How Contingency Fees Work

Step 1: Free Consultation

Direct Answer: A contingency fee case follows a defined sequence: free consultation, signed fee agreement, investigation, demand letter, lawsuit filing, discovery, settlement negotiation or trial, and final distribution. The attorney's fee and costs are deducted from the gross recovery before the client receives net proceeds.

The process begins with a free initial consultation. The attorney evaluates the facts of your case, assesses liability and damages, estimates the potential value, and determines whether they are willing to invest their time and resources on a contingency basis.

This is a two-way evaluation: you are assessing the attorney's experience and communication style, while they are assessing the strength and value of your case. If the attorney believes the case has merit and sufficient value to justify the risk, they will offer to represent you on a contingency basis.

Step 2: Signing the Retainer Agreement

If both parties agree to proceed, you sign a written contingency fee agreement (retainer). This document must clearly state:

• The contingency fee percentage (e.g., 33⅓% pre-trial, 40% at trial)
• Whether the fee is calculated on the gross recovery (before costs) or net recovery (after costs are deducted)
• Which litigation costs the attorney will advance
• Whether you are liable for costs if the case is unsuccessful
• Your right to terminate the agreement
• How disputes about fees will be resolved

The distinction between gross and net fee calculation is critical. On a $100,000 settlement with $10,000 in costs: a 33⅓% fee on the gross yields $33,333 (you receive $56,667), while a 33⅓% fee on the net ($90,000) yields $30,000 (you receive $60,000).

Step 3: Investigation & Litigation

The attorney conducts a thorough investigation: gathering evidence, obtaining medical records, consulting experts, and building the strongest possible case. All costs during this phase are advanced by the attorney — you pay nothing out of pocket.

Common costs advanced include:

• Court filing fees ($200–$500+)
• Expert witness fees ($2,000–$15,000+ per expert)
• Deposition costs ($1,000–$5,000+ per deposition)
• Medical record requests ($50–$500)
• Process server fees, court reporter fees
• Travel expenses for out-of-town depositions or hearings

Most cases settle before trial — approximately 95% of personal injury cases reach a negotiated settlement. If settlement negotiations fail, the case proceeds to trial.

Step 4: Settlement Distribution

When the case resolves successfully, the settlement funds are deposited into the attorney's client trust account. The distribution typically follows this order:

What Happens If You Lose?

If the case is unsuccessful, you owe no attorney fees. However, whether you owe litigation costs depends on your retainer agreement. Some agreements state that the attorney absorbs all costs on a loss ("true no win no fee"). Others require the client to reimburse advanced costs regardless of outcome. Read your agreement carefully and ask your attorney to clarify this point before signing.