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Finding a competent, trustworthy, and aggressive attorney can be a difficult task.  But it is a process that is crucial and signing up with the right attorney for you or your business can save on costs and precious time.

So…you found the right attorney.  Do you sign whatever retention agreement is sent to you?  Absolutely not.  In this blog post, we focus specifically on contingency fee agreements and negotiating the fee percentage.   

Contingency Fees and the Law

The basic concept of a contingency fee arrangement is that the client does not pay the attorney anything until the case ultimately ends.  The attorney then takes a percentage of the settlement or award at the conclusion of the case. 

First off, contingency fee agreements must be in writing.  Any attorney who does not provide one before your case begins should immediately signal a red flag. 

Contingency fee rates and terms vary from by firm and the type of case.  But what does not vary is what the California Business and Professions Code provides to you as the client.  Subject to certain exceptions, the contingency fee rate is completely negotiable.  In fact, the law requires in most instances that the retention agreement specifically state that the client can negotiate down the contingency fee rate.   

In certain cases, the law sets forth the maximum limits that the attorney can recover under a contingency fee agreement.  For instance, medical malpractice claims, suits involving a minor, worker’s compensation claims, and others all have statutory caps on the percentage an attorney may take.   

Negotiating the Fees

Every case is different and warrants its own evaluation but there may be instances where a reduction in the contingency fee is warranted.  Negotiating fees is not that different from negotiating other business deals.  Some factors to use in attempting to negotiate down fees include:

  • Is there a strong case of liability against the other party?
  • How heavy of litigation is anticipated?  Will there be several expert witnesses or multiple depositions? Is it a document intensive case?
  • Is there is an insurance policy that will be covering the claim?  Are the policy limits so low that it is likely there will be a policy limit demand and quick settlement?
  • What rates have other comparable attorneys quoted you?
  • What is the industry standard rate in your city?
  • Is the fee percentage structured in stages? (e.g. 25% before a lawsuit filed, 33% after filing, 40% at commencement of trial?)

Another factor in your case is the costs your attorney will incur.  In most retention agreements, an attorney will recoup his or her costs first.  An open-ended retention agreement without specific limitations as to litigation costs could cost hundreds or thousands of dollars.  However, by law the retention agreement must state specifically how disbursements and costs in connection with the prosecution or settlement will affect the contingency fee and your ultimate monetary recovery.

There is not a magic formula for what the contingency fee rate should be.  But just like any other negotiation or deal, doing your homework could save a substantial amount of money.  Plus, it never hurts to ask!   

This blog post was created by Ray Naderi of the Naderi Law Group.  Ray is a trial attorney representing clients across California. 

Ray Naderi