Working with a lawyer on contingency

How the law usually works

In an injury or insurance claim, a lawyer commonly investigates what happened, identifies potentially responsible parties, gathers medical and financial evidence, communicates with insurers, and negotiates or litigates the claim. A contingency arrangement shifts some financial risk from you to the lawyer, but it does not guarantee that you will receive money or that you will owe nothing.

The fee may be calculated in different ways:

• A percentage of the money recovered before expenses are deducted.
• A percentage of the amount remaining after certain expenses are deducted.
• Different percentages depending on whether the claim settles early, enters a lawsuit, or goes to trial.
• A fee calculated only on particular parts of the recovery, such as compensation for pain and suffering.

The written agreement commonly identifies:

• The percentage or other method of calculating the fee.
• Whether the fee changes after a lawsuit is filed or if there is an appeal.
• Which expenses the lawyer may pay during the case.
• Whether you repay those expenses if there is no recovery.
• Who pays taxes, medical liens, government benefit claims, or health-insurance reimbursement claims.
• How a settlement decision is made.
• What happens if you end the relationship or change lawyers.

A contingency fee is separate from case expenses. Expenses can include filing fees, medical-record charges, expert opinions, investigators, reports, travel, and court transcripts. Some agreements make you responsible for expenses even if the case is unsuccessful; others make the lawyer responsible for some or all of them.

A lawyer generally cannot settle your injury claim without your authority. The lawyer can recommend a settlement and explain risks, but the decision to accept or reject an offer usually remains yours. Professional-conduct rules also commonly require the fee to be reasonable and the arrangement to be explained in writing.

Medical providers, health insurers, workers’ compensation insurers, government programs, and accident-benefit schemes may have reimbursement or lien rights. The amount you receive after fees can therefore be lower than the settlement figure. A lawyer commonly checks these claims and negotiates them where the law permits.

Common processes

1. Gather initial information. People commonly provide the lawyer with accident reports, photographs, witness details, insurance information, medical records, bills, wage-loss information, and communications from insurers. The lawyer usually conducts an initial assessment of responsibility, injuries, available insurance, and possible deadlines.

1. Discuss the fee arrangement. The lawyer and client commonly discuss the proposed percentage, expenses, taxes, liens, likely duration, and whether the lawyer will accept the matter. Questions about what happens if there is no recovery are especially important.

1. Sign a written agreement. The agreement commonly authorizes the lawyer to act, explains the fee and expenses, and sets out how money will be distributed. Some places require particular wording, disclosures, or court approval for certain arrangements.

1. Investigate and develop the claim. The lawyer may obtain records, interview witnesses, consult medical or accident experts, and assess future treatment, disability, lost earnings, and other losses. Clients commonly continue medical care and keep records of expenses and limitations.

1. Deal with insurers. The lawyer may send a demand or claim package and negotiate with an insurer. Insurers often investigate liability, causation, the seriousness of the injury, and whether other coverage applies.

1. Consider formal proceedings. If negotiations do not resolve the matter, the lawyer may start a court or tribunal claim. This can involve pleadings, disclosure of documents, examinations or depositions, expert evidence, mediation, and trial preparation.

1. Review settlement and distribution. Before settlement, the lawyer commonly explains the proposed gross recovery, fees, expenses, liens, taxes or deductions, and estimated net amount. After funds clear, the lawyer generally pays authorized deductions and provides an accounting before sending the balance to the client.

1. End or change representation if necessary. A client may ask to end the relationship, but the agreement and local law may allow the lawyer to claim expenses or a fee for work already performed. A new lawyer may also need to resolve payment issues with the former lawyer.

Deadlines and time limits

Personal-injury limitation periods commonly range from about one to three years, but the exact period depends on the place, injury, defendant, and type of claim. Some jurisdictions have shorter notice deadlines for claims against governments, public authorities, or particular transportation bodies.

Other rules can affect timing:

• A claim against an insurer may have a separate contractual or statutory deadline.
• Motor-vehicle and no-fault benefit claims may require prompt notice or applications.
• Workers’ compensation claims often have their own reporting and filing periods.
• Claims by or for children, or by people lacking legal capacity, may have special rules.
• The deadline may be affected by when the injury was discovered, when a person was legally capable of suing, or when a defendant left the jurisdiction.

A settlement negotiation or an insurer’s investigation does not always stop the limitation clock. Typical ranges are only general information; the applicable deadline should be confirmed with the court or a licensed attorney where you live.

Documents that usually matter

Useful documents commonly include:

• The contingency or conditional-fee agreement and any later amendments.
• Accident reports, incident reports, photographs, video, and witness information.
• Insurance policies, claim numbers, correspondence, recorded statements, and settlement offers.
• Medical records, bills, prescriptions, treatment plans, and evidence of future care.
• Employment records, pay information, tax records, and evidence of missed work or reduced earning ability.
• Health-insurance, workers’ compensation, government-benefit, or medical-provider reimbursement notices.
• Receipts for travel, medication, equipment, home care, and other accident-related costs.
• Court documents, expert reports, mediation documents, and settlement statements.

Keeping copies of signed documents and written communications can help you understand the case and the final accounting.

How it differs by jurisdiction

United States. Contingency fees are widely used in personal-injury litigation. State professional-conduct rules generally require the fee arrangement to be in writing and prohibit certain contingency arrangements, including contingency fees in some criminal and domestic-relations matters. Percentages, expense rules, medical liens, client-protection requirements, and court procedures vary by state. Some states regulate fees in particular medical-malpractice or workers’ compensation matters.

England and Wales. Personal-injury lawyers commonly use conditional fee agreements, often described as “no win, no fee” arrangements. A success fee may be charged if the case succeeds, subject to statutory and regulatory limits in many personal-injury claims. The damages-based agreement model is different and must meet specific requirements. After-the-event insurance may cover some litigation expenses. The usual limitation period for many personal-injury claims is three years, subject to exceptions under the Limitation Act 1980.

Canada. Contingency fees are permitted but regulated by province or territory. Agreements may need to explain the percentage, expenses, taxes, and the client’s rights to review or challenge the account. Rules about maximum percentages, court approval, disbursements, and public-benefit reimbursement differ. Many injury claims commonly have a two-year limitation period, but important exceptions and shorter notice periods exist.

Australia. Conditional or “no win, no fee” arrangements are regulated by state and territory law and professional-conduct rules. An uplift or success fee may be restricted, and some jurisdictions prohibit or limit particular contingency arrangements. Motor-accident, workers’ compensation, and public-liability claims can follow different procedures and deadlines. Fee agreements commonly must contain specified disclosures and may provide rights to review legal costs.

When people consult a lawyer

Early legal advice can be especially important when injuries are serious, fault is disputed, insurance coverage is unclear, a government body may be involved, or a limitation deadline may be approaching. It can also help when a health insurer, government program, workers’ compensation body, or medical provider claims repayment from the settlement.

Before signing, people commonly ask:

• What is the estimated net recovery under different settlement amounts?
• Is the percentage calculated before or after expenses?
• Who pays expenses if the case is lost?
• Will the percentage increase if a lawsuit or trial occurs?
• What liens or repayment claims may reduce the recovery?
• Can the client reject a settlement?
• How can either side end the representation?
• How will disagreements about fees be handled?

A local lawyer, legal-aid service, bar referral service, or relevant legal regulator can explain the rules applying to a particular claim.