How much do lawyers charge as a contingency fee?
UPDATED: February 20, 2013
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In some states the percentage (or the maximum percentage) that a lawyer may charge by way of a contingency fee is set by law. It may be a fixed percentage, such as 33-1/3% of all sums recovered, or based on a sliding scale, such as 40% of the first $10,000 recovered, 35% of the next $40,000, 30% of the next $150,000, 25% of the next $300,000, etc.
The contingency fee may be based on the total amount recovered, the amount recovered net of expenses, or the amount recovered that exceeds the offer made by the other partys insurance company. As a general bit of advice, often makes more sense to focus on the amount that you can realistically expect to recover after the contingency fee, rather than the percentage the lawyer proposes to charge you by way of a contingency fee. For example, recovering $100,000 and paying a 40% contingency fee nets you $60,000, while recovering $50,000 and only paying a 20% contingency fee nets you only $40,000.
Also bear in mind that while the percentage contingency fee is not necessarily related to the recovery you can expect, some lawyers charge higher percentages as fees because they consistently obtain higher awards for their clients. Also, some people think a lawyer will fight harder to get more money the greater his or her share in the ultimate outcome. You and the lawyer should work out a fee agreement that you both are satisfied with up front, and get it in writing.