A contingency fee is almost always discussed as a percentage, and the percentage is the least interesting thing about it. What decides how much the client actually receives, whether the agreement survives a challenge, and whether the matter was worth taking at all is everything written around that number: what the fee is calculated against, who carries the case costs while the case runs, what the law of the jurisdiction permits in that kind of matter, and what the firm owes the client on the day the money arrives. Those things are not left to custom. They are specified, in adopted rule text and in statute, with more precision than most fee agreements in circulation reflect.
Key takeaways
- A contingency fee agreement is a writing signed by the client in every jurisdiction that regulates it, and a writing that omits a required term can be voidable at the client’s option, leaving the firm to prove a reasonable fee instead.
- The clause that moves the most money is the one nobody argues about: whether the percentage is applied before or after case costs are deducted. The difference to the client is exactly the fee percentage applied to the costs.
- Some matters cannot carry a contingent fee at all. The rule names criminal defense and fees contingent on securing a divorce or on the amount of maintenance, support or property settlement.
- In some matter types the percentage is capped by law rather than by agreement. California limits fees against health care providers to 25 percent on a pre-filing settlement and 33 percent after filing, subject to a good cause motion.
- Florida voters put a client’s minimum share of a medical liability recovery into the state constitution: no less than 70 percent of the first $250,000 and 90 percent of everything above it, exclusive of costs.
- A tiered maximum is not the headline number. Applied tranche by tranche to a $2,500,000 recovery, Florida’s published maximum schedule produces a blended 32 percent, not 40.
- Taking a case on contingency is a capital decision, not a pricing decision. The firm funds the work and usually the costs, and the client remains ultimately liable for those costs under the rule.
- The matter is not closed when the settlement clears. A written statement of the outcome and the method of the remittance is what closes it, and in Florida no money may move until the client approves it.
What a contingency fee agreement is, and the three questions it settles
A contingency fee agreement is a written contract under which the lawyer’s fee depends on the outcome of the matter, typically as a percentage of what the client recovers. If there is no recovery there is no fee. That single sentence is the whole of what most published explanations say, and it is the reason so many firms operate on a form they inherited without ever reading it against the rule.
The instrument does three things at once, and they are worth separating because they fail separately. First, it prices the work, by fixing a percentage and the events that trigger it. Second, it allocates risk, by deciding who funds the case while it runs and who carries the loss if it does not succeed. Third, it is a disclosure document, because the conduct rules treat a contingency agreement as the moment at which the client has to be told, in writing, how the eventual number will be produced. A form can be perfectly adequate as a price and still fail badly as a disclosure, and it is the disclosure failures that surface years later, when the money is on the table and the client reads the page properly for the first time.
It is also worth being clear about how the instrument sits alongside the others a firm uses. Our guide to attorney retainers covers advance payments and where they belong, and lawyer hourly rates covers the rate itself. A contingency agreement is not a substitute for either. Firms commonly run all three, and the published survey data suggests contingency is a minority instrument even where it is used. Clio’s 2025 report on mid sized law firms records that 64 percent of those firms report flat fee billing models, 54 percent hourly rates, 30 percent contingency fees and 27 percent subscription models. The report draws on several sources, including a survey of 1,028 United States legal professionals conducted June 5 to 23, 2024. Firms offer more than one model, so those shares are not a division of the market. They are a measure of what is on the menu.
The more useful way to hold the three instruments side by side is not how much each produces but when. An hourly engagement converts work into cash in repeated cycles across the life of the matter, which is why a firm running on hourly work can diagnose a revenue problem within a month or two of it appearing. A flat fee, where the jurisdiction permits it to be taken as the lawyer’s property on receipt, converts at or near the start, which is why firms that price that way tend to have the least complicated cash position of the three. A contingency engagement converts once, at the end, and only if the matter succeeds.
That difference in timing is the whole of what makes contingency work structurally different from the rest of a firm’s book. It is not that the work is riskier in any dramatic sense, since plenty of hourly matters also fail to produce what the client hoped for. It is that the firm has agreed to be the party that finds out last. Everything in the rest of this piece, from which clause governs costs to how the fee is taken when a settlement is paid in instalments, is downstream of that one structural fact, and it is worth having in mind before the drafting questions begin.
