What a contingency fee is
Under a contingency fee arrangement, the lawyer is paid a percentage of the amount recovered and generally receives no fee if there is no recovery. This lets people pursue claims without paying hourly fees upfront. The percentage is set by the written agreement between client and lawyer; there is no single national rate. Some agreements use a fixed percentage, while others step up the percentage if a lawsuit is filed or a case goes to trial.
The rules of professional conduct in each state govern fee agreements. The American Bar Association’s Model Rule 1.5, which most states have adopted in some form, provides that a contingent fee agreement must be in writing, signed by the client, and state the method of calculating the fee, including the percentage and whether expenses are deducted before or after the fee is calculated. Some states also limit contingency percentages in particular types of cases, such as medical malpractice or claims against government entities.
Case expenses are separate from the fee
Case expenses (or costs) are money spent to pursue the claim: court filing fees, fees for obtaining medical records, deposition transcripts, expert witnesses, investigators and similar items. Lawyers often advance these costs and are reimbursed from the recovery. Agreements differ on whether the client owes expenses if there is no recovery — something worth asking about directly.
Why the calculation order matters
Gross settlement $90,000; fee 33.33%; case expenses $6,000.
| Fee on gross | Fee after expenses | |
|---|---|---|
| Fee base | $90,000.00 | $84,000.00 |
| Attorney fee (33.33%) | $29,997.00 | $27,997.20 |
| Case expenses | $6,000.00 | $6,000.00 |
| Remaining before liens | $54,003.00 | $56,002.80 |
The difference here is $1,999.80. Neither method is inherently improper; the point is to know which one your agreement uses. The Net Settlement Calculator lets you switch between them.
The settlement statement
At the end of a contingency case, lawyers are generally required to give the client a written statement showing the outcome, the fee, the expenses and how the remittance to the client was calculated. Review it line by line and ask about anything you do not understand, including each expense item and each lien payment.
Questions to ask before signing a fee agreement
- What percentage applies, and does it change at any stage (for example, after a lawsuit is filed or at trial)?
- Is the fee calculated before or after case expenses are deducted?
- Which expenses are expected, roughly how much might they be, and will you check with me before large ones?
- Do I owe expenses if there is no recovery?
- How are medical liens and reimbursement claims handled, and will you try to negotiate them?
- What happens to the fee if I end the relationship or change lawyers?
- Who will handle my case day to day, and how will you keep me informed?
Handling a claim without a lawyer
Some people with minor injuries and clear liability handle claims themselves, avoiding fees. Others find that a lawyer’s involvement changes the outcome or reduces liens enough to offset the fee. Results vary and no general rule applies. Many lawyers offer a free initial consultation, and state bar associations operate lawyer referral services that can help you find someone licensed in your state.
Sources and references
- American Bar Association, Model Rule of Professional Conduct 1.5 (Fees) (opens in a new tab) — model requirements that contingent fee agreements be in writing, signed by the client, and explain how the fee and expenses are calculated; individual states adopt their own versions
- American Bar Association: Find Legal Help (opens in a new tab) — directory of lawyer referral services and legal aid by state