Understanding the Contingency Fee

There are three standard methods that attorneys use to bill for their services. One of those three is the contingency fee. In a contingency fee case, the attorney will not bill the client while they work on the case. Instead of billing while they work, the attorney is entitled to part of any award that they win in the case.

The industry standard portion that most Denver attorneys use is usually between 33% and 40% of the final award depending on the complexity of the issue and whether it goes to trial. Contingency fee agreements must be reasonable and cannot require an unconscionably high percentage of the award.

If a Colorado attorney takes a case on contingency, it means that the attorney only gets paid if the client receives an award. This method of billing forces the attorney to make very difficult decisions and only take certain types of cases on contingency. When an attorney takes a contingency fee case, the attorney is betting on their skill and ability to be able to win or settle the case on behalf of their client.

To take a case on contingency, a Denver lawyer needs to believe that they have a high chance to settle the case and that the award is large enough to justify taking the case. If there is a high chance that the attorney will lose or be unable to settle the case or the possible award is too low, the attorney will not take the case on contingency.

Usually, the types of cases attorneys will take on contingency are personal injury cases and damage to property. Colorado Lawyers will rarely take cases about other types of disputes on contingency. Even in a personal injury or property damage case, the damage has to be high enough for the attorney to take the case. The amount each attorney needs to think is at stake varies, but a good rule of thumb is that an attorney will not take a case on contingency with under $15,000 at stake.

The rules of ethics that bind attorneys name two types of cases when an attorney may not charge a contingency fee. The first type of case is a criminal matter. An attorney should not be allowed to gamble anything when their client’s life or liberty is in jeopardy. For that reason, an attorney cannot take a criminal case on contingency.

The second type of case attorneys are barred from taking on contingency is divorce and family cases. If an attorney was incentivized to maximize the money they “win” in a divorce or family case, the attorney may act unethically or against the interests of the party so the rules of ethics bar contingency fees in family law cases.