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This is a plain-English explainer, not legal advice. Only a licensed attorney representing you can evaluate the specific facts of your case.
The Contingency Fee at a Glance
The contingency fee is the near-universal payment structure for plaintiff personal injury representation. Under a contingency arrangement, the attorney receives a percentage of the recovery — but only if the case succeeds. If there is no recovery, there is no fee.
Standard Percentages
- 33.3% (one-third): Pre-litigation settlement — case resolves without filing suit.
- 40%: Post-filing settlement or verdict — case required litigation.
- 45%–50%: Post-appeal cases in some fee agreements.
Rates can vary by attorney and case complexity, but these are industry benchmarks. Some firms use tiered arrangements (25% pre-suit, 33% filed, 40% appeal).
State Fee Caps
Several states cap contingency fees, particularly in specific case types:
- California: MICRA caps medical malpractice fees on a sliding scale (40% of first $50K down to 15% over $600K).
- Florida: Sliding scale for med mal capped by state constitution (30% up to $250K down to 10% over $1M).
- New York: Med mal fee cap similar sliding scale.
- New Jersey: Court-supervised med mal fee schedule.
How Fees Are Calculated at Settlement
Assume a $150,000 settlement at 33.3% contingency:
| Item | Amount |
|---|---|
| Gross settlement | $150,000 |
| Attorney fee (33.3%) | $50,000 |
| Case costs (filing, records, experts) | $3,000 |
| Medical liens (post-negotiation) | $15,000 |
| Pre-settlement advance payoff | $10,000 |
| Net to plaintiff | $72,000 |
See our detailed distribution math piece.
What Case Costs Cover
Case costs are separate from the attorney fee. They cover:
- Filing fees.
- Records subpoenas and copies.
- Expert witness retention.
- Deposition costs (transcripts, court reporters).
- Investigation.
- Trial exhibits.
Case costs are typically advanced by the firm and reimbursed from settlement — either off the top or after the fee.
Fee Distribution Timing
The attorney fee is disbursed from the attorney's IOLTA (Interest on Lawyers Trust Account) as part of the closing statement. Standard sequence:
- Settlement check received into IOLTA.
- Attorney fee disbursed to firm.
- Case costs reimbursed.
- Medical liens paid.
- Pre-settlement advances paid.
- Net to plaintiff.
What Attorneys Cannot Do
- Charge a contingency fee on criminal cases or divorce cases (varies by state).
- Accept referral fees from pre-settlement funders (violates Rule 1.8(e) and state parallels).
- Advance living expenses to clients (also Rule 1.8(e)).
- Charge unreasonable fees (Rule 1.5).
Fee Agreement Best Practices
Legitimate fee agreements include:
- Written contingency percentage clearly stated.
- Case cost handling explained.
- Fee tier structure if applicable (pre-suit vs post-filing).
- Signed by both client and attorney.
- Copy provided to client at execution.
The Bottom Line
Contingency fees are the standard PI compensation model. Understand your fee agreement before signing, ask about state caps if med mal, and confirm case cost handling. Reputable attorneys explain every line of the closing statement.
For firms looking for a funder that treats the attorney relationship with the same care as the plaintiff relationship — no referral fees, no guarantees, transparent rates and caps — our attorney resources page walks through the process. Individual cases can be submitted via the application portal.
Frequently asked questions
No. Contingency fee arrangements require no upfront payment. If no recovery, no fee.
33.3% pre-suit, 40% post-filing. Higher for appeal cases in some agreements.
Yes. Several states cap fees, especially in med mal cases. Bar ethical rules require reasonableness.
Under most fee agreements, the firm absorbs case costs if there's no recovery. Verify with your agreement.
No. ABA Model Rule 1.8(e) and state parallels prohibit accepting anything of value from a funder for referring a client.
Sometimes, especially on large or particularly strong cases. Ask.
Doesn't apply to physical injury settlements (non-taxable). For taxable components, plaintiff reports gross, attorney fee is generally not deductible under current tax law (except for employment/civil rights cases).
Interest on Lawyers Trust Account — a special client trust account where settlement funds sit while attorney disburses per closing statement.
