The Contingency Fee
About the Contingency Fee
Did You Know?

The contingency fee allows ordinary people to hire a lawyer. And not just any lawyer, a competent lawyer who knows what she's doing, who can take on the big law firms hired by corporate defendants.

Unless you're a millionaire, you couldn't afford litigation. It's just too expensive and time consuming. Here's another catch, all legal fees paid by corporations are tax deductible, so there legal fees are subsidized by - guess who? - you, the taxpayer. But an individual's fees are deductible only if incurred in producing taxable income. Now, here's the catch, personal injury awards are not taxable, so if you had to pay legal fees out of your pocket, you couldn't even deduct them from your taxes.

Big corporate law firms charge from $300 to $500 per hour for their lawyers. Not all lawyers command fees like that. Even here in New York City, you can hire a lawyer for $150 an hour. Which one do you want to handle your case? Do you want to put your $150 an hour lawyer up against their $500 per hour lawyer? Are you feeling lucky?

The contingency fee helps level the playing field. Is there anything wrong with that?

Of course, big corporations and insurance companies hate it. Especially insurance companies. They would much rather deal with you directly. If you ever get into an accident, chances are you'll be contacted by some representative of the insurance company who's on the hook. They may call themselves adjustors or investigators, or, if they're feeling fancy, "risk managers." They'll even come out right out to your house, with a checkbook. Just sign here. Lawyer? You don't need a lawyer. We're only going to pay you such and such anyway, and if you get a lawyer, he's just going to get a third of that, and for what? We're going to pay you right now.

You'd be surprised how many people fall for these lies and give up their claims for a small fraction of what they're worth. Maybe this questionable practice should be addressed by the "tort reformers" who claim to want victims of accidents and other wrongs to receive "fair" compensation.

How can you prove they're lies? Here's how. Tell the adjustor you want a $1,000 advance which you'll take to hire a lawyer to evaluate the offer. You take that money and find a reputable personal injury lawyer and tell him you just want a rough evaluation of the settlement offer, for which you'll pay $1,000. No ethical lawyer would refuse to do this. In fact, it's unethical for a lawyer to demand a contingency fee. Now, if the lawyer tells you he can do better for you, make sure he puts his money where his mouth is, and agree that he'll get no fee unless you recover more money than the adjustor's offer would result in. Next - contingency fees in civil rights cases