A fee arrangement in which the lawyer is paid a percentage of what is recovered, and is paid no fee if nothing is recovered.
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Under a contingency fee the client pays no hourly rate. The lawyer takes an agreed percentage of whatever is recovered, and takes no fee at all if the case recovers nothing. It is how most personal injury work is billed, and it exists so that a claim does not depend on the claimant's ability to fund it.
The distinction that causes the most surprise is between fees and costs. The percentage is the lawyer's fee. Case costs - filing fees, records, expert witnesses, depositions - are usually a separate category, are often advanced by the firm, and are usually reimbursed out of the recovery. Whether the percentage is calculated before or after those costs come out changes the client's net share, and both methods are used.
Contingency fees are not permitted in every kind of case. In particular, they are generally prohibited in criminal defense and in securing a divorce.
Two protections in the model rule are easy to miss. The written agreement must tell the client which expenses they will owe even if the case is lost. When the matter ends, the lawyer must give the client a written statement of the outcome showing what was paid to the client and how that amount was worked out (ABA Model Rule 1.5(c)). Some kinds of claims also have fee caps set by statute. In a claim against the United States under the Federal Tort Claims Act, for example, the attorney's fee may not exceed 20 percent of an administrative settlement or 25 percent of a judgment or a settlement reached after suit is filed (28 U.S.C. § 2678).
Read the percentage, whether it changes if the case is filed or tried, and whether it is taken before or after costs - those three terms determine what actually reaches the client. A lawyer is required to put the agreement in writing, so any of this being vague is itself worth questioning.
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Other entries in the same area of law, each written from the same primary sources.