Those figures describe mid sized firms rather than solo and small ones, and no equivalent breakdown for smaller firms appears in the same source, so read them as a picture of how the instruments coexist rather than as a benchmark to aim at. The broader point holds either way. Contingency work sits alongside other fee models in most firms that do it, and the reason is structural rather than a matter of taste: a firm that puts a large share of its inventory on contingency has chosen, in effect, to fund its own receivables for years at a time. The rest of this piece is largely about what that choice commits you to.
Whether the fee may be contingent at all, the matters where it may not be
Before the percentage is negotiated there is a threshold question, and it has a written answer. The adopted rule permits a fee to be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by the rule itself or by other law. Washington’s Rule of Professional Conduct 1.5, amended effective April 29, 2025, states the two prohibitions directly. A lawyer shall not enter into an arrangement for, charge, or collect any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a dissolution or annulment of marriage or upon the amount of maintenance or support, or property settlement in lieu thereof. Nor may a lawyer charge a contingent fee for representing a defendant in a criminal case.
The domestic relations prohibition is broader in practice than its text suggests, and Washington’s comment to the rule, amended effective September 1, 2026, says so. The prohibition is equally applicable to other domestic relations matters, including the resolution of parenting issues, the establishment or maintenance of a guardianship of a minor, the dissolution of a state registered domestic partnership, and ending a committed intimate relationship under Washington law. That is a wider net than a form drafted around the word “divorce” will catch.
The same comment also marks out what remains available, which is the part firms most often miss. The prohibition does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, maintenance, or other financial orders, because such contracts do not implicate the same policy concerns. Collecting arrears on an order that already exists is a different matter from bargaining over what the order should say, and the rule treats it that way.
| Matter | May the fee be contingent | What the rule and comment actually say |
|---|---|---|
| Criminal defense | No | A lawyer shall not enter into an arrangement for, charge, or collect a contingent fee for representing a defendant in a criminal case |
| Dissolution or annulment of marriage | No, where the fee turns on the result | No fee in a domestic relations matter the payment or amount of which is contingent on securing the dissolution or annulment |
| Maintenance, support or a property settlement in lieu | No, where the fee turns on the amount | Named expressly alongside dissolution in the same prohibition |
| Parenting issues, guardianship of a minor, dissolving a domestic partnership, ending a committed intimate relationship | No | The Washington comment states the prohibition is equally applicable to these matters |
| Recovery of post-judgment balances under an existing support or financial order | Yes | The comment states such contracts do not implicate the same policy concerns |
| An ordinary civil claim for damages | Yes, subject to reasonableness and to any cap | The proprietary interest rule carries an express exception for a reasonable contingent fee in a civil case |
Two further constraints sit next to the prohibitions. Contingent fees, like any other fees, remain subject to the general reasonableness standard, and whether the fee is fixed or contingent is itself one of the enumerated factors in deciding whether a fee is reasonable. And the rule against acquiring a proprietary interest in the client’s cause of action carries an express exception for a reasonable contingent fee in a civil case, which is the provision that makes the whole instrument lawful in the first place. Neither point is decorative. Together they mean a contingency percentage is never immune from review simply because the client signed it.
What the writing has to contain, clause by clause
Every jurisdiction that regulates contingency fees requires a writing, and most specify its contents. The specification is the useful part, because it converts a vague obligation to be clear into a checklist a firm can run against its own form in twenty minutes.
Washington’s rule requires that the agreement be in a writing signed by the client, and that it state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal. Read the plural. A single flat percentage is permitted, but if the firm intends to charge more once suit is filed or once an appeal is taken, each of those percentages has to be in the document. The agreement must also state the litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. And it must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party.
California legislates the same ground in Business and Professions Code section 6147, and adds a consequence. The contract must be in writing, and a duplicate copy signed by both the attorney and the client must be given to the client at the time the contract is entered into. The statute lists what the contract must include: the contingency fee rate agreed upon; a statement of how disbursements and costs will affect the contingency fee and the client’s recovery; a statement of the extent, if any, to which the client could be required to pay compensation for related matters arising out of the relationship that the contingency contract does not cover; and a statement that the fee is not set by law but is negotiable, unless the matter is one where the rates are capped by statute, in which case the contract must say that the statutory rates are maximums and that a lower rate may be negotiated. Subdivision (b) supplies the teeth. Failure to comply with any provision of the section renders the agreement voidable at the option of the plaintiff, and the attorney is then entitled to collect a reasonable fee.
