How contingency fees work, and how to compare them before you sign

A contingency fee means your lawyer is paid a share of what you recover. Here is how the percentage, costs and fine print work, and how to compare offers.

Hiring a lawyer · 2026-11-04 · The Advicey team · general information, not legal advice

Key takeaways

A contingency fee is a percentage of the money you recover. If you recover nothing, you usually owe no fee, but you may still owe case costs unless the agreement says otherwise.
One-third (about 33%) is common for injury cases, and many agreements raise the percentage if the case goes to trial or appeal.
Whether costs come out before or after the lawyer's percentage changes what you take home by thousands of dollars on a typical settlement.
Professional conduct rules require a written, signed contingency agreement that explains the percentage, the costs and how the money is split.
Some fees are capped by law, including Social Security disability, workers' compensation and some medical malpractice cases.

If you were hurt in a crash, cheated out of wages or denied an insurance claim, the lawyer who takes your case will probably offer to work on a contingency fee. That means you pay nothing up front. Instead, the lawyer is paid a percentage of whatever money you recover, whether through a settlement or a court judgment. If there is no recovery, there is usually no attorney's fee.

That arrangement opens the courthouse door for people who could never pay hourly rates of several hundred dollars. But "no fee unless you win" is only the headline. The real cost of a contingency fee depends on the percentage, on whether it changes as the case moves forward, on how case costs are handled, and on the order in which money comes out of the settlement. Two agreements that both say "33%" can leave you with very different amounts.

This guide explains each moving part in plain language, shows the math with a worked example, and gives you a checklist for comparing offers from more than one firm.

What a contingency fee is, and what it is not

A contingency fee is a fee that is contingent on the result. The lawyer agrees to take a share of the recovery instead of billing by the hour. The lawyer takes the risk that the case produces nothing, and in return shares in the upside if it succeeds.

It helps to separate three different kinds of money that show up in a contingency case:

The attorney's fee. This is the lawyer's percentage of the recovery. It is the lawyer's pay for their time and skill.
Case costs (also called expenses). These are out-of-pocket amounts spent to build the case: court filing fees, deposition transcripts, expert witnesses, medical record charges, investigators, accident reconstruction, postage and copying. They are not the lawyer's pay, but someone has to cover them.
Liens and third-party claims. Health insurers, Medicare, Medicaid, hospitals and some government programs may have a legal right to be repaid from your recovery for bills they covered. These come out of your share, not the lawyer's.

A contingency fee is not free legal help. It is a different way of paying for it. When a case settles, the fee can easily be the largest single deduction from the check, so it deserves the same attention you would give to any major purchase.

The percentage: what is common, and what changes it

There is no single national rate. In injury cases, one-third of the recovery (33 or 33.3 percent) is widely used as a starting point. Many agreements use a sliding or "stepped" scale instead of one flat number:

A lower percentage if the case settles before a lawsuit is filed.
A higher percentage, often 35 to 40 percent, once a lawsuit is filed or the case is set for trial.
A further increase if there is an appeal.

The logic is that a case that goes to trial takes far more of the lawyer's time and carries more risk. The practical effect is that the same settlement amount can cost you more if it comes later in the case. If an agreement has steps, ask exactly what event triggers each step. "Filing suit" and "within 60 days of trial" are very different points in a case.

Fees that are capped by law

In some areas the law limits what a lawyer may charge, regardless of what the agreement says:

Social Security disability. Representatives' fees are generally limited to 25 percent of past-due benefits, up to a dollar cap set by the Social Security Administration, and the agency must approve the fee. The SSA publication on appeals listed below explains that a representative cannot charge more than the agency authorizes.
Workers' compensation. Most states set or approve attorney's fees in workers' comp cases, often as a percentage of benefits recovered.
Medical malpractice. Several states cap contingency fees in malpractice cases or use a sliding scale that lowers the percentage as the recovery grows.
Claims against the federal government. Fees in Federal Tort Claims Act cases are limited by federal statute.

If your case falls in one of these areas, ask the lawyer to point you to the rule that sets the fee. A firm that bids on Advicey for a case with a fee set by law commits to follow that limit, and the bid card says so.

