Contingency fee

What it is

Under a contingency fee, the client pays the lawyer a share of what the case recovers and nothing if it recovers nothing. It is the standard model for plaintiff personal injury and employment cases. The agreement sets how costs are handled and whether the percentage rises if the case is filed or tried.

The California rule

Business and Professions Code 6147 requires every contingency fee contract to be in writing, signed by both lawyer and client, with a signed copy given to the client. It must state the fee rate, how costs and disbursements affect the fee and the client's recovery, what related matters it doesn't cover, and, unless the claim is a medical negligence case under section 6146, that the fee is not set by law and is negotiable. A contract that doesn't comply is voidable at the client's option, leaving the lawyer a reasonable fee. In medical negligence cases, section 6146 caps fees at 25 percent of a recovery reached before a complaint or arbitration demand is filed, and 33 percent after. Rule of Professional Conduct 1.5 bars unconscionable fees. In workers' comp, fees must be approved by the WCAB (Labor Code 4906).

Why it matters to a plaintiff firm

The fee agreement is the first document a client signs and the last one checked, when the settlement statement is prepared. Firms keep templates current, explain the terms in the client's language, and store the signed copy where it can be found years later.