That is the sentence to sit with. A missing clause does not produce a warning letter. It hands the client an option to void the instrument that sets the fee, after which the firm is in the position of proving what a reasonable fee would have been, on a matter it has already finished.
| What the writing must settle | Washington RPC 1.5(c) | California B&P Code 6147 | Florida statement of clients’ rights |
|---|---|---|---|
| Form and signature | A writing signed by the client | In writing, with a duplicate copy signed by both attorney and client given to the client when the contract is entered into | In writing, with a three business day right to cancel |
| The percentage | The method by which the fee is determined, including the percentages that accrue on settlement, trial or appeal | A statement of the contingency fee rate agreed upon | The client’s right to bargain over the rate or percentage |
| Costs against the fee | Expenses to be deducted from the recovery, and whether deducted before or after the fee is calculated | How disbursements and costs will affect the fee and the client’s recovery | Whether the fee is based on the gross amount recovered or on the amount recovered minus costs |
| Costs if the case is lost | Clear notice of expenses for which the client is liable whether or not the client prevails | The extent to which the client could be required to pay compensation for related matters not covered by the contract | Notice of possible adverse consequences, including costs and the other side’s fees |
| Whether the rate is negotiable | Governed by the general reasonableness standard | A statement that the fee is not set by law but is negotiable, or, in a capped matter, that the statutory rates are maximums | A statement that there is no legal requirement to charge a set fee or percentage |
| The consequence of omission | Subject to the reasonableness standard and to discipline | Voidable at the option of the plaintiff; the attorney may then collect a reasonable fee | Referral to the Bar, and fee disputes to court or to fee arbitration |
Florida adds a procedural layer that has no analogue in most states and is worth knowing about even if you never practise there. The Florida Bar’s published statement of clients’ rights in contingency fee cases, approved by the Florida Supreme Court in June 1986, must be read and signed by both attorney and client in most contingency fee matters, and it gives the client three business days to reconsider the contract. A client who cancels in writing within those three business days owes no fee, although the client may be responsible for the lawyer’s actual costs during that period. A firm that starts work on day one of a Florida contingency matter is working inside a window in which the engagement can still evaporate.
The same statement carries a handful of disclosure obligations that sit outside the fee itself and are easy to leave out of a form. Before signing, the client is entitled to know about the lawyer’s education, training and experience, and specifically about actual experience with cases of that kind, in writing if the client asks. The client is entitled to be told whether the lawyer intends to handle the matter alone or with other lawyers, and if the matter may be referred, what kind of fee sharing arrangement will be made. The client is entitled to be told about the adverse consequences of losing, which may include costs owed to the lawyer and liability for the other side’s fees, costs and expenses.
Read as a group, those obligations describe a document that does considerably more than name a percentage. They describe an engagement letter that tells a person with no legal training what they are agreeing to, what it might cost them if it goes badly, and who will actually be doing the work. That is a higher bar than most inherited forms clear, and it is a bar that is easier to clear deliberately at the drafting stage than to argue about later.
Before or after costs, the clause that decides the client’s net
Of everything in the agreement, the clause that moves the most money is the one that gets the least attention: whether the percentage is applied to the gross recovery or to the recovery after case costs have been deducted. Washington’s rule requires the agreement to say which. Florida’s statement of clients’ rights puts it as an entitlement, telling the client that the lawyer should inform them whether the fee will be based on the gross amount recovered or on the amount recovered minus the costs. California requires a statement of how disbursements and costs will affect both the contingency fee and the client’s recovery.
The arithmetic is simple and it is worth doing once, because it produces a rule of thumb that is exactly true rather than approximately true. Take a recovery of $150,000 on a matter that ran up $20,000 of case costs, with a one third fee. Calculate the fee on the gross and it is $50,000; costs come off separately and the client receives $80,000. Calculate the fee on the net and the fee base is $130,000, the fee is $43,333, and the client receives $86,667. The client is $6,667 better off on the net basis, and that figure is not a coincidence. The difference between the two methods is always the fee percentage multiplied by the costs, whatever the size of the recovery.
Which method a firm uses is a commercial decision, not an ethical one, and the rules do not prefer either. What the rules require is that the document say which, unambiguously, before the work starts. The failure mode is not a firm that chooses the gross basis. It is a firm whose form says something like “the fee shall be one third of the recovery, and the client shall be responsible for costs,” which is a sentence that can be read either way and will be read the second way by the person who did not draft it.
