A contingency fee lets people hire a lawyer without paying hourly bills they cannot afford. In exchange, the lawyer takes on the risk of not being paid and receives a share of any recovery. This page explains how these arrangements generally work so you can read an agreement with confidence. It does not quote or recommend fees.
The basic arrangement
Under a contingency agreement, the lawyer's fee is a percentage of the money recovered, by settlement or verdict. If nothing is recovered, there is usually no fee. Colorado regulates these agreements: the Rules Governing Contingent Fees in Chapter 23.3 of the Colorado Rules of Civil Procedure, along with Rule 1.5 of the Colorado Rules of Professional Conduct, require them to be in writing and to address specific terms. You are entitled to a copy.
The percentage itself varies between lawyers and between cases, and some agreements change it at stages, for example if a lawsuit is filed or a trial begins. Read where any change is triggered.
Fees and costs are different things
The fee pays for the lawyer's work. Costs are the expenses of the case: filing fees, medical records, expert witnesses, depositions, court reporters, investigators and the like. In a case that goes into litigation, costs can be significant. Agreements handle them in different ways, and the differences are worth understanding before you sign.
| Step | Fee calculated before costs | Fee calculated after costs |
|---|---|---|
| Gross recovery | 100 units | 100 units |
| Case costs | 10 units | 10 units |
| Fee base | 100 units | 90 units (100 minus costs) |
| Effect on you | Fee is a share of the full amount | Fee is a share of a smaller amount |
The table uses abstract "units" on purpose; it is about the order of operations, not any real percentage. Ask a lawyer to walk you through a sample statement using their actual agreement.
Liens come out of the same pot
Medical liens and reimbursement claims from health insurers, Medicare, Medicaid or providers are usually paid from the settlement too. Ask who will negotiate those liens and whether that work is covered by the fee. Lien reductions can change your net recovery as much as the fee percentage does.
Questions to ask about any fee agreement
- What is the percentage, and what events change it?
- Who pays case costs while the case is open, and are they repaid before or after the fee is calculated?
- If there is no recovery, will I owe anything, including costs?
- Who negotiates liens, and is that included?
- Will you show me a sample closing statement?
- What happens to the fee if I end the relationship, or if you withdraw?
- How will I receive updates on costs as they are incurred?
- you are asked to sign the agreement at the first meeting
- it is reasonable to ask to take it home and read it first.
- the agreement uses terms you do not understand
- ask for a plain explanation in writing; a careful lawyer will provide one.
- you already have an agreement and want a second opinion
- another lawyer can review it, and you can generally change lawyers.
Other fee arrangements
Contingency is common in injury cases but not the only option. Some lawyers will review a settlement offer or a release for an hourly or flat fee, which can make sense for a smaller claim you are otherwise handling yourself. Ask about it if full representation does not fit your situation.
The percentage is only one term. Know how costs are handled and in what order, who resolves liens, and what you owe if there is no recovery. Get it in writing and ask for a sample closing statement.