Contingency Fee
What does "Contingency Fee" mean in law?
A contingency fee is an arrangement under Model Rule 1.5(c) in which the lawyer's fee is contingent upon obtaining a favorable result, typically calculated as a percentage of the recovery (commonly one-third of the settlement or judgment). Such agreements must be in a writing signed by the client that states the method by which the fee is determined, including the percentage that accrues at each stage of litigation and whether expenses are deducted before or after the fee is calculated. Contingency fees are categorically prohibited in domestic relations cases where the fee is contingent upon securing a divorce or the amount of alimony or property settlement, and in criminal cases. These arrangements serve the important policy of enabling clients who cannot afford hourly fees to access the legal system.
Definition
A contingency fee is an arrangement under Model Rule 1.5(c) in which the lawyer's fee is contingent upon obtaining a favorable result, typically calculated as a percentage of the recovery (commonly one-third of the settlement or judgment). Such agreements must be in a writing signed by the client that states the method by which the fee is determined, including the percentage that accrues at each stage of litigation and whether expenses are deducted before or after the fee is calculated. Contingency fees are categorically prohibited in domestic relations cases where the fee is contingent upon securing a divorce or the amount of alimony or property settlement, and in criminal cases. These arrangements serve the important policy of enabling clients who cannot afford hourly fees to access the legal system.
Example
A plaintiff's attorney agrees in a signed writing to represent an injured worker for 33% of any settlement or 40% if the case goes to trial, with litigation costs deducted from the recovery before the fee is calculated.