How Contingency Fees Work in Personal Injury Cases
Many people who’ve been seriously injured assume they can’t afford a lawyer. Between mounting medical bills, lost income, and the financial stress of recovery, hiring an attorney seems like an expense they can’t take on. The contingency fee arrangement was created to solve exactly this problem. It allows injured people to access skilled legal representation without paying anything out of pocket, shifting the financial risk from the client to the attorney.
At Burton Law Firm, every personal injury case we handle is taken on a contingency fee basis. You don’t pay us a dollar unless we recover compensation for you. This arrangement ensures that our interests are aligned with yours from the first day to the last.
What is a Contingency Fee?
A contingency fee is a payment arrangement where the attorney’s compensation depends entirely on the outcome of the case. If we recover money for you through a settlement or jury verdict, we receive a percentage of that recovery as our fee. If we don’t recover anything, you owe us nothing for our legal services.
This stands in stark contrast to hourly billing, where you pay the attorney for every hour of work regardless of whether the case succeeds or fails. Under hourly billing, a client could spend thousands of dollars and still lose. Contingency fee arrangements eliminate that risk entirely.
How the Percentage Works
Contingency fees in personal injury cases are calculated as a percentage of the total recovery. The specific percentage is agreed upon between you and your attorney before any work begins and is documented in a written fee agreement, as required by the North Carolina Rules of Professional Conduct.
The percentage typically ranges from 25% to 33.33%, depending on several factors. Cases that settle before litigation may carry a lower percentage because they require less work and involve less risk. Cases that proceed through litigation and trial typically carry a higher percentage because of the additional work, preparation, and risk involved.
For example, if your car accident case settles for $100,000 and your fee agreement provides for a 33.33% contingency fee, the attorney receives $33,333 and you receive $66,667 (before costs). If the case hadn’t recovered anything, you would owe nothing.
Costs and Expenses vs. Attorney Fees
It’s important to understand that attorney fees and case costs are separate items. Costs are the out-of-pocket expenses incurred in pursuing your case: court filing fees, medical record acquisition fees, deposition costs, accident reconstruction analysis, and similar expenditures.
In most contingency fee arrangements, the attorney advances these costs on your behalf. You’re not asked to pay for them out of pocket while your case is pending. Upon settlement or verdict, costs are deducted from your recovery along with the attorney fee.
Your written fee agreement should clearly explain how costs are handled: whether they’re deducted before or after the contingency fee percentage is calculated, and what specific costs you’re responsible for. Read this agreement carefully and ask questions about anything you don’t fully understand before signing.
Why Contingency Fees Benefit Injured People
The contingency fee arrangement creates several important advantages for personal injury clients.
It removes the financial barrier to justice. You don’t need savings or available credit to hire a lawyer. The attorney finances the case and takes the financial risk. This means everyone has access to legal representation, regardless of their financial situation at the time of injury.
It aligns your attorney’s incentives with yours. Your attorney only gets paid if you get paid, and the more you recover, the more the attorney earns. This creates a powerful incentive for your attorney to pursue the maximum possible recovery. Unlike hourly billing, where the attorney profits from billing more hours regardless of results, contingency fees reward actual outcomes.
It shifts risk from client to attorney. If your case fails, you’ve lost nothing financially. The attorney absorbs the cost of the time, effort, and expenses invested in the case. This risk transfer is fair because the attorney is better positioned to evaluate case merit and absorb potential losses across a portfolio of cases.
It also filters for case quality. Attorneys working on contingency only accept cases they believe have genuine merit and a reasonable chance of success. If an attorney agrees to represent you on contingency, it reflects a professional judgment that your claim is viable and recovery is likely.
What to Look for in a Fee Agreement
Before signing a contingency fee agreement, make sure it clearly addresses several key points. The percentage should be stated explicitly, including whether different percentages apply at different stages (pre-litigation vs. litigation vs. trial). The agreement should specify which costs and expenses you’re responsible for and whether those costs are deducted before or after the fee percentage is calculated.
The agreement should explain what happens if you decide to change attorneys or if the attorney withdraws from the case. It should state whether the attorney will provide periodic case updates and written accounting of costs incurred.
Under North Carolina law, the fee agreement must be in writing and signed by the client. Upon conclusion of the case, the attorney must provide a written statement showing the outcome, the recovery amount, the fee calculation, and the final amount remitted to you.
Common Questions About Contingency Fees
People often wonder whether contingency fees make legal services more expensive. In practice, the opposite is usually true. Because attorneys working on contingency are motivated to resolve cases efficiently, they don’t have the hourly-billing incentive to prolong proceedings. And because you pay nothing if the case fails, you’re never stuck paying for unsuccessful representation.
Some clients wonder whether they can negotiate the percentage. Fee percentages are not fixed by law, and you can discuss terms with your attorney. However, lower percentages may come with trade-offs, such as fewer resources dedicated to your case or less willingness to proceed to trial if needed.
Talk to a North Carolina Personal Injury Attorney
If you’ve been injured in a motorcycle accident, truck accident, pedestrian accident, or any other incident caused by negligence, we’re here to help. Our Chapel Hill personal injury lawyers and car accident attorneys serve injured victims across the Triangle and throughout North Carolina.
We’ll explain our contingency fee arrangement in detail and answer every question you have about costs. You pay nothing unless we win.
Contact us today to discuss your case.