There is a second trap in the same neighbourhood. In a capped matter, the cap may be expressed against a defined base that is not the base your form uses. California’s statutory limits on fees against health care providers apply to the amount recovered, and the statute defines recovered as the net sum after deducting disbursements or costs incurred in connection with the prosecution or settlement of the claim, while expressly excluding the plaintiff’s own medical care costs and the attorney’s office overhead from that deduction. A firm applying a percentage to a different base than the statute contemplates has not merely mispriced the matter. It has exceeded a statutory limit.
The caps that override your percentage, including one written into a state constitution
In most matters the percentage is whatever the lawyer and the client agree, subject only to the reasonableness standard. In a small number of matter types it is not, and the firms that get caught by this are usually the ones taking an unfamiliar case as a favour.
California’s Business and Professions Code section 6146, as amended by Assembly Bill 35 and effective January 1, 2023, sets hard limits on contingency fees for representing a person seeking damages against a health care provider based on alleged professional negligence. The fee may not exceed 25 percent of the amount recovered where the recovery comes by a settlement agreement and release of all claims executed by all parties before a civil complaint or a demand for arbitration is filed. It may not exceed 33 percent where the recovery follows a settlement, arbitration or judgment after a complaint or demand has been filed. Where the matter is tried or arbitrated, the plaintiff’s attorney may file a motion with the court or arbitrator for a fee above that percentage, served on all parties, which is decided in the court’s discretion on evidence establishing good cause. The limits apply regardless of whether the client is an adult, an infant or a person of unsound mind, and regardless of how the recovery arrives.
That structure rewards filing, which is an unusual thing for a fee statute to do, and it is worth understanding why the two numbers differ before deciding that an early resolution is in everyone’s interest. It also means section 6147’s disclosure requirement bites differently in these matters: the contract must state that the statutory rates are the maximum limits and that the attorney and client may negotiate a lower rate, rather than the usual statement that the fee is not set by law.
Florida went further and put the client’s share in the constitution. On November 2, 2004 Florida voters approved a measure that created Article I, Section 26 of the state constitution, titled “Claimant’s right to fair compensation.” In any medical liability claim involving a contingency fee, the claimant is entitled to receive no less than 70 percent of the first $250,000 in all damages received, exclusive of reasonable and customary costs, whether received by judgment, settlement or otherwise, and regardless of the number of defendants. The claimant is entitled to 90 percent of all damages in excess of $250,000, again exclusive of costs and regardless of the number of defendants. The provision states that it is self executing and requires no implementing legislation.
The Florida Bar publishes the waiver procedure that grew up around that provision, approved by the Florida Supreme Court and effective January 1, 2007, for a client who cannot obtain counsel of choice at the constitutional rates. The waiver is initialled clause by clause, acknowledges that an important constitutional right is being released, records that the client was advised they may consult separate counsel and may request a hearing before a judge, and is itself cancellable within three business days. Reading the form is the fastest way to understand how seriously that jurisdiction treats the question of what share of a recovery reaches the person who was injured.
| Jurisdiction and matter | What is limited | The limit | Instrument |
|---|---|---|---|
| California, damages against a health care provider for professional negligence | The attorney’s contingency fee | 25 percent of the amount recovered on a settlement and release executed before a complaint or arbitration demand is filed | Statute, B&P Code 6146, as amended effective January 1, 2023 |
| California, the same matters after filing | The attorney’s contingency fee | 33 percent of the amount recovered on settlement, arbitration or judgment after filing, with a good cause motion available where the matter is tried or arbitrated | Statute, B&P Code 6146 |
| California, the definition that the cap applies to | The base the percentage is taken against | The net sum after disbursements and costs, excluding the plaintiff’s medical care costs and the attorney’s office overhead | Statute, B&P Code 6146(c)(1) |
| Florida, any medical liability claim involving a contingency fee | The claimant’s minimum share | No less than 70 percent of the first $250,000 and 90 percent of all damages above it, exclusive of reasonable and customary costs | State constitution, Article I, Section 26, approved by voters November 2, 2004 |
| Florida, once the constitutional right is waived | The maximum agreed fee | 33 and one third to 40 percent of the first $1 million, 20 to 30 percent of the portion from $1 million to $2 million, 15 to 20 percent above $2 million | Rules Regulating The Florida Bar 4-1.5(f)(4)(B)(i), quoted in the Bar’s published waiver form |
Two features of that table are worth pausing on, because they are the parts that generalise beyond the two states named. The first is that the cap and the base are set together. California does not simply name a percentage; it defines what the percentage is taken against, and excludes two categories from that base by name. A firm that reads only the percentage has read half the provision. The second is that the instrument matters. A limit in a statute can be amended by a legislature in an ordinary session, as California’s was in 2022. A limit in a constitution cannot, which is why Florida’s arrangement needed a waiver procedure rather than a legislative fix, and why that waiver is initialled line by line and acknowledged under oath.
