Question 1

What is a contingency fee agreement?

Accepted Answer

A contingency fee agreement is a contract between an attorney (or, in some contexts, another professional) and a client in which the professional's fee is contingent upon a successful outcome — meaning the professional receives a percentage of the recovery (settlement, judgment, or award) rather than an hourly or flat fee. If the case is unsuccessful and produces no recovery, the professional receives no fee. This arrangement shifts the economic risk of litigation from the client to the attorney, making legal representation accessible to plaintiffs who could not otherwise afford to pursue a claim. The agreement must be in writing, signed by the client, and clearly state the percentage, how expenses are treated, and the method of calculating the fee at different stages of the case.

Question 2

What is a typical contingency fee percentage?

Accepted Answer

The most common contingency fee is 33.33% (one-third) of the gross recovery if the case settles before a lawsuit is filed, and 40% if the case proceeds to trial. Many agreements use a sliding scale that increases the percentage as the case advances through litigation milestones: for example, 33% if settled before filing, 36% after filing but before trial, 40% during or after trial, and 45% on appeal. Some states cap contingency fees by statute or court rule — New York caps contingency fees in medical malpractice cases at 30% of the first $250,000 and a declining percentage thereafter; New Jersey has similar sliding-scale caps. California requires the agreement to state that the fee is negotiable. The percentage must always be clearly disclosed in the written agreement.

Question 3

How are expenses handled in a contingency fee arrangement?

Accepted Answer

This is one of the most important and frequently misunderstood aspects of contingency fee agreements. There are two primary methods: (1) expenses deducted before the fee is calculated (the 'net method'), where the attorney's percentage is applied to the recovery minus costs — this is more favorable to the client; and (2) expenses deducted after the fee is calculated (the 'gross method'), where the attorney takes their percentage of the total recovery and expenses are deducted from the client's share — this is more favorable to the attorney. The written agreement must clearly specify which method applies. Common expenses include court filing fees, deposition costs, expert witness fees, medical records, process service, and postage. Many attorneys advance these costs during the case and recoup them from the recovery; others require the client to pay costs as they are incurred regardless of the outcome.

Question 4

Are contingency fee agreements allowed in all types of cases?

Accepted Answer

No. Ethical rules prohibit contingency fees in two categories of cases: criminal defense (ABA Model Rule 1.5(d)(2)) and most domestic relations matters where the fee is contingent on obtaining a divorce or on the amount of alimony, child support, or property settlement (ABA Model Rule 1.5(d)(1)). All other civil matters generally permit contingency fees, though some case types have additional restrictions. Workers' compensation cases are subject to fee schedules in many states. Social Security disability cases are capped at 25% of past-due benefits or $7,200 (whichever is less) by federal regulation. Medical malpractice fees are capped or subject to sliding scales in many states. Class action contingency fees are subject to court approval. Beyond these restrictions, contingency fees are available in personal injury, employment discrimination, civil rights, consumer protection, insurance bad faith, and many other practice areas.

Question 5

What happens to expenses if the case is lost?

Accepted Answer

The treatment of expenses in a losing case is a critical term that must be addressed in the agreement. Under the most common arrangement, the attorney advances litigation costs and is reimbursed from the recovery — if there is no recovery, the client owes nothing for either fees or costs. This is the most client-friendly approach and the one most personal injury firms use. An alternative arrangement makes the client responsible for costs regardless of the outcome — the attorney agrees to a contingency fee (no fee without a recovery) but the client must reimburse litigation costs even if the case is lost. This hybrid approach is more common in commercial litigation. The ABA Model Rules (Rule 1.8(e)) permit attorneys to advance costs contingent on the outcome, and most state rules follow this approach. The agreement must clearly state which method applies so the client understands their financial exposure.

Question 6

Can the client terminate a contingency fee agreement?

Accepted Answer

Yes. A client has an absolute right to terminate the attorney-client relationship at any time, regardless of the fee arrangement. However, termination does not necessarily eliminate the attorney's fee entitlement. If the client terminates and subsequently recovers on the claim (through a new attorney or pro se), the original attorney may be entitled to compensation under one of two theories: (1) the contractual percentage, if the agreement includes a termination clause providing for the fee on any recovery; or (2) quantum meruit — the reasonable value of the services actually rendered. Many contingency fee agreements include a provision stating that if the client terminates the agreement, the attorney is entitled to a fee calculated at their standard hourly rate for all work performed, payable from any recovery. Courts scrutinize these provisions to ensure they do not effectively penalize the client for exercising their right to change counsel.

Question 7

How does a structured settlement affect the contingency fee?

