Personal Injury Lawyer Contingency Fees Explained

1. Payment is a percentage of the amount the insurance company pays for your personal injury claim.
2. Payment is contingent on the outcome of the case. That means:

• You pay the fee if the injury lawyer successfully resolves your injury claim.
• You do not owe the fee if the injury lawyer does not successfully resolve your case.

• Is it a flat contingency fee or a graduated contingency fee?
• What disbursements will be charged?
• Is there a retainer to offset any of the costs of disbursements?

• The contingency fee enables ordinary citizens to get justice for their personal injury claims. Victims who have suffered injuries, particularly serious injuries, are often unable to take on the costs of pursuing an insurance claim. A qualified and successful injury lawyer has the financial resources to handle those costs.
• Payment of the fee is not due until your case is resolved. Until then, the injury lawyer usually pays the costs of your case. One exception is if the lawyer charges a retainer. They use the retainer fee to help pay the costs of their disbursements.
• If the injury lawyer does not win your case, you do not pay. That means the injury lawyer should be very motivated to obtain the best possible compensation for your injury.
• If the injury lawyer wins your case, the contingency fee is deducted from the compensation you receive from the insurance company.
• In practice, the insurance company pays your compensation into the injury lawyer’s trust fund. The lawyer’s fees are deducted, and the remaining funds are then transferred to you.
• Successful injury lawyers win their clients more net compensation from insurance companies. That mean their clients receive more money than the insurance company initially offers.

A Contingency Fee Agreement is a type of fee agreement covering a personal injury lawyer’s charges. The fee itself is a percentage of the compensation due the client. The percentage is set by the law firm. Compensation is typically paid by the at-fault party’s insurance.

The agreement will specify that the injury lawyer will not be paid unless the injured party receives compensation for their injury. That is why it is often called a no win, no fee agreement.

The Contingency Fee Agreement must specify whether the lawyer charges a flat contingency fee or a graduated contingency fee, the percentage charged, and how it is paid.

A flat contingency fee means that the percentage charged remains the same until your case is resolved. The percentage does not increase even if your case

• takes longer to resolve
• requires more work, or
• goes all the way to trial.

A graduated contingency fee means that the percentage charged increases based on the time and/or steps taken to resolve your case. A case that takes a long time to settle with the insurance company can result in a higher percentage charge. A case that isn’t settled but goes all the way to trial can also result in a higher percentage charge.

Such factors can drive the fee up by as much as 10% or more. Most Alberta personal injury lawyers charge a graduated contingency fee.

In Alberta, persona injury lawyers are also required to charge GST for services.

No, the percentage and type of contingency fee varies and is set by the personal injury lawyer.

The fee is a percentage of the amount you receive from the insurance company for your injury claim.

In general, the fee will reflect the injury lawyer’s experience, success rate, and area of practice. Bargain hunting is not the way to find the best personal injury lawyer.

There are also two types of contingency fees, flat contingency fees and graduated contingency fees.

No, you do not have to pay the contingency fee if your case is lost. The injury lawyer is only paid the fee if the case is won.

Nonetheless, you should always carefully review the contingency fee agreement you sign with an injury lawyer.

• Be certain you understand all the terms of the agreement.
• Watch for any exceptions that might mean you are responsible for any type of payment.
• Ask questions until you are sure you understand what happens in the event your case is lost.

Injury lawyers are successful if they can correctly evaluate the risks. When I enter into a contingency fee agreement, I already know the facts and potential risks of taking the case. My knowledge and experience as an injury lawyer, will tell me whether:

• I can win your case.
• I can increase the net payment you will receive.
• I can risk the resources needed to prove your case, including hiring medical and other personal injury experts.
• I can recoup my firm’s costs from the insurance company.

A no win, no fee agreement means you will pay the injury lawyer’s contingency fee only if the case is won. You do not pay if the case is lost. That does not mean you will not owe the injury lawyer any money.

Win or lose, you may be charged for some payments the injury lawyer makes to third parties on your behalf. These payments are called disbursements.

The injury lawyer’s contingency agreement should explain in plain language the payment requirements for fees and disbursements. Before you sign a contingency agreement, ask your injury lawyer to explain whether any disbursements are not covered by the contingency fee. Also ask whether you have to pay for any disbursements if the case is lost.  

The injury lawyer should answer any questions you have. If you are not certain about the meaning of any of the wording in the contract, including legal costs, alway ask!

Find out how I handle disbursements.