Which fee is calculated as a percentage of the settlement or award in a case?

Which fee is calculated as a percentage of the settlement or award in a case?

• A. Hourly rate
• B. Contingency fee
• C. Billable hours
• D. Tickler system

Answer: (B)

Contingency fee describes a lawyer’s fee that is earned as a percentage of the settlement or award, rather than being charged by the hour. This means the attorney’s payment depends on the outcome, which aligns the lawyer’s incentives with obtaining the best possible recovery for the client. For example, if a case settles for $100,000 with a 25% contingency, the lawyer would receive $25,000, and if there is no recovery, the lawyer typically does not get paid (though costs may still be charged separately). By contrast, an hourly rate charges based on time spent, billable hours are the tracked hours used for billing, and a tickler system is simply a reminder/docketing tool for deadlines, not a fee arrangement.

Contingency fee describes a lawyer’s fee that is earned as a percentage of the settlement or award, rather than being charged by the hour. This means the attorney’s payment depends on the outcome, which aligns the lawyer’s incentives with obtaining the best possible recovery for the client. For example, if a case settles for $100,000 with a 25% contingency, the lawyer would receive $25,000, and if there is no recovery, the lawyer typically does not get paid (though costs may still be charged separately). By contrast, an hourly rate charges based on time spent, billable hours are the tracked hours used for billing, and a tickler system is simply a reminder/docketing tool for deadlines, not a fee arrangement.