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How Do Contingency Fees Work?

How Do Contingency Fees Work?

Most everyone has seen the lawyer ads advertising “No Fees Unless You Recover!!!”  These ads are referring to contingency fees, but how do they work in practice? Well, when it comes to Personal Injury cases, it usually works like this.

Percentage Fee

It is completely true that an attorney who takes a case on contingency takes no fee up front. In most cases, it is also true that you pay no fee unless there is a recovery (more on that later). Instead of an up front fee, the attorney takes a percentage of the recovery. That percentage usually ranges from 25% to 40% depending on the attorney, the type of case, and whether suit has to be filed. (In some cases where settlement occurs before suit is filed, the fee is a lower percentage.) Different attorneys will take differing contingency fees, so be sure to check the contract and/or ask the attorney about his fees and compare with other attorneys. This isn’t the only consideration however, as a good attorney may be able to get you a larger recovery, increasing the final amount you receive in real dollars.



A law firm will usually shoulder the costs of the case. Those costs can include experts, depositions, investigations, court fees, or other a myriad of other costs depending on the type of case. Depending on the type of case, costs can become significant, and can quickly range into the tens of thousands. This leads to a couple things that you should consider when hiring a plaintiff attorney.

First, will the law firm pay for these fees if the recovery is not big enough to cover the full amount? It is industry standard for the lawyer to cover these costs, but some firms do not. Also, there are some types of cases for which the costs will be borne by the plaintiff. Just make sure you know before entering into an agreement.

Second, you should be aware that at the end of the settlement, these costs are taken out of the plaintiff’s share. You should consider these costs when calculating what your final share will be. Let’s look at an example.

Let’s say Sally is injured and settles for $100,000. Sounds like a lot, right? Well, if there was a 30% contingency fee, her settlement is already reduced to $70,000. Now consider costs. Let’s say the law firm spent $20,000 securing experts, getting depositions, filing documents, etc. (this might be a bit high in a case like this, but costs can definitely add up quickly.) Now that $100,000 settlement is $50,000. This still might be good for Sally. Maybe before the law firm got involved, the opposing party was denying liability, meaning Sally would get zero. Each case is different, but it is important to understand how the recovery will be split BEFORE signing a contract with an attorney.

Bottom Line

If you have been injured and are searching for an attorney, make sure you know the right questions to ask. Seeking out legal advice might not be your highest priority as you recover from your injuries. And there is a steep learning curve if you’ve never done it before. But, a good attorney can increase your recovery significantly, so it is worth putting in the research. A slightly higher contingency fee might be worth it for the right attorney, but go into the contract with open eyes, and you will have a better experience. This blog does not constitute legal advice, but if you have been injured in Texas and would like legal advice on your specific case, visit us at atx.legal, or call 512-677-5003 for a free case evaluation.

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