A contingency fee is meant to help the common man retain access to the courts by making it easier to pay for legal services. In a typical contingency fee agreement, the plaintiff is only responsible for paying their attorney if they win the case, with the payment coming as a percentage of the winnings, usually around 30%.
The reason that contingency fees are used so often is related to the cost of pursuing a trial. In California, the average attorney hourly rate started at $279 (pdf) for a firm with 1-3 years of experience, and went as high as $475 (average) for a firm with 26-30 years of experience. The average cost of a medical malpractice case can run up to $100,000, with the funds being spent on expert witnesses, obtaining medical records, and using technology to show what went wrong. An individual likely does not have the cash on hand to keep up with the each of these necessary costs. In a medical malpractice case, the contingency fee allows people who cannot afford legal services to pursue litigation.
Supporters of contingency fees cite many reasons why they are an important part of our current legal system. The primary reason is increased access to justice for the individual. Without contingency fees, most people would not be able to access the legal system even if they have a compelling reason to do so. This would limit the courts to those with money, who could use it to bully those who do not have the resources to defend themselves. Even some tort war groups that oppose contingency fee agreements acknowledge that attorney costs are the most common barrier to access to the courts. Contingency fees eliminate such barriers.
Supporters also believe that the contingency fee system adds an additional layer of protection against “frivolous lawsuits.” Contingency-fee lawyers simply will not undertake a lawsuit that is without merit for a simple reason: An attorney is unlikely to invest hundreds or even thousands of hours in a case if their client does not have a good chance to win. This additional litmus test for every case helps to lower the number of lawsuits filed, saving time and resources for our underfunded and overextended court system.
Contingency fees make sure that a lawyer’s interests are closely tied with those of a client. The plaintiff will most likely receive better representation, as the lawyer has a higher incentive to do a good job. Tactics such as delaying cases or wasting time in order to “run the clock” are eliminated, as the lawyers themselves are spending the funds required to try the case. This saves everyone involved money; the plaintiff, the lawyers and the courts system itself.
Anti-contingency fee groups that continually push to implement caps on the fees that lawyers charge argue that contingency fees are preventing smaller cases from being taken. This seems to be a contradiction. If there was a cap on the fees, say 10%, a lawyer would only be able to take cases that could guarantee them getting their money back plus a reasonable hourly wage – it would in effect push them to take on only that litigation that could result in a big award. Thus, these contingency-cap supporters are pushing for change that would hurt all but the wealthy.
Contingency fees are helping maintain equal footing in our courts between wealthy and powerful corporations and the average Californian who lacks the economic clout to afford high-priced corporate attorneys. Without this system for financing litigation, bedrock principles from our nation’s founding – that the individual matters and has the Seventh Amendment right to a fair trial – face joining the rubble of civilizations lost to history.