Contingency Fee

What Is a Contingency Fee?

A contingency fee is a payment arrangement between an attorney and a client in which the attorney's fee is contingent upon -- meaning dependent on -- the outcome of the case. If the case results in a financial recovery through settlement or jury verdict, the attorney receives an agreed-upon percentage of that recovery. If the case is unsuccessful, the attorney receives no fee for their legal services.

This arrangement is standard in medical malpractice litigation and is one of the primary reasons that patients who have been harmed by medical negligence can afford to pursue complex, expensive claims. Without the contingency fee model, most individuals would be unable to pay the upfront costs of retaining medical experts, obtaining records, and funding multi-year litigation against well-funded healthcare institutions and their insurers.

How Do Contingency Fees Work in Practice?

At the outset of the attorney-client relationship, the attorney and client sign a retainer agreement that specifies the contingency fee percentage. This percentage typically ranges from 33% to 40% of the gross recovery, though the exact amount depends on the complexity of the case, the stage at which it resolves, and applicable state regulations.

Many contingency fee agreements use a sliding scale. For example, the attorney might receive 33% if the case settles before a lawsuit is filed, 37% if it settles after litigation begins but before trial, and 40% if the case goes to a jury verdict. This structure reflects the increasing amount of work and financial risk the attorney assumes as the case progresses through the legal system.

Some states impose statutory caps on contingency fees in medical malpractice cases. These caps may limit the percentage the attorney can charge overall or apply a tiered structure based on the size of the recovery. For instance, a state might allow 33% on the first $250,000, 25% on the next $250,000, and 20% on any amount above $500,000. Patients should ask their attorney whether their state imposes any such limitations.

What About Litigation Costs?

It is important to distinguish between attorney fees and litigation costs. The contingency fee covers the attorney's professional services -- their time, expertise, and labor. Litigation costs are the out-of-pocket expenses incurred during the course of the case, and they can be substantial in medical malpractice claims.

Common litigation costs include:

• Expert witness fees. Medical malpractice cases require expert testimony, and qualified experts charge significant fees for record review, report preparation, deposition testimony, and trial testimony. Expert costs alone can range from $10,000 to $50,000 or more.
• Medical record retrieval. Obtaining complete medical records from hospitals, clinics, and other providers involves copying fees and administrative charges.
• Court filing fees. Filing a lawsuit requires payment to the court, and additional fees may be incurred throughout litigation.
• Deposition costs. Depositions require a court reporter, transcript fees, and sometimes videographer fees.
• Demonstrative exhibits. Medical illustrations, anatomical models, and other visual aids used at trial involve preparation costs.

In most contingency fee arrangements, the law firm advances these costs on behalf of the client during the case. If the case is successful, the costs are reimbursed from the recovery -- typically before the contingency fee percentage is calculated, though this varies by agreement. If the case is unsuccessful, the question of who bears the costs depends on the retainer agreement. Some firms absorb the costs entirely; others require the client to reimburse them. This is a critical detail to clarify before signing a retainer agreement.

Why the Contingency Fee Model Benefits Patients

The contingency fee model aligns the interests of the attorney and the client. Because the attorney's compensation depends on the outcome, they are financially motivated to maximize the recovery and invest the resources necessary to build the strongest possible case. It also means that attorneys screen cases carefully -- they will not invest their time and money in a case they do not believe has merit.

For patients, the most important benefit is access to justice. Medical malpractice cases are among the most expensive and complex areas of civil litigation. Without the contingency fee arrangement, pursuing a claim would require tens or hundreds of thousands of dollars in upfront costs -- a financial barrier that would place accountability beyond the reach of most patients and families.