How Contingency Fees Work in Personal Injury Cases

A contingency fee means your lawyer is paid a percentage of the money recovered for you, and nothing if you recover nothing. One-third is a common rate. Case costs such as filing fees and expert bills are separate. How they are handled can change your take-home amount by thousands of dollars.

What percentage do injury lawyers charge?

A one-third fee is common, according to Maryland's People's Law Library. It also notes that some lawyers use a sliding scale based on how far the case goes before it settles.

A typical sliding scale charges less for an early settlement and more once a lawsuit is filed or the case goes to trial. The jump reflects the extra work of depositions, expert testimony and trial preparation.

Florida publishes the clearest benchmark. Its Rule 4-1.5(f)(4)(B) presumes a fee is "clearly excessive" if it goes above these levels without court approval.

• Before the defendant answers the lawsuit. 33 1/3% of the first $1 million, 30% of the next $1 million and 20% of anything above $2 million.
• After the answer, through trial. 40% of the first $1 million, 30% of the next $1 million and 20% above $2 million.
• If every defendant admits liability in its answer and only damages are tried. 33 1/3% of the first $1 million, 20% of the next $1 million and 15% above $2 million.
• Appeals. An extra 5% of any recovery once an appeal is filed.

What is the difference between fees and costs?

The fee is the lawyer's pay. Costs are the out-of-pocket expenses of building the case, such as court filing fees, medical record charges, deposition transcripts and expert witness bills.

Many lawyers advance costs and take them back from the settlement, though some ask you to pay items such as filing fees up front. The American Bar Association's Model Rule 1.5(c) requires the agreement to say whether costs come out before or after the fee is calculated. It must also tell you which expenses you owe even if you lose.

That before-or-after choice matters more than most people expect.

Your share may shrink again before you see it. Health insurers, hospitals and government programs often hold liens that are paid from your portion. Our guide to medical liens explains how those are negotiated.

Which states and cases have fee caps?

Most personal injury fees are limited only by the general rule against unreasonable fees. Caps are more common in medical malpractice and in claims against the federal government.

• California medical malpractice. Business and Professions Code §6146 caps the fee at 25% for a settlement signed before a lawsuit or arbitration demand is filed. After filing, the cap is 33%. A court may approve more for good cause, and the percentage applies to the recovery after costs.
• New York medical malpractice. Judiciary Law §474-a uses a sliding scale. It allows 30% of the first $250,000, 25% of the next $250,000 and 20% of the next $500,000. After that, it drops to 15% of the next $250,000 and 10% above $1.25 million.
• Claims against the federal government. The Federal Tort Claims Act, at 28 U.S.C. §2678, caps fees at 20% of an administrative settlement. The cap is 25% of a judgment or a settlement after suit. A lawyer who charges more can be fined up to $2,000 or jailed for up to 1 year.

These caps apply to the case type, not to every injury case in the state. A California car crash case, for example, is not covered by §6146. Our California page covers other state rules.

How much will you actually take home?

Your net amount is the settlement minus the fee, costs and any liens on your share. On a small claim, liens can take a large bite, so ask for an estimate before you settle.

The same math shows why stage-based fees matter. In a California malpractice case, a $200,000 net settlement signed before suit carries a maximum fee of $50,000 at 25%. Signed after filing, the cap rises to $66,000 at 33%.

Federal claims follow the same pattern. A $200,000 FTCA settlement reached at the agency level caps the fee at $40,000. After a lawsuit, the cap is $50,000.

Does the fee agreement have to be in writing?

Yes, under the ethics rules of most states. ABA Model Rule 1.5(c), which most state rules follow, requires a written agreement "signed by the client." It must state the percentage for settlement, trial and appeal, and how expenses are handled.

Some states add their own rules. Texas Government Code §82.065 requires the contract to be in writing and signed by both the lawyer and the client. Florida's statement of client's rights gives you 3 business days after signing to cancel the contract in writing, for any reason.

When the case ends, Rule 1.5(c) requires a written closing statement. It must show the outcome, what you received, and how that figure was calculated. Ask for it if you don't get one.

What should you ask before you sign?

1. What is the percentage at each stage? Get the pre-suit, post-filing, trial and appeal rates in writing.
2. Are costs taken out before or after the fee? Use the $100,000 example above to see the difference.
3. Who pays costs if we lose? Some agreements make you repay costs even with no recovery. Rule 1.5(c) requires the agreement to say so clearly.
4. Is the fee calculated on the gross settlement or after liens? Ask for a sample breakdown with your likely medical bills.
5. What happens if I change lawyers? The first lawyer may claim part of the fee for work already done.
6. Will you reduce the fee if liens eat most of my share? It costs nothing to ask before you sign.

Our list of questions to ask a personal injury lawyer covers communication, staffing and trial experience. Compare at least two written fee agreements before you choose.