What Is a Contingency Fee?

A contingency fee is a payment arrangement between an attorney and their client where the attorney agrees to represent the client without requiring any payment up-front.

Instead, the attorney will take a certain percentage of the compensation recovered through the claim. This type of payment arrangement is used in most personal injury lawsuits.

How Does a Contingency Fee Work?

In most cases, lawyers who accept contingency fees will agree to take 33% – 40% of the amount recovered for their clients. This applies whether the client receives a settlement or wins compensation after a trial. The percentage can vary depending on factors such as the complexity of the case and whether the claim settles or goes to trial. 

You won’t owe the lawyer a fee if you don’t receive any compensation through a settlement or verdict.


Let’s say you hire a personal injury lawyer who charges a 35% contingency fee. If your case settles out of court for $100,000 in damages, your lawyer will receive 35% of that, or $35,000. Their fee comes directly out of the settlement, so you never have to pay for the services upfront or out of your own pocket.  

Disadvantages of Contingency Fee Agreements 

One potential pitfall of contingency fee agreements is that lawyers can charge a high percentage. For example, many attorneys will charge 33% or more for cases that settle out-of-court and 40% if the case goes all the way to trial.

While these fees can be negotiable, clients should understand what they agree to before signing a fee agreement. A good personal injury lawyer will clarify what the client can expect ahead of time.

It’s also important for clients to know that when entering into a contingency fee agreement, they may still have to pay fees and costs if they don’t win their case—such as court filing fees, expert witness fees, and costs for copies of medical records. 

These expenses are usually paid out of any money awarded at the end of a case. However, if there is no award or settlement, these costs remain unpaid and become the client’s responsibility unless the agreement says otherwise. 

Advantages of Contingency Fee Agreements

The following are some of the most significant advantages of a contingency fee arrangement: 

One advantage of contingency fees is that it gives individuals access to legal representation without having to worry about the cost upfront. It allows individuals who may not have the resources to pay for a lawyer to get their day in court and still have their rights protected. 

Reduced Financial Burden on Clients 

Another advantage of contingency fees is that they reduce the financial burden on clients by allowing them only to pay if their case is successful or settled out of court. If a client loses their case, they don’t need to worry about paying any attorney’s fees. This means there is no risk to the client of pursuing a claim. 

Incentive for Lawyers 

Contingency fees also incentivize lawyers since they are only paid if their client wins or settles out of court.

Attorneys must put in the maximum effort when it comes time for settlement negotiations or at trial so that their client receives an adequate amount. The more you make, the more they make. Your interests will be aligned in that regard.

Additionally, when an attorney takes your case on a contingency fee basis, you can be certain that they believe it has merit and is likely to succeed. They wouldn’t take your case if they didn’t believe they could recover compensation for you.

How Does the Process of Collecting Payment Work in a Contingency Fee Agreement?  

Once you and your lawyer have established a contingency fee agreement, it is essential to understand how payment will work when your claim is successful.

Generally speaking, your lawyer will initially receive your settlement or verdict in an escrow account.

They will then take their fee out of it along with any other agreed-upon costs and fees and then give you the remaining funds.

Your lawyer should provide you with an invoice for any extra costs and fees that aren’t associated with their legal fees.

Contingency fees ultimately benefit clients in their pursuit of justice. While lawyers may take a significant percentage of the settlement or judgment, it is still better for the client to receive 65% of something than 100% of nothing.

An experienced personal injury attorney can also dramatically increase a claim’s value such that the client comes out ahead despite the contingency fee. 

In cases where clients cannot afford to pay upfront for legal representation, contingency fee agreements provide a valuable option to recover damages without incurring significant financial hardship. 

Contact a Bedford personal injury attorney from Parker Law Firm Injury Lawyers today at (817) 503-9200 for an initial free case evaluation.