Accepted Answer

When a case settles for a structured settlement (periodic payments over time rather than a lump sum), the contingency fee calculation becomes more complex. The agreement should specify whether the fee is calculated on the present value of the structured settlement, the total nominal value of all future payments, or only on payments as they are received. The most common approach is to calculate the fee on the present value of the settlement at the time it is finalized. Some attorneys negotiate to receive their fee from an initial lump-sum payment while the client receives the structured portion. The agreement should also address what happens if the client dies before receiving all structured payments, whether the fee obligation transfers to the estate, and how the fee is calculated if the structured settlement is later commuted to a lump sum.

Question 8

What is the difference between a contingency fee and a conditional fee?

Accepted Answer

In U.S. practice, the terms are often used interchangeably, but technically a contingency fee is a percentage of the recovery, while a conditional fee (sometimes called a 'success fee' or 'conditional fee arrangement') may take a different form — such as a standard hourly fee that is only payable if the case is successful, or a reduced hourly fee during the case with a bonus multiplier upon success. Some jurisdictions distinguish between the two: a contingency fee is specifically a percentage-based fee tied to the amount recovered, while a conditional fee is any fee arrangement where payment depends on a particular outcome. In practice, the vast majority of 'no win, no fee' arrangements in the United States are percentage-based contingency fees. The written agreement should clearly define the fee structure regardless of what label is used.

Question 9

Are contingency fees negotiable?

Accepted Answer

Yes — contingency fees are always negotiable, and in California the agreement must explicitly state that the fee is not set by law and is negotiable between the attorney and client. Factors that influence the negotiated percentage include the strength of the case (stronger cases with clear liability and substantial damages may command a lower percentage because the attorney's risk is lower), the expected duration and complexity of litigation (cases likely to require extensive discovery, expert witnesses, and trial preparation justify a higher percentage), the amount in controversy (very large recoveries may warrant a lower percentage because the absolute dollar amount of the fee is large), and market competition (in markets with many attorneys competing for contingency work, rates tend to be more competitive). Clients should compare fee structures from multiple attorneys and understand that a lower percentage is not always better if it comes with less favorable expense treatment or less experienced representation.

Question 10

What disclosures are required in a contingency fee agreement?

Accepted Answer

ABA Model Rule 1.5(c) requires that a contingency fee agreement be in writing, signed by the client, and state: (1) the method by which the fee is to be determined, including the percentage(s) that shall accrue to the attorney in the event of settlement, trial, or appeal; (2) litigation and other expenses to be deducted from the recovery, and whether such expenses are deducted before or after the contingent fee is calculated; and (3) that expenses and fees are separate and distinct obligations. Upon conclusion, the attorney must provide the client with a written statement showing the outcome, the remittance to the client, and the method of determination. Many states impose additional requirements — California requires a statement that the fee is negotiable, Florida requires specific disclosures in medical malpractice cases, and New York requires court approval of fees in certain categories.

Component	What to Include
Parties	Attorney/firm name and client name, with matter identification
Scope of Representation	Specific claim or case; exclusions (e.g., does not cover appeals unless agreed)
Fee Percentages	Percentage at each stage: pre-suit, post-filing, trial, appeal
Expense Treatment	Net vs. gross method; who advances costs; client liability if no recovery
Recovery Definition	What constitutes "recovery" (cash, property, structured settlement present value)
Settlement Authority	Client retains sole authority to accept or reject settlement offers
Client Obligations	Cooperation, truthful information, attendance at depositions and hearings
Lien Obligations	Medical liens, subrogation, Medicare/Medicaid obligations from recovery
Termination	Client right to terminate; attorney's quantum meruit or hourly fallback fee
Fee Negotiability	Statement that the fee is negotiable (required in California and other states)
Closing Statement	Attorney provides written disbursement statement at conclusion
Signatures	Attorney and client, with date

Free Contingency Fee Agreement Forms

What Is a Contingency Fee Agreement?

No Win, No Fee

Aligned Interests

Access to Justice

Contingency Fee Agreement Form Preview

Contingency Fee Agreement

Section 1: Parties & Matter

Section 2: Fee Schedule

Section 3: Expenses

Key Components

How to Create a Contingency Fee Agreement

Identify the parties and the claim

Set the fee percentages by stage

Specify expense treatment

Define recovery and settlement authority

Address liens and subrogation

Include termination and fallback fee provisions

Add required disclosures, sign, and deliver

Fee Calculation Methods

Net Method (Client-Favorable)

Gross Method (Attorney-Favorable)

Always specify the method

Sample Contingency Fee Agreement

Frequently Asked Questions

Official Resources

Ready to Draft Your Contingency Fee Agreement?