The same waiver form quotes the maximum schedule that applies once the constitutional right is waived, drawn from the Rules Regulating The Florida Bar. Depending on the circumstances of the matter, the maximum agreed fee may range from 33 and one third percent to 40 percent of any recovery up to $1 million, plus 20 percent to 30 percent of any portion of the recovery between $1 million and $2 million, plus 15 percent to 20 percent of any recovery exceeding $2 million. It is a tiered ceiling, and the tiers fall as the recovery grows.
None of this is an argument for or against any particular percentage. It is an argument for looking up the answer before quoting a number in an unfamiliar matter type, because the jurisdictions that regulate this do not regulate it gently, and none of the caps described here can be cured by a clause in your form.
What a tiered maximum actually produces, the blended rate on a large recovery
A tiered ceiling has a consequence that gets lost whenever the top tier is quoted on its own. The headline percentage applies only to the first tranche of the recovery. On a large recovery the effective rate is always lower, and the gap widens as the recovery grows.
Work the published Florida schedule through a $2,500,000 recovery. Applying the top of every band gives 40 percent of the first $1,000,000, which is $400,000; 30 percent of the second $1,000,000, which is $300,000; and 20 percent of the remaining $500,000, which is $100,000. The total is $800,000, which is a blended 32 percent of the recovery rather than 40. Applying the bottom of every band gives $333,333, $200,000 and $75,000, a total of $608,333, which is a blended 24.3 percent. The arithmetic below is illustrative, computed from the quoted schedule on a hypothetical recovery, and is not a report of what any firm charges.
Two things follow for a firm that works in a tiered jurisdiction. The first is that the fee model in your spreadsheet has to be tiered too, because a flat percentage applied to a projected recovery will overstate the fee on exactly the matters where the projection matters most. The second is that a client who has read the schedule and arrives asking why the firm is charging 40 percent is asking a fair question with a precise answer, and the answer is easier to give if the firm has already run the blend.
Who advances the costs, and why this is a capital decision rather than a pricing decision
The percentage decides how a recovery is divided. It says nothing about who pays the filing fee in month one, the expert in month nine, and the deposition transcripts in month fourteen, on a matter that may not resolve for two years and may not resolve at all. That is the question that determines whether a contingency practice is viable, and it is a balance sheet question rather than a pricing one.
The rules permit the firm to fund it, within limits, and the limits are specific. Washington’s Rule of Professional Conduct 1.8(e) prohibits a lawyer from advancing or guaranteeing financial assistance to a client in connection with contemplated or pending litigation, with two exceptions. A lawyer may advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and costs of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses. And in matters maintained as class actions only, repayment of expenses may be made contingent on the outcome.
Two words in that provision do a great deal of work. “Ultimately liable” means that outside a class action, the default position is that the client owes the costs whether the case succeeds or not, and that the firm advancing them is extending credit rather than absorbing an expense. Washington’s own rule requires the agreement to notify the client clearly of any expenses for which the client will be liable whether or not the client is the prevailing party, which is the disclosure that makes that default intelligible to the person signing. Whether a firm chooses to pursue unrecovered costs from an unsuccessful client is a separate question, and a commercial one, but the document should describe the arrangement the firm actually intends to operate.
