Guide · Updated
How contingency fees work
Most injury lawyers are paid only if you get money. Here is how that usually works, and what to check before you sign.
Step 1: What a contingency fee is
With a contingency fee, the lawyer’s fee depends on the outcome. If you get money, the lawyer takes an agreed share of it. In Texas, the rules allow a fee that depends on the outcome of the case2.
Fee percentages differ from firm to firm and from state to state, and some states limit them for some cases. In New York, for example, the fee in a medical-malpractice case can’t be more than a sliding scale set by law: 30% of the first $250,000 recovered, falling in steps to 10% of anything over $1,250,0004. A lawyer can ask the court for more in extraordinary circumstances4.
Step 2: Fees and costs are different
The fee pays the lawyer. Costs are the money spent on your case, such as court filing fees, medical records and expert reports. In Texas, the agreement must say this2.
- Settlement
- $30,000
- Costs
- $3,000
- Fee, one-third of $30,000 (costs taken out after)
- $10,000
- You receive
- $17,000
- Fee, one-third of $27,000 (costs taken out first)
- $9,000
- You receive
- $18,000
These numbers are only to show the math. They are not typical fees or settlements.
To try your own numbers, use the settlement take-home calculator.
Step 3: What the written agreement should say
- The percentage the lawyer gets if the case settles, goes to trial, or is appealed.
- Which costs will be taken out of your money.
- Whether costs come out before or after the fee is figured.
- Any costs you must pay even if you lose.
In Texas, a contingency fee contract must be in writing and signed by you and the lawyer3. It must say how the fee is worked out, the percentage for settlement, trial or appeal if they differ, the expenses to be taken out of the money you get, and whether they come out before or after the fee2. The Texas rule doesn’t mention costs you owe if you lose, so ask about those.
In Texas, the lawyer must give you this statement2.
Step 4: Questions to ask about fees
- What percentage do you take, and does it change if the case goes to trial?
- Do costs come out before or after your fee?
- Will I owe anything if we lose?
- Can I see a sample settlement statement?
For more questions, see how to choose a personal injury lawyer.
To see how the fee, costs and medical bills come out of a settlement, read what you take home from a settlement. If you want to switch lawyers, read changing or firing your lawyer.
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Where the legal facts on this page come from
- ABA Model Rule of Professional Conduct 1.5 (fees)Read the source: ABA Model Rule of Professional Conduct 1.5 (fees)
- Tex. Disciplinary R. Prof’l Conduct 1.04 (fees)“(d) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (e) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined. If there is to be a differentiation in the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, the percentage for each shall be stated. The agreement shall state the litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement describing the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.”Read the source: Tex. Disciplinary R. Prof’l Conduct 1.04 (fees)
- Tex. Gov’t Code § 82.065 (contract for legal services)“(a) A contingent fee contract for legal services must be in writing and signed by the attorney and client. (b) Any contract for legal services is voidable by the client if it is procured as a result of conduct violating Section 38.12(a) or (b), Penal Code, or Rule 7.03 of the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, regarding barratry by attorneys or other persons.”Read the source: Tex. Gov’t Code § 82.065 (contract for legal services)
- N.Y. Judiciary Law § 474-a (contingent fees in medical, dental or podiatric malpractice)“2. Notwithstanding any inconsistent judicial rule, a contingent fee in a medical, dental or podiatric malpractice action shall not exceed the amount of compensation provided for in the following schedule: 30 percent of the first $250,000 of the sum recovered; 25 percent of the next $250,000 of the sum recovered; 20 percent of the next $500,000 of the sum recovered; 15 percent of the next $250,000 of the sum recovered; 10 percent of any amount over $1,250,000 of the sum recovered. … 4. In the event that claimant's or plaintiff's attorney believes in good faith that the fee schedule set forth in subdivision two of this section, because of extraordinary circumstances, will not give him adequate compensation, application for greater compensation may be made upon affidavit with written notice and an opportunity to be heard to the claimant or plaintiff and other persons holding liens or assignments on the recovery.”Read the source: N.Y. Judiciary Law § 474-a (contingent fees in medical, dental or podiatric malpractice)
This is general information, not legal advice.