Contingency Fee Agreements: No Win, No Fee Explained

Contingency fees let you hire an attorney without paying upfront - the lawyer gets paid only if you win. The American Bar Association explains contingency fee arrangements and how they're regulated. Understanding how these arrangements work helps you decide if it's right for your case.

How Contingency Fees Work

Basic Structure

• You pay nothing upfront for attorney fees
• Attorney takes percentage of recovery
• If you lose, attorney gets no fee
• Attorney is motivated to win and maximize recovery

What "Recovery" Means

• Settlement amount
• Jury verdict
• Arbitration award
• Any money obtained from defendant

Typical Percentages

Common Structures

• Standard: 33% (one-third)
• If suit filed: 33-40%
• If goes to trial: May increase to 40%
• Appeal: May increase further

Sliding Scale Example

• Pre-suit settlement: 25%
• After filing lawsuit: 33%
• After discovery begins: 37%
• At trial: 40%

Costs vs. Fees

What Are "Costs"?

Separate from attorney fees:

• Filing fees
• Service of process
• Expert witness fees
• Deposition transcripts
• Medical record copies
• Court reporter fees

How Costs Are Handled

• Attorney advances: Paid back from recovery
• Client pays as incurred: Less common
• Included in fee: Rare but possible

What If You Lose?

• Attorney fees: You owe nothing
• Costs: Depends on agreement
• Some attorneys absorb costs if you lose
• Others require reimbursement
• Ask before signing

Calculating Your Take-Home

Example Calculation

Settlement: $100,000

• Attorney fee (33%): $33,000
• Costs advanced: $5,000
• Your take-home: $62,000

Different Calculation Methods

• Fee before costs: Fee calculated on gross, costs from remainder
• Fee after costs: Costs deducted first, fee from remainder
• Method affects your take-home significantly
• Negotiate for fee-after-costs if possible

When Contingency Makes Sense

Good Candidates

• Personal injury cases
• Employment discrimination
• Medical malpractice
• Product liability
• Civil rights violations
• Cases with clear liability and damages

When It May Not Work

• Small claims (not worth attorney's time)
• Weak cases (attorney won't take risk)
• Defendant can't pay (nothing to recover)
• Family law (usually prohibited)
• Criminal defense (prohibited)

Pros and Cons

Advantages

• No upfront cost
• Attorney motivated to win
• Access to quality representation
• Risk shared with attorney
• Levels playing field against wealthy defendants

Disadvantages

• Pay more total if you win big
• May still owe costs if lose
• Attorney may push for quick settlement
• Less control over case decisions

Questions to Ask

Before Signing

• What percentage do you charge?
• Does percentage increase as case progresses?
• How are costs handled?
• Do I owe costs if we lose?
• Is fee calculated before or after costs?
• Who makes settlement decisions?
• What happens if I fire you?

Negotiating Terms

What May Be Negotiable

• Percentage (especially for large cases)
• Sliding scale structure
• Cost responsibility
• Fee calculation method

Negotiation Tips

• Get quotes from multiple attorneys
• Larger cases = more negotiating power
• Ask about lower percentage for quick settlement
• Understand industry standards

Red Flags

Warning Signs

• Unusually high percentage
• Vague cost provisions
• Pressure to sign immediately
• Won't explain terms clearly
• Hidden fees or charges

Ending the Relationship

If You Want to Fire Your Attorney

• You usually can, but may owe fees
• Attorney may have lien on recovery
• Check termination provisions
• May need to pay for work done