Fees that are not allowed

Professional conduct rules based on ABA Model Rule 1.5 generally prohibit contingency fees in criminal defense, and in divorce cases where the fee would depend on getting a divorce or on the amount of alimony, support or a property settlement. If someone offers to defend a criminal charge "for a percentage," that is a red flag.

Case costs: the clause most people skip

Costs are where two agreements that look identical can differ the most. Read the cost clause for answers to three questions.

Who pays costs if the case loses? Many firms advance all costs and absorb them if there is no recovery. Others advance them but require you to repay them no matter what. On a case that needs expert witnesses, costs can run into tens of thousands of dollars, so this matters even though it rarely comes up in the first conversation.

Are costs deducted before or after the fee is calculated? This is the single most important detail in the agreement, and we work through the math below.

What counts as a cost? Some firms charge for in-house expenses such as copying, postage, legal research subscriptions or a flat "file fee." Others do not. Ask for a list, and ask whether interest is charged on costs the firm advances. Some firms finance costs through outside lenders and pass the interest on to the client.

Worked example: before or after costs

Imagine a case settles for $100,000. The fee is 33.3 percent, and the firm advanced $10,000 in costs.

Fee calculated on the gross recovery (costs deducted after the fee):

Settlement: $100,000
Attorney's fee (33.3% of $100,000): $33,300
Costs repaid to the firm: $10,000
Amount to you before liens: $56,700

Fee calculated on the net recovery (costs deducted before the fee):

Settlement: $100,000
Costs repaid to the firm: $10,000
Net recovery: $90,000
Attorney's fee (33.3% of $90,000): $29,970
Amount to you before liens: $60,030

Same settlement, same percentage, and you keep $3,330 more with the second method. The larger the costs, the bigger the gap. ABA Model Rule 1.5(c) requires a contingency agreement to state whether expenses are deducted before or after the contingent fee is calculated, so the answer must be in writing. If you cannot find it, ask before you sign.

What the written agreement must say

Under ABA Model Rule 1.5(c), which most states follow in some form, a contingency fee agreement must be:

In writing and signed by the client.
Clear about the method of calculating the fee, including the percentage or percentages that apply if the case settles, goes to trial or is appealed.
Clear about litigation and other expenses to be deducted from the recovery, and whether those expenses come out before or after the fee is calculated.
Clear about expenses you will owe whether or not you win.

When the case ends, the lawyer must give you a written statement showing the outcome, the amount paid to you and how it was calculated. That settlement statement is your chance to check every number against the agreement. Our guide to reading a settlement statement walks through it line by line.

Rule 1.5(a) also says a fee must not be unreasonable. Even a signed agreement can be challenged if the fee is out of proportion to the work and the result, although that is the exception rather than the rule.

Other terms to look for

Beyond the percentage and costs, a good agreement answers these questions in plain words:

What happens if you fire the lawyer? Many agreements give the first lawyer a claim to be paid for work done, often out of the eventual recovery. That should not stop you from changing lawyers, but you should know the rule. See Can you change lawyers in the middle of a case?
What happens if the lawyer withdraws? Look for the circumstances in which the firm can stop representing you, and what you would owe.
Does the fee apply to all money recovered? Some agreements apply the percentage to property damage, medical payments coverage or benefits you could have collected without a lawyer. Ask whether those are included.
Who decides whether to settle? Under professional conduct rules the decision to accept a settlement is yours. The agreement should not say otherwise.
Is there a referral or co-counsel arrangement? If another firm will share the fee, the rules generally require that you agree to it in writing and that the total fee is not increased because of it.
How will the firm keep you informed? Rule 1.4 requires lawyers to keep clients reasonably informed and to respond to reasonable requests for information. Some firms put their communication promise in writing.

How to compare contingency fee offers

Talking to more than one firm is normal and smart. When you compare, line up the same facts for each offer:

Base percentage if the case settles before a lawsuit.
Each step-up, the percentage after that step, and the exact trigger.
Costs if you lose: does the firm absorb them, or do you owe them?
Before or after: are costs deducted before the fee is calculated?
In-house charges and interest on advanced costs.
Which recoveries the fee applies to.
Who will actually work on your case, and how often you will hear from them.

