You are likely to find a "contingency fee" in personal injury cases, accidental claims, property damage cases, or other cases where a large amount of money is in contention. A contingency fee is a sum of money that a lawyer receives as a fee only if a case is won or settled.
Since the U.S. Supreme Court decided that lawyers can advertise, there have been a number of attorneys who advertise on television. The vast majority of television advertisements are for personal injury cases. This is because most lawyers who accept personal injury cases do so on a contingency fee basis. The lawyer's fees will be a percentage of the money they recover for you. This means that clients usually do not have to give the attorney money up front (a “retainer” fee) to hire the attorney. However, you may have to pay some expenses up front, such as court filing fees and any fees to retain the services of expert witnesses. It also means that the attorney will base their attorney fees on a percentage of any award that you may win. Learn more about different attorney fee arrangement types.
Maryland's Rules for Professional Conduct do not say how much an attorney should charge for a case. The rules only say that a fee cannot be "unreasonable." Some factors that affect whether a fee will be determined to be reasonable are:
- the difficulty of the case;
- the skill and experience of the attorney;
- the time the attorney will need to devote to the case; and
- how much is usually charged for similar services in the area.
The contingency fee percentage varies and some lawyers offer a sliding scale based on how far along the case is when it is settled. A one-third (1/3) fee is common.
The contingency fee agreement must be in writing and must state how the fee is to be calculated. Be sure you understand how the fees will be calculated.
Consider and ask whether the lawyer will calculate the fee before or after the expenses. This can make a substantial difference, since calculating the percentage of the attorney's fee after the expenses have been deducted increases the amount of money you receive.
For example, let's say you win the case and are awarded $100,000, and the attorney's contingency fee is one-third (1/3). If the fee is paid before expenses, then you will receive $46,667 from the $100,000 award. If the fee is paid after expenses, then you will receive $53,334 from the $100,000 award. See the breakdown below.
|Timing of Payment of the Attorney's Fee|
|Fee Paid Before Expenses||Fee Paid After Expenses|
|Award: $100,000||Award: $100,000|
|Subtract 1/3 Attorney Fee: - $33,333||Subtract Expenses: - $20,000|
|= $66,667||= $80,000|
|Subtract Expenses: -$20,000||Subtract 1/3 Attorney Fee= - $26,666|
|Your Share = $46,667||Your Share = $53,334|