The ways in which lawyers are paid for providing legal services can vary. Nearly always, a contract outlines the agreement between the lawyer and client regarding how the lawyer will be paid for representation. Most personal injury and accident attorneys in Florida work on a contingency fee basis. This means that clients can get legal help in their case without worrying about providing upfront costs to the attorney.

What is a contingency fee contract?

What if you’re injured due to someone else’s negligence and can’t afford a lawyer?

Contingency fee agreements allow people to obtain legal representation without the fear of being unable to afford a lawyer. These agreements allow victims of negligence to hire legal representation against people and businesses that oftentimes have big insurance companies paying defense legal fees and costs. In a sense, it is a way to even a very uneven playing field.

A contingency fee contract is an agreement between a lawyer/law firm and a client where the lawyer/law firm agrees to provide representation and legal services to a client without the client putting up any money upfront. The agreement typically provides for a fixed fee structure entitling the lawyer/law firm to payment of fees and costs upon the personal injury matter resolving at some time in the future, with the legal fee amounts set as a percentage of the recovery your lawyer obtains for you. One benefit for the client is that if the lawyer cannot recover any compensation for the client, the lawyer is not paid for their legal services.

It’s important to note that most states regulate what a client can be charged in a contingency fee contract. They also regulate the types of cases where a contingency fee contract may be used. Please check your state’s bar rules as to what that state’s guidelines allow for in a contingency fee arrangement. Most often, contingency fee contracts are the standard type of lawyer/client agreement in personal injury matters.

The difference between Fees and Costs

Importantly, those entering into a contingency fee contract should be aware that there is a difference between “fees” and “costs.” A “fee” is the money paid or due to the lawyer for the task of representing the client. A “cost”, however, is money advanced by the lawyer/law firm for services needed during the representation. Examples include taking depositions, hiring experts, and even sending a Federal Express package. Money due for those types of events during legal representation will be considered a “cost.”

In a contingency fee agreement, the lawyer/law firm can advance legal costs for the client during representation. The “costs” may also be paid back to the lawyer/law firm at the conclusion of the representation, or the lawyer/law firm may require that the client pay all of a portion of the costs as the representation is ongoing.

You must thoroughly read your contingency fee agreement to fully understand what your responsibility for “costs” will be. If the client is required to pay all or a portion of the costs as the representation is on-going, the client has an expectation that it will reimburse his or herself from the proceeds of any satisfied final judgment or settlement. If the client is responsible for paying costs at the end of representation, the client would be wise to determine whether the contingency fee agreement requires that the client still pay costs despite the lawyer/law firm not being able to obtain a positive monetary resolution.

Standard Contingency Fee Structure in Florida

In Florida, the standard contingency fee structure is as follows:

a. Before the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action: 1. 33 1/3% of any recovery up to $1 million; plus 2. 30% of any portion of the recovery between $1 million and $2 million; plus3. 20% of any portion of the recovery exceeding $2 million.

b. After the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action, through the entry of judgment: 1. 40% of any recovery up to $1 million; plus2. 30% of any portion of the recovery between $1 million and $2 million; plus3. 20% of any portion of the recovery exceeding $2 million.

c. If all defendants admit liability at the time of filing their answers and request a trial only on damages: 1. 33 1/3% of any recovery up to $1 million; plus 2. 20% of any portion of the recovery between $1 million and $2 million; plus3. 15% of any portion of the recovery exceeding $2 million.d. An additional 5% of any recovery after institution of any appellate proceeding or post-judgment relief or action is required for recovery on the judgment.

In cases of Medical Malpractice

If the representation concerns medical malpractice, the Florida bar provides:

…a lawyer who enters into an arrangement for, charges, or collects any fee in an action or claim for medical liability in which the compensation is dependent or contingent in whole or in part on the successful prosecution or settlement must provide the language of article I, section 26 of the Florida Constitution to the client in writing and must orally inform the client that:

1. Unless waived, in any medical liability claim involving a contingency fee, the claimant is entitled to receive no less than 70% of the first $250,000 of all damages received by the claimant, exclusive of reasonable and customary costs, whether received by judgment, settlement, or otherwise, and regardless of the number of defendants. The claimant is entitled to 90% of all damages in excess of $250,000, exclusive of reasonable and customary costs and regardless of the number of defendants.
2. If a lawyer chooses not to accept the representation of a client under the terms of article I, section 26 of the Florida Constitution, the lawyer must advise the client, both orally and in writing, of alternative terms, if any, under which the lawyer would accept the representation of the client, as well as the client’s right to seek representation by another lawyer willing to accept the representation under the terms of article I, section 26 of the Florida Constitution, or a lawyer willing to accept the representation on a fee basis that is not contingent.
3. If any client desires to waive any rights under Article I, section 26 of the Florida Constitution in order to obtain a lawyer of the client’s choice, a client may do so by waiving such rights in writing, under oath, and in accordance with [the Florida Bar rules]. The lawyer must provide each client a copy of the written waiver and must afford each client a full and complete opportunity to understand the rights being waived as set forth in the waiver. A copy of the waiver, signed by each client and lawyer, must be given to each client to retain, and the lawyer must keep a copy in the lawyer’s file pertaining to the client.

Statement of Client’s Rights

As stated above, before a lawyer enters into a contingent fee contract for representation of a client in the lawyer must provide the client with a copy of a document outlining the Statement of Client’s Rights. The lawyer must afford the client a full and complete opportunity to understand each of the rights as set forth in it. A copy of the statement, signed by both the client and the lawyer, must be given to the client to retain, and the lawyer must keep a copy in the client’s file.

Please note. If the representation requires suing a sovereign entity – such as a city or municipality, the law in Florida caps a lawyer’s contingency fee at 25% of the recovery.

Other types of Fee Structures

Retainer Based Fee

Some lawyers require that their clients pay them a “retainer.” A retainer is a lump sum of money which, depending on the agreement, will either cover the full amount of representation until a certain point in the future (or the happening or non-happening of an event). It can also be a lump sum that allows the lawyer to begin representation, which will be billed at an hourly rate. The retainer may be “refundable” or “non-refundable.” If a retainer is “refundable,” any unused portion not billed against by the lawyer is paid back to the client when representation ceases. If the retainer is “non-refundable,” the money paid for representation is final, with no expectation of any part returning to the client.

Paying an hourly rate to a lawyer can add up. The retainer and hourly rate can fluctuate based on the lawyer’s analysis of the facts of the legal issue(s) presented. This includes the time the lawyer anticipates needing to spend on the matter, the novelty of the matter, and the expertise of the lawyer. Additionally, the lawyer’s need to take time away from other matters, fees customarily charged by similarly situated lawyers in the community and other considerations addressed in the state bar’s rules also play a role in determining the retainer and hourly rate.

Should you need legal assistance with a personal injury or accident case

The rules regarding contingency fees are comprehensive – and for good reason. Typically, the regulation of contingency fee agreements is a byproduct of the state bar’s consumer protection efforts.

We hope you decide to call us regarding your personal injury or accident case. Before hiring a lawyer, it’s important to discuss the fee agreement, payment expectations, and the anticipated outcomes for your case. In Florida, lawyers must provide their clients with this information in writing at the outset of seeking legal representation.

Authored by Corey Friedman

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