What is a Contingency Fee?

A contingency fee is a payment structure in which an attorney takes a percentage of any recovery through settlement or verdict and receives no fee if the case does not result in a recovery. No hourly billing, no upfront costs, though certain litigation costs may apply. This arrangement is standard in personal injury cases and is designed to ensure access to legal representation regardless of financial situation.

How a Contingency Fee Is Calculated

The contingency fee percentage is agreed upon in writing before representation begins. In personal injury cases, the standard range is 33% to 40% of the total recovery, though the exact percentage depends on several factors.

The most common variables that affect the percentage include:

• Whether the case settles before a lawsuit is filed, which typically results in a lower percentage
• Whether the case proceeds through litigation, which involves more attorney time and resources and generally warrants a higher percentage
• Whether the case goes to trial or appeal, the percentage may increase further to reflect the additional work involved
• The complexity of the case and the anticipated difficulty of proving liability

A written contingency fee agreement, signed by both the client and the attorney before work begins, sets the exact percentage and outlines all terms. In Texas, this agreement is required under Rule 1.04 of the Texas Disciplinary Rules of Professional Conduct, which governs attorney fee arrangements and requires that fees be reasonable under the circumstances.

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What the Percentage Covers and What It Does Not

The contingency fee percentage covers the attorney’s time, legal work, and professional services throughout the case. It does not cover case expenses, a separate category of costs that accumulate during litigation.

Case expenses are out-of-pocket costs that an attorney advances on behalf of the client to build and pursue the claim. These typically include:

• Filing fees for court documents
• Expert witness fees for medical, accident reconstruction, or economic experts
• Costs of obtaining medical records, police reports, and other documentation
• Deposition costs, including court reporter and transcript fees
• Investigation costs for gathering evidence
• Postage, copying, and administrative costs related to the case

Most personal injury attorneys front these expenses and recover them from the settlement proceeds separately from the fee percentage. The fee agreement should clearly state how expenses are handled and whether they are deducted before or after the percentage is calculated, since that distinction affects the client’s net recovery.

How the Math Works in Practice

A concrete example makes the structure easier to follow. Assume a personal injury case settles for $100,000, with a 33% contingency fee and $5,000 in case expenses.

If expenses are deducted before the fee is calculated, the attorney takes 33% of $95,000 ($31,350), and the client receives $63,650.

If expenses are deducted after the fee is calculated, the attorney takes 33% of $100,000 ($33,000), then deducts $5,000 in expenses, leaving the client with $62,000.

The order of deduction matters and should be specified clearly in the written fee agreement before the client signs anything.

Medical Liens and Their Effect on Net Recovery

A factor that many clients do not anticipate is the role of medical liens. When a health insurer, Medicare, Medicaid, or a medical provider has paid for treatment related to the injury, they may assert a lien against the settlement proceeds, giving them the right to be reimbursed from the recovery.

Liens are deducted from the client’s share of the settlement after the attorney’s fee and expenses have been accounted for. Attorneys can sometimes negotiate lien reductions with providers, which can increase what the client ultimately receives. How liens are handled should be part of any early conversation with your attorney.

What Happens When There Is No Recovery

The defining feature of a contingency fee arrangement is that the client owes no attorney’s fee if the case does not result in a recovery. If the case is dismissed, the claim is denied, or the verdict comes back in the defendant’s favor, the attorney absorbs the loss of their time and work.

Case expenses are a separate question. Some fee agreements require the client to reimburse expenses incurred in advance, even if no recovery is made. Others do not. This is a material term that should be addressed specifically in the written agreement. Clients should ask directly how expenses are handled in the event of a zero-recovery outcome.

How Contingency Fees Are Regulated in Texas

Texas regulates attorney fees through the Texas Disciplinary Rules of Professional Conduct, administered by the State Bar of Texas. Rule 1.04 sets out the factors used to evaluate whether a fee is reasonable, including the time and effort required, the difficulty of the matter, and the results obtained.

Contingency fees are expressly permitted in Texas civil cases under Rule 1.04(d), which requires a written agreement signed by the client that states how the fee will be determined. Rule 1.04(e) prohibits contingency fees in criminal defense cases, and Texas ethics rules also strongly discourage this fee structure in divorce and child custody matters.

Why the Contingency Fee Structure Exists

The contingency fee model addresses a practical problem: serious injuries often affect people who cannot afford to pay legal fees upfront, while such cases require significant investment of attorney time, expert fees, and other resources to pursue.

By tying payment to results, the contingency structure gives injured people access to representation they could not otherwise afford and aligns the attorney’s financial interests with the client’s goal of maximizing recovery.

This is why contingency fee representation is the standard model in personal injury, car accident, truck accident, and wrongful death cases across Texas and most of the United States.

Frequently Asked Questions About Contingency Fees

What Is the Difference Between a Contingency Fee and a Retainer?

A retainer is an upfront payment applied against an hourly rate. A contingency fee requires no upfront payment. The attorney is only paid if they recover compensation for you, which is why this model is standard in personal injury cases.

Can a Contingency Fee Percentage Be Negotiated?

In some cases, yes. Clients can discuss the proposed percentage with their attorney before signing, particularly in cases with high anticipated recovery or unusually low litigation risk. The rate typically reflects the case’s complexity and whether it is likely to settle or go to trial.

Does a Contingency Fee Arrangement Apply to Appeals?

Not automatically. Appellate work may require a separate agreement or an adjusted percentage. What is covered depends on the terms of the written fee agreement signed at the start of representation.

What Happens If You Win the Case, But the Defendant Cannot Pay?

Insurance typically covers most personal injury settlements, so this is uncommon, but it can happen when damages exceed policy limits or no insurance applies. If a private settlement goes unpaid, it can be enforced as a breach of contract. If a court judgment goes unpaid, the winning party can pursue the defendant’s assets directly to satisfy the debt.

Have Questions About Legal Fees After an Injury?

At Mokaram Injury Lawyers, we handle personal injury cases on a contingency fee basis. There is no upfront cost, no hourly charge, and no fee unless we recover compensation on your behalf. Over our 30 years of experience, we have recovered over $1 billion for injured clients, who we consider to be family.

If you have questions about how the fee structure works or want to discuss your case, call 281-222-2222 or contact us online. Someone is available 24/7.