The Contingency Fee Model
A contingency fee means the attorney’s fee is contingent on winning — if you recover nothing, the attorney collects no fee. In California, contingency fees in personal injury cases are governed by California Rules of Professional Conduct, Rule 1.5. The fee must be in writing, signed by the client, and clearly state how the fee is calculated.
The standard contingency fee in California personal injury cases is 33 percent of the gross recovery before trial. If the case goes to trial, the fee typically increases to 40 percent. Some attorneys charge higher percentages on appeals or post-judgment collection.
That percentage sounds straightforward. The math gets complicated.
Gross Recovery vs. Net Recovery — The Number That Matters
The most important question to ask before signing a contingency fee agreement is whether the attorney’s fee is calculated on the gross recovery or the net recovery.
Gross recovery means the fee is calculated on the total settlement or judgment before any costs are deducted. Net recovery means the fee is calculated after costs are deducted.
The difference is significant. Here is an example:
Your case settles for $100,000. Litigation costs — medical records, expert witnesses, filing fees, deposition costs — total $15,000. The attorney’s fee is 33 percent.
If the fee is calculated on gross recovery: the attorney takes $33,000, then costs of $15,000 are deducted, leaving you $52,000.
If the fee is calculated on net recovery: costs of $15,000 are deducted first, leaving $85,000. The attorney takes 33 percent of $85,000 — $28,050 — leaving you $56,950.
Most California personal injury attorneys calculate their fee on the gross recovery. Read your fee agreement carefully before you sign.
Costs Are Separate From the Fee
Litigation costs are not included in the contingency fee — they are in addition to it. Common costs in a personal injury case include:
- Filing fees.
- Medical records and billing statements.
- Police reports.
- Expert witness fees — accident reconstruction, medical experts, economists.
- Deposition costs and court reporter fees.
- Investigation costs.
- Mediation fees.
In a complex case these costs can run tens of thousands of dollars. Under most contingency agreements, the attorney advances these costs and recoups them from your recovery at the end of the case. Some agreements require you to pay costs as they are incurred regardless of outcome — read your agreement carefully.
Medical Liens Come Out of Your Recovery Too
If you received medical treatment after your accident and your provider — a hospital, chiropractor, or other provider — agreed to treat you on a lien basis, that lien must be paid from your settlement before you receive your share. Medical liens can significantly reduce what you take home.
On top of that, if your health insurance paid for your treatment, your insurer may have a subrogation right — meaning they are entitled to reimbursement from your settlement for what they paid. Medicare and Medi-Cal subrogation rights are federal and state law requirements respectively and cannot be waived.
By the time the attorney fee, costs, and medical liens are paid, your net recovery can be substantially less than the headline settlement number. A $100,000 settlement can net the client $40,000 or less in a case with significant medical treatment and litigation costs.
The Fee Agreement Is Negotiable
California law requires the contingency fee to be in writing but does not set a maximum percentage for most personal injury cases. The fee is negotiable — particularly in high-value, straightforward cases where liability is clear and damages are well-documented.
An attorney who refuses to discuss the fee structure or dismisses your questions about costs at the intake meeting is showing you something about how they operate. Get the fee agreement before the first meeting ends. Read every line.
What to Ask Before You Sign
Before signing any contingency fee agreement, ask:
- Is your fee calculated on gross or net recovery?
- Who pays costs if we lose — me or you?
- Are costs deducted before or after your fee is calculated?
- What is your estimate of total litigation costs for a case like mine?
- Will your fee percentage increase if the case goes to trial or appeal?
- What happens to my case if you leave the firm or the firm dissolves?
Get the answers in writing. The fee agreement itself should answer most of these questions — if it does not, ask for a revised agreement that does.
If You Need to Talk to a Personal Injury Attorney
If you were injured in an accident and want to understand your options before signing anything, you can request a consult at Lawyers for the Little Guys.
Frequently Asked Questions
What is the standard contingency fee in California?
Typically 33 percent before trial and 40 percent if the case goes to trial. These percentages are not set by law for most personal injury cases — they are the industry standard and are negotiable.
Do I owe anything if I lose?
Under a true contingency agreement, you owe no attorney fee if you recover nothing. Whether you owe costs if you lose depends on your specific agreement. Some agreements require the client to repay advanced costs even if the case is lost. Read your agreement.
Can an attorney take more than 40 percent?
California does not cap contingency fees for most personal injury cases. Fees above 40 percent are unusual but not prohibited. Medical malpractice cases are an exception — California caps contingency fees on the first $350,000 of recovery under the MICRA reforms effective January 1, 2023.
When does the attorney get paid?
At the conclusion of the case — when a settlement check is received or a judgment is collected. The attorney typically disburses funds from their client trust account, deducting their fee and costs before sending you your share. You should receive a written disbursement statement showing every deduction.
Does this apply outside California?
Laws vary by state. Contingency fee rules, disclosure requirements, and cost arrangements differ by state. If you are in another state, consult the rules in your state.