A slightly lower percentage is not automatically the better deal. A firm with the experience and resources to take your case to trial can sometimes recover much more, which matters more than a few percentage points. But all else being equal, lower fees and fairer cost terms leave more money with you.

On Advicey, every bid card shows the most that firm will charge you, so you can compare the fee side by side before you talk to anyone. Bids are advertising, and Advicey does not recommend or rate lawyers. The firm you pick still needs to put the full terms in a written agreement for you to sign. You can see how it works on the How it works page, and use the [fee-savings illustration](/) on our home page to see what a difference of a few points can make.

Negotiating the fee

Contingency fees are negotiable, though many people do not realize it. You are more likely to get a lower percentage when:

Fault is clear, for example a rear-end crash with a police report and witnesses.
Your damages are well documented with medical records and bills.
There is plenty of insurance coverage to pay a fair settlement.
The insurer has already made an offer, and the lawyer's job is to improve it.

In that last situation, some lawyers will agree to take a percentage only of the amount they recover above the existing offer. It is a fair question to ask.

Things that make a lower fee less likely include disputed fault, serious injuries that need expert testimony, a case that will almost certainly need a lawsuit, and claims against government agencies with special notice rules.

Taxes and your recovery

How a recovery is taxed depends on what it compensates. Damages for personal physical injuries or physical sickness are generally excluded from income under federal tax law, while back pay in an employment case, punitive damages and interest are generally taxable. The IRS explains the rules in Publication 4345. In some cases you may be taxed on the gross amount even though part of it went to your lawyer, so for larger recoveries it is worth talking with a tax professional before you settle. Our guide Are legal settlements taxable? goes further.

Common mistakes to avoid

Signing at the first meeting without reading the agreement. You can take it home. A firm that pressures you to sign immediately is telling you something.
Assuming "33%" means the same thing everywhere. The steps, the cost terms and the base for the calculation matter as much as the headline number.
Not asking who pays costs if you lose. This can be the difference between owing nothing and owing a five-figure bill.
Missing the filing deadline while you shop. Comparing offers is wise, but legal deadlines keep running. Check the usual deadline for your claim with our filing deadline checker and ask each lawyer about your specific deadline.
Not keeping a copy. Keep the signed agreement and every update. You will want it when the settlement statement arrives.

A short checklist before you sign

I have the agreement in writing, and I have read it.
I know the base percentage and every step-up, and what triggers each one.
I know whether costs come out before or after the fee.
I know who pays costs if there is no recovery.
I know what happens if I change lawyers.
I know who will handle my case day to day and how we will communicate.
I know my filing deadline, and the lawyer has confirmed it.

If you can check every line, you understand your contingency fee better than most people ever do. If you cannot, ask before you sign. A good lawyer will be glad to explain.

When you are ready to compare, you can post your case free on Advicey. Licensed firms in your state bid, every bid shows the firm's maximum fee, and you choose one firm or none.

Frequently asked questions

What percentage do most contingency fee lawyers take?

Many personal injury lawyers charge about one-third (33%) of the recovery, and agreements often rise to 35% to 40% if the case is filed in court, goes to trial or is appealed. Some areas of law have legal caps, so the percentage depends on the case type and your state.

Do I pay anything if I lose a contingency fee case?

Usually you owe no attorney's fee if there is no recovery. Case costs such as filing fees, expert fees and medical record charges are a separate question. Many firms absorb them if the case loses, but some agreements make you responsible, so read that clause before signing.

Can I negotiate a contingency fee?

Yes. The percentage, how costs are handled and the trial step-up are all negotiable. A strong case with clear liability and documented damages gives you more room to ask for a lower percentage.

Is the contingency fee taken before or after medical bills?

The lawyer's percentage is normally calculated on the gross recovery. Medical liens and bills are usually paid out of your share afterward. Your settlement statement should list every deduction in order.

Are contingency fees allowed in every kind of case?

No. Professional conduct rules generally prohibit contingency fees in criminal defense and in most divorce, alimony and child support matters. They are common in injury, employment, insurance and consumer cases.

Sources

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