What Is a Contingency Fee
A contingency fee is an arrangement where a lawyer is paid a percentage of the money recovered in a case instead of charging by the hour or up front. If the case does not result in a recovery, the lawyer generally does not receive a fee. It is the most common way people pay for a personal injury lawyer, and it makes legal help possible for people who could never afford hourly rates after an accident.
How a Contingency Fee Works
When you hire a lawyer on contingency, you sign a written agreement that sets the percentage the lawyer will receive. The lawyer then handles the case, often for months or longer, without billing you along the way. When the case settles or a verdict is paid, the fee is taken from the recovery and the remaining money, minus any case costs and outstanding medical liens, goes to you. The law firm typically sends you a closing statement that shows exactly how the money was divided.
Because the lawyer is only paid if you are, the arrangement lines up your interests. The firm has every reason to pursue the strongest possible result and to take on cases it believes in.
Typical Contingency Fee Percentages
There is no single national rate. One-third of the recovery is a common fee in personal injury cases, and many agreements use a sliding scale where the percentage increases if a lawsuit is filed or the case goes to trial, often to around 40 percent. The percentage can depend on the type of case, the amount of work expected, and the risk involved. Some states limit contingency fees in certain kinds of cases, such as medical malpractice or workers’ compensation.
The Rules Behind Contingency Fees
Contingency fees are governed by each state’s rules of professional conduct, which in most states follow the American Bar Association’s Model Rules. Those rules require a contingency fee agreement to be in writing and signed by the client. The agreement must state the percentage or percentages that apply at each stage, explain which expenses will be deducted from the recovery, and say whether expenses come out before or after the fee is calculated. It must also tell the client about any expenses they will owe whether or not they win. At the end of the case, the lawyer must give the client a written statement showing the outcome and how the money was distributed. The rules do not allow contingency fees in criminal cases or in divorce cases where the fee depends on securing the divorce or the amount of support or property awarded. All fees must also be reasonable.
Fees Versus Costs in a Contingency Case
Case costs are separate from the attorney’s fee. Costs include court filing fees, medical record charges, deposition transcripts, and expert witness fees. Many firms advance these costs and are repaid from the settlement. Whether costs are deducted before or after the percentage is calculated can change how much you take home, so read that part of the agreement closely and ask the firm to walk you through an example.
Questions to Ask Before Signing
- What percentage applies if the case settles before a lawsuit is filed?
- Does the percentage change if the case goes into litigation or to trial?
- Who pays case costs, and are they deducted before or after the fee?
- Will I owe anything if the case is lost?
- How are medical liens and unpaid bills handled at the end?
- Will I receive a written closing statement?
Frequently Asked Questions
Is a contingency fee the same as “no fee unless we win”?
Generally, yes. The phrase means you owe no attorney fee without a recovery. Check whether you could still owe case costs if the case is unsuccessful.
Can I negotiate the percentage?
Sometimes. Some firms will adjust the percentage based on the strength of the case or how early it is likely to settle. It is reasonable to ask.
Are contingency fees used outside personal injury?
Yes. They also appear in wrongful death, workers’ compensation, some employment claims, Social Security disability, and certain business disputes.
What if I fire my lawyer during a contingency case?
You can change lawyers. The first lawyer may still be entitled to payment for work already done, which is often resolved out of the eventual recovery. Your agreement may address this.