The practical consequence is that a contingency matter consumes working capital in two directions at once. The firm’s own time is unbilled for the life of the matter, and the firm’s cash is going out the door on costs at the same time. Our law firm profitability guide works through how long money already earned takes to arrive in an ordinary hourly practice; on a contingency matter that lag is the entire life of the case. Any deposit a client does provide toward costs is client money and belongs in the trust account until it is properly applied, which our guide to lawyer trust accounting covers in detail.
| The cost question | What the rule requires the document to settle | What a vague form leaves open |
|---|---|---|
| Who pays the costs as they are incurred | Whether the firm advances them, and on what terms | An informal expectation that the firm will fund whatever the case needs, with no ceiling |
| Who carries them if there is no recovery | Clear notice of any expenses for which the client is liable whether or not the client prevails | A dispute at the worst possible moment, with no document to point to |
| Whether the fee is calculated before or after costs | An explicit statement of which base the percentage applies to | Two defensible readings of the same sentence, resolved in favour of whoever did not draft it |
| Which expenses count as case costs at all | The litigation and other expenses to be deducted from the recovery | Office overhead drifting onto the settlement statement, which a capped matter expressly excludes |
| What happens to a cost deposit the client provides | Client money, held and applied under the trust accounting rules | A deposit spent before it was earned or properly applied |
| Who decides how much to spend | Nothing in the fee rule, but Florida’s statement gives the client the right to decide after consulting the lawyer | An expert retained on the firm’s judgment and queried on the client’s |
When the money arrives in instalments, taking a percentage of what has not been paid
Structured settlements create a problem the percentage on its own cannot solve. If the client is to receive payments over twenty years, a fee expressed as a percentage of the recovery has to be resolved against either the stream or its present value, and those are very different numbers.
Washington’s rule answers it rather than leaving it to the agreement. Where a contingent fee is a percentage of the monetary amount recovered for a claimant, and all or part of the recovery is to be paid in the future, the fee shall be paid only in one of two ways: by applying the percentage to the amounts recovered as they are received by the client, or by applying the percentage to the actual cost of the settlement or award to the defendant. The first has the firm paid as the client is paid. The second values the arrangement at what it actually cost to buy, rather than at the undiscounted total of the instalments.
What the provision rules out is the third option, which is to compute the fee against the face value of a long stream and take it immediately out of the front end. A firm that does not practise in this area often enough to have met the problem is exactly the firm likely to write a form that permits it by silence.
Dividing the fee with a lawyer outside the firm, what the client has to agree to
Contingency work is referred more than most other work, which is why the fee division rule shows up in this context more than any other. The adopted rule permits a division of a fee between lawyers who are not in the same firm only if three conditions are met together. The division is in proportion to the services provided by each lawyer, or each lawyer assumes joint responsibility for the representation. The client agrees to the arrangement, including the share each lawyer will receive, and that agreement is confirmed in writing. And the total fee is reasonable.
The comment to the rule is candid about where this is used. A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm, and it most often arises when the fee is contingent and the division is between a referring lawyer and a trial specialist. Joint responsibility, the alternative to proportionality, entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership. That is a considerable thing to assume in exchange for a referral share, and it is worth being certain which of the two bases the arrangement actually rests on.
Two details are easy to miss. The client’s agreement must include the share each lawyer will receive, not merely the fact of the division, and it must be confirmed in writing. And the comment notes that contingent fee agreements must still be in a writing signed by the client and must otherwise comply with the contingency paragraph of the rule, so a referral does not create an exception to any of the drafting requirements set out earlier. Florida, characteristically, makes the point structurally: where lawyers from different law firms will represent the client, at least one lawyer from each law firm must sign the contingent fee contract.
What closes a contingency matter, the statement that comes before the money moves
An hourly matter ends when the last invoice is paid. A contingency matter ends with a document, and the document is required rather than customary.
Washington’s rule states it in a single sentence: upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. Three things are required there, not one. The outcome. The remittance. And the method by which the remittance was determined, which means the arithmetic has to be shown rather than asserted.
Florida sequences it, and the sequencing is the striking part. The client has the right to receive and approve a closing statement at the end of the case before paying any money. That statement must list all of the financial details of the entire case, including the amount recovered, all expenses, and a precise statement of the lawyer’s fee. Until the client approves the closing statement, the lawyer cannot pay any money to anyone, including the client, without an appropriate order of the court. And every lawyer or law firm working on the case must sign it. The disbursement is gated on the client’s approval of the accounting, not the other way round.
A firm that treats the closing statement as a formality is skipping the one moment in the engagement where the client, the file and the money are all in the same place and every figure can be reconciled. It is also the document against which any later question about the fee would be measured, which is a reason to build it carefully rather than quickly. The habits that produce a clean closing statement are the same habits that produce a clean bill, which our guide to attorney billing works through for hourly matters.
