How a contingency fee works
A contingency fee means the lawyer's fee depends on the result. If there is no recovery, you owe no fee. If there is, the lawyer takes an agreed percentage of it. This is why most injured people can hire a lawyer without paying anything up front.
The percentage is only half of the arrangement. The other half is case costs: money the firm spends to run your claim, such as medical records, police reports, court filing fees, deposition transcripts and expert witnesses. Most firms pay these as they go and take them back from the settlement.
The American Bar Association's model rules, which almost every state has adopted in some form, require a contingency fee agreement to be in writing and signed by the client, and to say how the percentage changes at each stage and whether costs come out before or after the fee is calculated.
The percentages you will usually see
| Stage the case ends at | Typical fee |
|---|---|
| Settles before a lawsuit is filed | 33% to 35% |
| Settles after a lawsuit is filed | 35% to 40% |
| Goes to trial or appeal | 40% to 45% |
These are common market rates, not legal limits. A strong case with clear liability and high insurance limits gives you room to ask for less. A complicated or risky case, such as medical malpractice or a claim against a trucking company, often costs more to run and firms are less flexible.
States and claim types with fee limits
Most states leave the percentage to the agreement between you and the lawyer, as long as it is reasonable. Some set limits:
- Florida sets a schedule for personal injury cases, starting at 33⅓% of any recovery up to $1 million if the case settles before the defendant answers the lawsuit, and 40% after that.
- Michigan caps personal injury contingency fees at one third of the amount recovered after costs.
- California limits fees in medical malpractice cases to 25% before a lawsuit is filed and 33% after.
- New York uses a sliding scale for medical malpractice, starting at 30% of the first $250,000.
- Claims against the federal government under the Federal Tort Claims Act are capped at 20% for an administrative settlement and 25% once a lawsuit is filed.
If your case falls under one of these rules, the agreement should reflect it. If it does not, ask why.
Costs: before or after the fee?
This single clause can change what you keep by thousands of dollars. Take a $90,000 settlement with $6,000 in case costs and a 33⅓% fee:
| Fee calculated on the gross | Fee calculated after costs | |
|---|---|---|
| Settlement | $90,000 | $90,000 |
| Costs repaid | $6,000 | $6,000 |
| Lawyer's fee | $30,000 (⅓ of $90,000) | $28,000 (⅓ of $84,000) |
| You receive (before liens) | $54,000 | $56,000 |
Neither method is improper, but you should know which one you are agreeing to. Also ask what happens to costs if you lose: many firms write them off, while some agreements make you liable for them.
What comes out after the fee
The fee is not the only deduction. Health insurers, Medicare, Medicaid and unpaid medical providers can have a legal right to be repaid from your settlement. These liens are paid from your share, not the lawyer's, although a good lawyer will negotiate them down. Our guide to medical liens explains how that works.
So the order is usually: settlement, minus the fee, minus case costs, minus liens, equals what you take home. The settlement calculator shows this for your own numbers, with a fee percentage you can change.
Calculator
See what you would keep after fees and liens
Full settlement range with your state's fault rule, fees and deadline.
Is a lawyer worth it for your claim?
The honest answer depends on the size of the claim and how contested it is. A lawyer adds the most value when:
- the injury needs months of treatment or has lasting effects
- the other side disputes fault
- the at-fault driver's policy limit is lower than your losses, so your own underinsured coverage comes into play
- a commercial vehicle, employer or government body is involved
- the deadline is close
For a minor injury with clear fault and a few thousand dollars in bills, the fee can take more than a lawyer is able to add. Our guide on whether you need a lawyer after a minor car accident walks through that decision.
A quick break-even check: divide the insurer's best offer by (1 minus the fee). With a $12,000 offer and a 33% fee, a lawyer would need to settle for about $18,000 before you keep the same amount, and more once costs are included.
Questions to ask before you sign
- What is the percentage at each stage, and when exactly does it step up?
- Are costs deducted before or after the fee is calculated?
- Who pays the costs if we lose?
- Which costs do you expect in a case like mine, and roughly how much?
- Will you negotiate my medical liens, and is that included in the fee?
- Who will actually handle my case day to day?
- Can I get a copy of the signed agreement today?
A reputable firm will answer all of these without hesitation. You are also free to talk to more than one lawyer before choosing, and most offer a free consultation.
If you are unhappy with the fee later
If you think a fee is unreasonable, raise it with the lawyer first and ask for a written settlement statement showing every deduction. Many state bars run fee dispute or fee arbitration programs, and a court can review a contingency fee that is clearly excessive. Keep your signed agreement, because it is the starting point for any dispute.