. If that contract contains terms that outline contingency fees, then so be it. If such a contract gives a person access to a fantastic legal mind, who can fight their corner in court then that’s great. If a contract with a contingency fee means that two parties enter into a profitable business relationship, then that is fantastic too. The key is to ensure that both parties are absolutely sure and happy with what the fee is contingent on, and how that fee is structured in reality.