The ten questions below are drawn from the rule and statutory provisions quoted throughout this piece. They are written as questions about your own form rather than as a summary, because a summary is easy to agree with and a question is not.
| # | Ask of your own contingency form | Where the requirement comes from |
|---|---|---|
| 1 | Is it a writing signed by the client, not merely sent to the client | RPC 1.5(c)(1) |
| 2 | Does it state a percentage for each of settlement, trial and appeal, if those differ | RPC 1.5(c)(2) |
| 3 | Does it say in terms whether costs come off before or after the fee is calculated | RPC 1.5(c)(2); B&P Code 6147(a)(2) |
| 4 | Does it name which categories of expense are deducted from the recovery | RPC 1.5(c)(2) |
| 5 | Does it state clearly that the client is liable for named expenses whether or not the client prevails | RPC 1.5(c)(2); RPC 1.8(e)(1) |
| 6 | Does it say whether the fee is set by law or negotiable, and say which in the right matters | B&P Code 6147(a)(4) and (a)(5) |
| 7 | Does it address compensation for related matters outside the contingency contract | B&P Code 6147(a)(3) |
| 8 | Does it say how a fee is taken where the recovery is paid in the future | RPC 1.5(c)(4) |
| 9 | If another firm is involved, does the client’s written agreement state each lawyer’s share | RPC 1.5(e)(2) |
| 10 | Does your closing process produce a written statement of outcome, remittance and method | RPC 1.5(c)(3) |
Whether to take the case, a firm side test
Everything above concerns the instrument. The remaining question is the one the instrument cannot answer, which is whether this particular matter belongs in your inventory at all.
A contingency matter asks the firm for three things simultaneously: lawyer time that will not be billed for the life of the case, cash for costs that goes out on a schedule the firm does not control, and a share of the firm’s risk capacity that cannot be used on anything else while the matter is live. A firm can be profitable on paper and still be unable to carry a third matter of that shape, because the constraint is not margin, it is liquidity and concentration.
Those three demands do not arrive evenly, which is the part that catches firms out. The time commitment is roughly proportional to the work, so it is at least predictable in shape. The cash commitment is not: costs cluster around events the other side and the court schedule control, so a matter that looked affordable in month two can require an expert and a set of depositions inside the same quarter. And the risk commitment is invisible on any report the firm runs, because there is no line item for the fact that three of your six open contingency matters turn on the same theory or the same industry.
That is why the useful question is not whether the expected value of the case is positive. It usually is, or the firm would not be looking at it. The useful questions are narrower. What is the realistic cost budget, and can the firm fund it from cash on hand rather than from the proceeds of a different matter. How long is the expected cycle, and what does the firm’s cash position look like in the middle of it rather than at the end. How many matters of this shape are already live, and would one adverse result on the largest of them change what the firm can do next year. And what does the percentage produce on a tiered schedule at the realistic recovery, rather than at the hopeful one.
None of those questions has a standard answer, and none of them is answered by the fee agreement. But a firm that has written down its answers before the client signs is running a contingency practice, and a firm that has not is running an experiment with its own balance sheet. The paperwork described throughout this piece is what makes the first of those possible, which is the real reason to get the form right long before the case that tests it arrives. If you want a structured way to look at where your firm’s systems are strongest and weakest, the firm assessment is a short place to start.
Frequently asked questions
It is a written contract under which the lawyer’s fee depends on the outcome of the matter, usually as a percentage of what the client recovers, so that no recovery means no fee. The adopted rule requires it to be a writing signed by the client and to state the method by which the fee is determined, including the percentage or percentages that apply on settlement, trial or appeal, the expenses to be deducted from the recovery, and whether those expenses are deducted before or after the fee is calculated.
There is no single figure, and in most matters there is no legally fixed one either. Where a jurisdiction does regulate the number it publishes a schedule rather than a rate. Florida’s published maximum, for example, ranges from 33 and one third to 40 percent of the first $1 million, 20 to 30 percent of the portion between $1 million and $2 million, and 15 to 20 percent above $2 million. Anything quoted as a national average is a description of practice, not a rule, and the rate always remains subject to the reasonableness standard.
Whichever the agreement says, and the agreement is required to say. The difference matters more than most clients realise: on a $150,000 recovery with $20,000 of costs and a one third fee, calculating the fee on the gross leaves the client $80,000 and calculating it on the net leaves the client $86,667. The gap is always the fee percentage multiplied by the costs. Washington’s rule requires the agreement to state which basis applies, and California requires a statement of how disbursements and costs affect both the fee and the client’s recovery.
