You need legal help after an injury, but you’re worried about affording an attorney. You’ve heard that personal injury lawyers work on contingency, but you’re not entirely sure what that means or whether there are hidden costs you should know about.
Our friends at Fogelman Law LLC discuss how contingency arrangements have made legal representation accessible to people who couldn’t otherwise afford it. As a motorcycle accident lawyer will tell you, this payment structure aligns our interests with yours in a way that hourly billing never could.
How Contingency Fee Arrangements Actually Work
A contingency fee means your attorney gets paid only if you recover compensation. No recovery means no attorney fee, regardless of how many hours we spent on your case. This structure eliminates the financial barrier that prevents many injured people from seeking legal help.
The fee is typically a percentage of your total recovery, whether through settlement or trial verdict. Common percentages range from 33% to 40% depending on the case complexity and how far into litigation it progresses.
If you settle for $100,000 at a 33% contingency rate, your attorney receives $33,000. If your case goes to trial and the fee agreement specifies 40% for trial cases, that same $100,000 recovery means $40,000 to your attorney.
Standard Contingency Fee Percentages
Most personal injury attorneys use similar fee structures, though the exact percentages vary by region, case type, and firm policy:
- 33% for cases that settle before filing a lawsuit
- 40% for cases that require filing suit and going through litigation
- Some agreements include graduated scales where the percentage increases if the case goes to trial or appeal
These percentages aren’t arbitrary. They reflect the risk attorneys assume by working without guaranteed payment and the resources required to properly handle injury cases.
What Contingency Fees Don’t Cover
A common misunderstanding is thinking the contingency fee covers everything. It doesn’t. The fee compensates your attorney for their time and legal services, but case costs are separate expenses.
Costs include filing fees, court reporter charges, medical record retrieval fees, witness fees, deposition expenses, and payments to medical professionals for review or testimony. These costs can run from a few hundred dollars for simple cases to tens of thousands for complex litigation.
Most contingency fee agreements specify that clients remain responsible for costs regardless of whether the case succeeds. Some firms advance these costs and deduct them from your settlement. Others require clients to pay costs as they’re incurred.
Read your fee agreement carefully to understand how costs are handled. The difference between paying costs upfront versus having them deducted from your settlement significantly affects your out-of-pocket expenses during the case.
How Costs Affect Your Final Recovery
Even when your attorney advances costs, you typically repay them from your settlement before calculating the contingency fee. This distinction matters more than most people realize.
Example one: Settlement is $100,000, costs were $5,000, and contingency fee is 33%. The fee gets calculated on the full $100,000 ($33,000), then costs get deducted, leaving you $62,000.
Example two: Same numbers but the agreement calculates the fee after costs are deducted. Subtract $5,000 in costs first, leaving $95,000, then take 33% ($31,350), leaving you $63,650.
That $1,650 difference comes from how the math is structured. Make sure you understand which method your agreement uses.
When Contingency Fees Aren’t Appropriate
Not all legal matters use contingency fees. Criminal cases, divorce proceedings, and most business disputes require hourly billing or flat fees. Contingency arrangements work specifically for cases where you’re seeking monetary damages.
Even within personal injury law, some attorneys won’t take certain cases on contingency. If your damages are minimal or liability is questionable, the risk-reward calculation doesn’t justify working without guaranteed payment.
Why Contingency Fees Benefit Clients
This payment structure creates powerful incentives for your attorney to maximize your recovery. We don’t get paid unless you do, and our payment increases when your recovery increases. Our financial interests align with yours completely.
Contingency fees also mean you can afford quality legal representation regardless of your current financial situation. You don’t need to save money or take out loans to hire an attorney. The legal system becomes accessible to everyone, not just people with money to pay hourly rates.
The American Bar Association recognizes how contingency fees provide access to justice for people who couldn’t otherwise afford legal representation in civil cases.
Negotiating Contingency Fee Percentages
Fee percentages aren’t set in stone. Some attorneys negotiate rates depending on case specifics. A straightforward liability case with clear damages might warrant a lower percentage than a complex case requiring extensive litigation.
Factors that might influence fee negotiations include the strength of your liability case, the clarity of your damages, whether the case will likely settle quickly, how much work the attorney anticipates, and whether you have other offers from different firms.
Don’t be afraid to discuss fees with potential attorneys. Asking about the percentage, how costs are handled, and what happens if you lose doesn’t make you a difficult client. It makes you an informed consumer.
Additional Costs Beyond Attorney Fees
Remember that medical liens, outstanding bills, and other claims against your settlement get paid before you receive your portion. The attorney’s fee is just one deduction from your gross settlement amount.
A $100,000 settlement might break down as follows: $33,000 attorney fee, $8,000 case costs, $25,000 medical liens, leaving you $34,000. Understanding this breakdown from the start prevents disappointment when settlement checks are distributed.
Getting Fee Agreements In Writing
Every contingency fee arrangement must be in writing. The agreement should specify the exact percentage, how costs are handled, what happens if you lose, when and how the percentage might change, and how settlement proceeds get distributed.
Read this document carefully before signing. Ask questions about anything unclear. This contract governs one of the most important financial relationships you’ll have, so understanding it completely is worth the time investment.
The Value Beyond The Percentage
Focusing solely on the contingency percentage misses the bigger picture. A skilled attorney might charge 40% but negotiate a settlement three times larger than you could get alone or with a cheaper, less experienced lawyer.
Would you rather keep 60% of a $200,000 settlement or 67% of a $75,000 settlement? The math is simple. Attorney skill, reputation, and resources often matter more than saving a few percentage points on the fee.
If you have questions about how contingency fees work, what costs you might face, or whether a fee agreement is fair and reasonable, reach out to discuss the specific terms and help you understand exactly what you’ll pay and what you’ll receive from your injury settlement.