What is "contingent fee"

A contingent fee (in the United States) or conditional fee (in England and Wales) is any fee for services provided where the fee is payable only if there is a favourable result. Although such a fee may be used in many fields, it is particularly well associated with legal practice. In the law, it is defined as a "fee charged for a lawyer's services only if the lawsuit is successful or is favorably settled out of court.... Contingent fees are usually calculated as a percentage of the client's net recovery."

In the English legal system, it is generally referred to as a conditional fee agreement or, informally by the public and press, as no win no fee. The usual form of this agreement is that the solicitor will take a law case on the understanding that if lost, no payment is made.

However, if the case is won, the lawyer will be entitled to the normal fee based on hourly billing, plus a success fee. The success fee in England must be as a percentage no greater than 100% of the normal fee. This contrasts with the contingency fee in the US, which gives the successful attorney a percentage of the damages awarded in favor of his client.

This makes it easier for the poor to pursue their civil rights since otherwise, to sue someone for a tort, one must first be wealthy enough to pursue such litigation in the first place. However, because of the high risk, few attorneys will take cases on a contingency basis unless they feel the case has good merit.

According to a 2004 book by law professor Herbert Kritzer, contingent fees were allowed as of that year in the following countries: Australia, Brazil, Canada, the Dominican Republic, France, Greece, Ireland, Japan, New Zealand, the United Kingdom and the United States. They are also allowed in personal injury actions in Lithuania.