Through a written contingent fee agreement: the lawyer is paid a percentage of the recovery at the end of the case, and nothing if there is no recovery. Case expenses are handled separately, and the agreement must say whether they come out before or after the fee is calculated.
Texas regulates contingent fees through the lawyer ethics rules. Rule 1.04(d) of the Texas lawyer ethics rules requires a contingent fee agreement to be in writing and to state the method by which the fee is determined. If the percentage changes depending on settlement, trial, or appeal, the agreement must state each one.
Expenses are not the same as the fee. They include filing fees, records, deposition transcripts, expert witnesses, and accident reconstruction. Rule 1.08(d) allows a lawyer to advance court costs and litigation expenses, and repayment can be contingent on the outcome of the case.
The order of deductions matters. Rule 1.04(d) requires the agreement to say which expenses will be deducted from the recovery and whether they are deducted before or after the fee is calculated. On the same settlement, those two methods can produce a different amount for the client.
At the end, the client gets an accounting. When a contingent fee matter concludes, the lawyer must give the client a written statement of the outcome and, if there is a recovery, show the amount paid to the client and how it was determined. That statement also shows any liens or reimbursements paid from the settlement.
Texas does not set a single percentage for contingent fees in car accident cases. Fees must be reasonable under Rule 1.04, and the agreement must spell out the terms. That is why reading and comparing the written agreement is the most important part of choosing how to pay a lawyer.
If you change lawyers during a case, the first lawyer may claim part of the fee for work performed, depending on the agreement. The second lawyer should explain how that will be handled so you are not charged twice.
Ask how case expenses are tracked. A good firm can tell you what has been spent on your case at any point, so the closing statement at the end holds no surprises.
Owsley Law Firm explains its fee agreement line by line before a client signs and charges no fee unless it wins.
Settlement funds go into the lawyer’s trust account first. Texas rules require client funds to be held separately from the firm’s own money, and the distribution to the client, any lienholders, and the firm is made from that account according to the closing statement the client approves.
Texas rules also allow a lawyer to advance some living and medical expenses in limited circumstances. Rule 1.08(d) permits a lawyer to advance or guarantee court costs and litigation expenses, and reasonably necessary medical and living expenses, with repayment contingent on the outcome. Any such arrangement should be in writing and explained clearly.
The fee should be compared on net, not gross. Two agreements with the same percentage can produce different results depending on how expenses are deducted and whether the percentage increases if suit is filed. Ask each lawyer to walk through an example with real numbers before you choose.
A simple example shows why the order of deductions matters. On the same recovery, calculating the fee before expenses are subtracted produces a larger fee than calculating it after. The agreement must say which method applies, so clients can compare offers accurately.
Liens and reimbursements are paid from the recovery too, but they are not fees. Hospital liens, health plan reimbursement, and Medicare or Medicaid interests are often negotiated down, and that work can significantly change what the client receives.
Mistakes that cost people money
- Not reading how expenses are handled if the case is lost.
- Assuming the percentage stays the same if a lawsuit is filed.
- Not asking for the closing statement to be explained line by line.
Related questions
Do I pay anything up front?
No. Under a contingent fee agreement, the fee is paid from the recovery at the end.
What if there is no recovery?
There is no attorney’s fee. Whether expenses are owed depends on the agreement, so read that term before signing.
Is the fee negotiable?
Fee terms are set in the written agreement before the representation begins. Ask any lawyer to explain their terms.
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