Injury, disability and some employment matters are commonly handled on a contingency fee: instead of billing you by the hour, the attorney takes an agreed percentage of whatever is recovered. If nothing is recovered, there is no attorney's fee. It's the arrangement that lets people without savings hire a lawyer at all.
What the percentage typically covers
The percentage is the attorney's fee for their work. Common ranges run from roughly a quarter to forty percent, and many agreements use a sliding scale that increases if the case goes to trial or appeal, because the work multiplies. The exact number is negotiable more often than people assume, and some states cap it for certain case types.
What it usually doesn't cover
Costs are separate from fees, and this is where surprises happen. Costs can include court filing fees, medical record fees, deposition transcripts, expert witnesses and investigators. Agreements handle costs in different ways:
- The firm advances costs and deducts them from your share at the end.
- The firm advances costs and, if the case is lost, you owe nothing for them.
- The firm advances costs but you remain responsible for them even if the case is lost.
The third version is the one to notice. Ask directly: "If we lose, will I owe costs?"
Gross or net?
Whether the percentage is taken before or after costs changes your check. On a hypothetical $60,000 recovery with $6,000 in costs and a one-third fee, "fee off the gross" leaves you $34,000; "fee off the net" leaves you $36,000. Your agreement will specify which applies. Read that line.
Liens and medical bills
If a health insurer, Medicare, Medicaid or a hospital paid for your treatment, they may have a right to be reimbursed from the recovery. A good attorney negotiates those liens down, and the agreement should say how lien reduction is handled.
A contingency agreement is a contract. Take it home, read it, and ask about anything you don't understand before signing.
None of this is a reason to avoid contingency work. It's how most injury victims get representation. It's simply a reason to know what you're signing.
Terms worth asking about before you sign
The percentage gets all the attention, but several quieter terms can matter just as much. Most are fair game for a polite question:
- When does the fee step up? Some agreements raise the percentage once a lawsuit is filed, others only if the case goes to trial. The trigger point can matter as much as the numbers.
- Are in-house costs charged? Some firms bill for photocopies, postage and internal staff time; others absorb them.
- Is interest charged on advanced costs? A few firms charge interest on money they front, which can add up over a long case.
- Does the fee apply to money already offered? If an insurer made an offer before you hired anyone, ask whether the fee could apply only to what the attorney recovers above it.
- How are big expenses approved? You may want to be consulted before the firm hires an expert or spends a large sum.
You won't get every change you ask for, and you don't need to. The goal is to know what each clause means before it shows up on your final statement.
How to read your settlement statement
When a case resolves, your attorney should give you a written settlement statement (sometimes called a closing or disbursement statement) before any money is paid out. The ethics rules in most states require one in contingency matters. It lays out where every dollar goes, and it's the moment to ask questions, not after the check clears.
A clear statement starts with the gross recovery and subtracts the attorney's fee. It then lists each cost individually: filing fees, records charges, expert invoices, deposition transcripts. Next come any liens being paid, ideally with both the original amount and the reduced amount if your attorney negotiated one down. The last line is your net.
Check that the fee matches the percentage in your agreement and was calculated on the right base, gross or net. Look for vague entries like "case expenses" with no detail, and ask for the invoices behind them. If a lien is listed, ask for the letter from the lienholder confirming the final figure. You're entitled to understand the document before you sign it.
A realistic example
Picture this: Luis tripped on a broken stair at his apartment complex and hired an attorney on a one-third contingency fee, calculated on the gross recovery. The claim settled without a lawsuit. Using illustrative numbers only, say the settlement was $30,000.
Before signing the release, Luis received a settlement statement. The fee was $10,000, one-third of the gross. Costs came to $1,500, broken out into medical records fees, postage, a photographer's invoice and a $200 line marked "miscellaneous." His health insurer had paid $5,000 toward his treatment and claimed reimbursement. His attorney negotiated that down to $3,000, and the statement showed both figures.
Luis asked about the miscellaneous charge. The firm sent the underlying invoice from a records retrieval service, and it matched. Satisfied, he signed. His net, in this illustration, was $15,500.
None of it surprised him, because he'd asked for a sample statement when he signed the fee agreement.
Common questions
Is the contingency fee taken before or after medical bills are paid?
Usually before. In most agreements the fee is calculated on the total recovery, and medical liens are then paid out of your share. That's why lien reductions matter so much to your bottom line. Some attorneys will voluntarily reduce their fee when liens would leave you with very little, but that's a courtesy rather than a rule. Your agreement and the settlement statement should show the order clearly.
Do I still pay the full percentage if my case settles quickly?
Generally yes, since the agreed percentage applies whenever the recovery comes in. That said, the lowest tier of a sliding-scale agreement usually covers early settlements, and some attorneys will discuss a reduced fee if an insurer had already made a reasonable offer before they were hired. If you think your claim may resolve fast, raise it at the start rather than after the offer arrives.
Can a lawyer take a divorce or criminal case on contingency?
In most states, no. Professional conduct rules generally prohibit contingency fees in criminal defense and in divorce, custody and support matters, because tying a lawyer's pay to those outcomes creates conflicts courts consider unacceptable. Those cases are typically billed hourly or at a flat fee. Contingency arrangements show up most often in injury claims, disability benefits appeals and some employment disputes.
Ask for a sample settlement statement when you sign, so you know how the final numbers will be laid out.
