The Contingent Fee Agreement & Access to Justice
"There is far too much law for those who can afford it and far too little for those who cannot."
Derek C. Bok, American lawyer and former Harvard University President, ‘‘A Flawed System,’’ Harvard Magazine, May-June 1983.
The contingent fee agreement empowers victims of others' negligent, intentional, or criminal acts. It gives them access to justice. Most seriously injured clients cannot afford to pay lawyers up front to try their cases against insurance companies, self-insured companies, or government agencies. Some cases are much more expensive to try than others because defendants tend to be willing to spend lots of money defending lawsuits when the alleged damages are hundreds of thousands or millions of dollars. Cases that require expert witnesses, consultants, complex investigations, or custom scientific studies to prove injured clients' claims can cost tens of thousands of dollars for things unrelated to lawyers' fees. Most people simply do not have that kind of money. (Truth be told, most lawyers could not afford to pay talented personal injury lawyers up front to try their cases.)
Law firms that have good track records and sound financial management practices can offer their clients contingent fee agreements. When this happens, the lawyers agree to wait to be compensated for their time until they have successfully resolved their clients' claims. Generally, law firms will also front court costs as well as costs associated with hiring transcriptionists and videographers to record depositions, hiring expert witnesses to write opinion letters or testify, investigating defendants and their witnesses, conducting scientific experiments, creating animated recreations of accident scenes, hiring graphic designers, copying and printing documents, and other things. In exchange, the clients agree to pay their lawyers for their time as well as for the costs and fees unrelated to the lawyers' time once the clients obtain settlement or post-verdict payments from the defendants. Clients promise their lawyers a percentage of the money they recover as payment for their lawyers' time. Lawyers bear the risk of not being compensated for their time if their clients recover nothing.
Chapter 23.3. of the Colorado Rules of Civil Procedure governs contingent fee agreements. Chapter 23.3., Rule 1 defines a 'contingent fee agreement' as "a written agreement for legal services of an attorney or attorneys (including any associated counsel), under which compensation is to be contingent in whole or in part upon the successful accomplishment or disposition of the subject matter of the agreement." For obvious reasons, Chapter 23.3., Rule 3 prohibits the use of contingent fee agreements for criminal cases and divorce cases. Chapter 23.3., Rule 4 requires each contingent fee agreement to make specific disclosures about things such as the possibility that the court could award the opposing party's costs and attorneys' fees. Contingent fee agreements need to explain who will pay any special fees or costs the court might award to the opposing party. Chapter 23.3., Rule 5 spells out all the contract terms that must be included in each contingent fee agreement.
Access to justice often requires two things: courageous lawyers and substantial financial resources, especially when the damages are very high and the defendants' law firms will fight aggressively to minimize their liability or the money they will be forced to pay if they lose at trial.