It consumes working capital in two directions at once. The lawyer’s time is unbilled for the life of the matter, and the firm is usually advancing case costs at the same time, on a schedule it does not control. A firm can be profitable and still be unable to carry another matter of that shape, because the binding constraint is liquidity and concentration rather than margin. The instrument also carries drafting risk that hourly work does not, since a non-compliant agreement can be voidable at the client’s option in some jurisdictions.
No, on the terms the rule describes. A lawyer may not charge a contingent fee for representing a defendant in a criminal case, nor any fee in a domestic relations matter the payment or amount of which is contingent on securing a dissolution or annulment of marriage or on the amount of maintenance, support or property settlement in lieu of it. Washington’s comment extends that to parenting issues, guardianship of a minor, dissolving a state registered domestic partnership and ending a committed intimate relationship. It does not preclude a contingent fee for recovering post-judgment balances due under an order that already exists.
Yes, in every jurisdiction that regulates it, and in several the writing must be signed by the client rather than merely delivered. California requires in addition that a duplicate copy signed by both the attorney and the client be given to the client at the time the contract is entered into. Florida requires a separate statement of clients’ rights to be read and signed by both attorney and client in most contingency matters, and gives the client three business days to cancel the contract without owing a fee.
It depends on the jurisdiction, and the consequence can be severe. Under California’s fee agreement statute, failure to comply with any provision of the section renders the agreement voidable at the option of the plaintiff, after which the attorney is entitled to collect a reasonable fee rather than the agreed percentage. That shifts the firm from enforcing a contract to proving a quantum, on a matter it has already completed. The agreement also remains subject to the general reasonableness standard regardless of what the client signed.
Yes, on three conditions that must be satisfied together. The division must be in proportion to the services each lawyer provides, or each lawyer must assume joint responsibility for the representation. The client must agree to the arrangement, including the share each lawyer will receive, and that agreement must be confirmed in writing. And the total fee must be reasonable. Joint responsibility, the alternative to proportionality, means financial and ethical responsibility for the representation as if the lawyers were associated in a partnership. Florida adds that where lawyers from different firms represent the client, at least one lawyer from each firm must sign the contract.
A written accounting, before the money moves. The rule requires that on conclusion of a contingent fee matter the lawyer provide the client with a written statement of the outcome and, where there is a recovery, showing the remittance to the client and the method of its determination. Florida sequences it further: the client has the right to receive and approve a closing statement listing the amount recovered, all expenses and a precise statement of the fee, and until the client approves it the lawyer may not pay money to anyone, including the client, without a court order.
Sources
- Washington Rules of Professional Conduct, RPC 1.5 Fees, paragraphs (a), (c), (d) and (e) with comments 3, 6 and 7. Rule amended effective April 29, 2025; Washington comment 6 amended effective September 1, 2026. courts.wa.gov
- Washington Rules of Professional Conduct, RPC 1.8, paragraphs (e) and (i), on advancing the expenses of litigation and acquiring a proprietary interest in a cause of action. courts.wa.gov
- California Business and Professions Code section 6147, contingency fee contracts, required contents and the voidable-agreement consequence. leginfo.legislature.ca.gov
- California Business and Professions Code section 6146, limits on contingency fees in actions against health care providers, as amended by Stats. 2022, Ch. 17 (AB 35), effective January 1, 2023. leginfo.legislature.ca.gov
- The Florida Bar Consumer Protection Law Committee, “A Consumer Guide to Clients’ Rights,” containing the Statement of Clients’ Rights in Contingency Fee Cases approved by the Florida Supreme Court in June 1986, the text of Article I, Section 26 of the Florida Constitution, and the waiver form effective January 1, 2007 that quotes the maximum fee schedule in Rule 4-1.5(f)(4)(B)(i) of the Rules Regulating The Florida Bar. floridabar.org
- “Highlights From the 2025 Legal Trends for Mid-Sized Law Firms Report,” drawing on several sources including a survey of 1,028 United States legal professionals conducted June 5 to 23, 2024, as published by the Tennessee Bar Association. tba.org
Educational information for law firm owners, not legal advice. Conduct rules, fee statutes and constitutional provisions vary by jurisdiction; the text quoted here is from the states named and is current as of the dates given. The arithmetic in this piece is illustrative and its inputs are stated. Verify against your own jurisdiction’s adopted text before drafting or changing a fee agreement.