Signing a Contingency Agreement? The Clauses Worth Reading Twice

A contingency agreement is usually two or three pages, and most clients sign it in a conference room within twenty minutes of meeting the lawyer who drafted it. That is the wrong amount of time. The document decides how a future settlement gets divided, and the decisions inside it are not obvious from a first pass, because the operative language sits in ordinary sentences rather than in anything that announces itself. A careful reader slows down at five places, asks a question at each, and writes the answer into the agreement if the answer matters.

Whether the percentage comes off the top or off the net

The single largest variable is not the percentage. It is the number the percentage is applied to. A fee taken from the gross recovery is calculated before case expenses are deducted; a fee taken from the net is calculated after. On a modest case with light expenses the difference is small. On a case carrying an expert's invoice, deposition transcripts, and a treating physician's narrative report, the difference can run into thousands. Find the sentence that defines the fee base, read it twice, and make sure it says gross or net rather than leaving the sequence implied.

The step-up, and what triggers it

Most injury retainers escalate. A common structure sets one percentage for a claim resolved before suit and a higher one once litigation begins, on the reasonable theory that filing converts a negotiation into a case with deadlines, discovery, and motion practice. The clause worth checking is the trigger, not the number. Some agreements step up on the filing of a complaint, some on the expiration of a stated period, some on the setting of a trial date, and a few on the firm's decision that suit is necessary. A trigger tied to a visible, dated event is easier to verify later.

Who fronts the expenses and who owes them at the end

Case costs are separate from fees, and they accumulate whether the claim succeeds or not: filing fees, service, records requests, court reporters, expert review, investigation, mediation. Nearly every firm advances these. The question is what happens if the case recovers nothing. Many agreements waive repayment on a loss, some make the client liable, and a few are silent, which is its own answer to negotiate. The careful reader also checks whether the firm charges interest on advanced costs, whether internal charges like copying and mileage are billed at a set rate, and whether any single expense above a threshold requires the client's approval first.

What happens if the relationship ends

Clients change lawyers, and the retainer says what that costs. The usual mechanism is a lien: the discharged firm asserts a claim against the eventual recovery for the reasonable value of the work it performed, or in some states for a share of the contingency. Read whether the agreement fixes an hourly rate for that calculation, and at what number, because an unstated rate becomes a disputed one. The same clause typically covers the firm withdrawing, which it may do if the claim proves weaker than it looked. A clean discharge provision protects both sides, and it is easier to agree on before anyone is unhappy.

The lines that are actually negotiable

Firms treat some terms as fixed and others as routine to adjust, and clients rarely know which is which. The base percentage on a straightforward liability case with clear damages is negotiable more often than people assume, particularly where policy limits make the outcome predictable. So is the fee base, the interest on advanced costs, the approval threshold for large expenses, and the handling of a recovery that arrives without much work, such as an early policy-limits tender. What is rarely movable is the client's responsibility for medical liens and subrogation claims, which are owed to third parties regardless of what the fee agreement says. Pre-settlement advances from funding companies sit outside the retainer entirely, in a consumer lending market the Consumer Financial Protection Bureau oversees, and a good agreement says plainly that the firm neither arranges nor guarantees them.

Ask for the changes in writing, initialed by both parties, and keep a signed copy with the itemized cost ledger the firm should be willing to produce on request. A lawyer who explains each clause without hurrying, and who agrees to write down what was said, has told the client something useful about how the rest of the case will be handled.