Contingency Fees Explained: Why You Don’t Pay Unless We Win

Standard Contingency Fee Percentages in California

Although fees are technically negotiable, California has well-established industry norms. Most reputable personal injury firms follow the same general structure.

1. Pre-Litigation: 33⅓%

If your case resolves before a lawsuit is filed, the standard fee is one-third.

• Example: A $100,000 settlement results in a $33,333 attorney fee.

2. Litigation: 40%

If the insurance company refuses to make a reasonable offer and a lawsuit must be filed, the fee typically increases to 40%.

This increase reflects the substantial additional work involved once litigation begins, including written discovery, depositions, court appearances, expert witnesses, and trial preparation.

Attorney Fees vs. Case Costs: A Critical Difference

This is where many clients get confused—and where careful reading of the contract matters most.

Attorney Fees

Attorney fees are the percentage discussed above. This is compensation for the lawyer’s time, skill, and expertise.

Case Costs

Case costs are out-of-pocket expenses paid to third parties to move the case forward. In serious injury cases, these costs can easily range from several thousand dollars to tens of thousands of dollars.

Common examples include:

• Court filing fees
• Expert witness fees
• Deposition and court reporter costs
• Medical records and imaging retrieval fees

The Most Important Question: Who Pays Costs If You Lose?

This is critical.

Many established firms operate on a “no recovery, no fee and no cost” model. If the case does not result in a recovery, the firm absorbs the costs as a business risk.

Other contracts require the client to reimburse costs even if the case is lost. This is not inherently improper, but it must be clearly disclosed—and understood—before you sign.

Action item:
Look for language stating that the client is not responsible for costs if there is no recovery. If it is unclear, ask.

Why Contingency Fees Create Access to Justice

The contingency system exists so that justice is not reserved for people with deep pockets.

Under an hourly billing model, a serious injury case could require tens of thousands of dollars just to get started. With a contingency fee agreement:

1. No retainer is required
2. No monthly bills are sent
3. The firm advances all costs, effectively financing the case until resolution

This allows injured individuals to stand on equal footing with insurance companies and corporate defendants.

Questions You Should Ask Before Signing a Retainer

Before signing any contingency fee agreement, you should feel comfortable asking direct questions. Reputable lawyers expect them.

1. Is the fee calculated on the gross or net recovery?
   • Most firms calculate the fee on the gross settlement amount. Net-based fees are rare.
2. Do you advance all case costs?
   • You should not be asked to pay filing fees or expert costs out of pocket.
3. If we lose, will I be responsible for costs?
   • Many firms waive costs entirely if there is no recovery. Confirm this.
4. Does the fee change for arbitration or trial?
   • Some contracts increase the fee if the case goes to trial. Clarify this in advance.

Frequently Asked Questions

Can I negotiate my lawyer’s fee?

Yes, technically. California law requires lawyers to disclose that fees are negotiable. In practice, established firms rarely reduce their standard rates unless the case is unusually simple, liability is undisputed, and minimal work is required.

What if the settlement doesn’t cover my medical bills?

An experienced attorney will negotiate medical liens with providers and insurers to reduce what must be paid back. This process helps maximize the amount the client ultimately receives.

Who pays court costs if I lose?

That depends entirely on the language in your contract. If it states “no fee and no cost unless we win,” the firm pays. If it only says “no fee unless we win,” you may still be responsible for costs.

Reminder:
This content is for informational purposes only and should not be relied upon as legal advice. Every case is different. If you have questions about your rights or deadlines, consult a qualified attorney promptly.