How Do You Write a Contingency Fee Agreement as a New Attorney?

Your first contingency case is exciting, because you only get paid if the client recovers, which aligns your interests with theirs and opens representation to clients who could never pay by the hour. But everything about how you get paid, and how the client understands the arrangement, rides on the contingency fee agreement. Get it right and it protects both of you. Get it wrong and you invite fee disputes, or worse.

This is general information, not legal advice, and the rules governing contingency fees vary by state, so confirm your own jurisdiction's requirements before you draft anything. Rather than a template, which no responsible article should hand out, this piece explains what a contingency fee agreement contains clause by clause and the ethics rules that govern it, so you understand what you are building and why.

How Do You Write a Contingency Fee Agreement?

Put it in writing, clearly state the percentage and how it is calculated, explain how costs and expenses are handled, and include the disclosures your state requires, then have the client sign it. The agreement must be understandable to the client and complete enough that there is no confusion later about how the fee works.

Because the specific requirements vary meaningfully by state, the single most important step is to know your own jurisdiction's rules for contingency agreements, since many impose particular content and format requirements. What follows is the common structure such agreements share, but treat it as a framework to fill in with your state's specifics, not a substitute for them.

What Is a Contingency Fee?

A fee paid only if the client recovers, calculated as a percentage of the recovery. In a contingency arrangement, the attorney takes no fee unless the case produces a recovery, at which point the fee is a share of what the client obtains. If there is no recovery, there is no fee. This structure makes representation possible for clients who cannot pay hourly and shifts the risk of a losing case onto the attorney.

Because the attorney bears that risk, contingency fees are typically higher as a percentage than they would be if the client paid win or lose, reflecting the cases that produce nothing. Understanding this basic economics matters for a new attorney, because it explains both why contingency percentages are what they are and why the agreement has to be precise about what triggers a fee and how it is measured.

Why Must It Be in Writing?

Because most states require contingency fee agreements to be written and signed by the client. Unlike some fee arrangements, contingency fees are generally subject to a specific writing requirement, and failing to comply can render the agreement unenforceable or expose you to discipline. This is not a formality to skip when a client is eager to get started.

The writing requirement protects the client by ensuring they understand a significant financial arrangement before agreeing to it, and it protects you by creating a clear record of the terms. A signed written agreement is your best defense against a later dispute about what the client agreed to. Confirm exactly what your state requires in the writing, because some jurisdictions mandate specific language, disclosures, or formatting, and put every contingency arrangement in a compliant signed document without exception.

What Does a Contingency Fee Agreement Contain?

The core terms that define how the fee works and what the client is agreeing to. While the specifics vary, a contingency agreement generally addresses each of these:

• The fee percentage, and whether it changes depending on the stage at which the case resolves.
• How the fee is calculated, particularly whether it comes off the recovery before or after costs are deducted.
• How costs and expenses are handled, including who advances them and how they are repaid.
• What happens if there is no recovery, making clear the client owes no fee, and clarifying any responsibility for costs.
• The scope of the representation, including whether it covers appeals.
• The client's rights and required disclosures under your state's rules.

Each clause exists to prevent a specific misunderstanding. Spelling them out clearly, in language the client can actually follow, is what makes the agreement protective rather than merely present.

How Is the Percentage Set and Disclosed?

Set within what is reasonable and any statutory limits, and disclosed plainly to the client. The percentage must be reasonable, and in some kinds of cases it may be capped by statute or court rule, so you have to know the limits that apply to your matter type. Within those bounds, the agreement should state the percentage unambiguously.

Many agreements use a tiered percentage that rises as the case progresses, for example a lower rate if the matter settles early and a higher one if it goes to trial or appeal, reflecting the increasing work and risk. If you use a structure like that, the agreement must lay out each tier and when it applies, so the client understands exactly what they will owe under each scenario. Clarity here prevents the most common contingency disputes, which arise when a client is surprised by how the fee was calculated.

How Are Costs and Expenses Handled?

Separately from the fee, with the agreement specifying who advances them and how they are repaid. Costs, such as filing fees, expert charges, and litigation expenses, are distinct from your fee, and the agreement must be explicit about them, because confusion over costs is a frequent source of client disappointment at settlement.

Address who pays costs as the case proceeds, whether you advance them and are reimbursed from the recovery, and, critically, how the fee interacts with costs, since calculating the fee before versus after deducting costs produces different results for the client. Also clarify what the client owes for costs if there is no recovery, which your state's rules may govern. Because the net amount a client actually receives depends heavily on how costs are treated, this section deserves particular care and plain explanation.

What Are the Ethics Requirements?

Reasonableness, a signed writing, required disclosures, and often a written statement at the conclusion. Beyond being in writing, contingency agreements carry specific ethical obligations that vary by state but commonly include that the fee be reasonable, that certain matters cannot be taken on contingency at all in some jurisdictions, and that you provide the client a written statement at the end showing the outcome and how the fee and costs were calculated.

Some case types, such as certain family law matters, are prohibited from contingency arrangements in many states, so confirm your matter is even eligible. Because these requirements are detailed and jurisdiction-specific, this is precisely the area to check against your state's rules or a knowledgeable colleague rather than assume. The consequences of getting the ethics wrong, from an unenforceable fee to discipline, are serious enough to warrant that diligence.

What About Referral or Co-Counsel Splits on Contingency Cases?

They are governed by the fee-splitting rules and should be addressed clearly. Contingency cases are often referred or handled with co-counsel, and when a fee is shared between attorneys who are not in the same firm, the fee-division rules apply on top of the contingency rules. In many states the client must consent to the division, though the specifics vary.

If your contingency matter involves a referral or co-counsel, make sure the arrangement complies with those rules and that the client understands it; our guide to attorney fee splitting explains how fee divisions work. For a new attorney, contingency matters are also a common situation where referring or partnering makes sense, whether because you cannot fund the costs or the case is beyond your experience. A network like Overture connects you with vetted attorneys so a contingency matter you cannot take alone still becomes a served client, whether you refer it out or bring in a partner to work it with you. Create your free account to handle those situations well.