Quick answer: A contingency fee is a percentage of the money actually recovered, paid only if the case succeeds. California requires the arrangement to be in a written agreement that states the rate, how the fee is calculated against case costs, and that the rate is negotiable. At the end of a case the client receives a written settlement statement itemizing the fee, every cost, and each lien paid.
Why the structure exists
Injured people frequently cannot pay hourly rates while out of work and facing medical bills. Contingency fees shift the financial risk of the case to the firm and align both sides around the same objective: the largest reasonable net recovery.
Gross vs. net — the detail that matters most
A fee can be calculated on the gross recovery (before case costs are deducted) or on the net (after). The same percentage produces different results depending on which method the agreement uses, so this term deserves a direct question before signing.
Liens and reimbursement claims
Health insurers, Medi-Cal, Medicare, and treating providers on a lien can each assert a right to be reimbursed from a settlement. Reducing those claims is part of the work and directly affects the amount a client actually keeps.
- Health plan and ERISA reimbursement claims
- Medi-Cal and Medicare conditional payments
- Medical provider liens for treatment on credit
- Workers' compensation carrier liens in third-party cases
The written settlement statement
California requires a signed disbursement statement at the close of a case. It should show the gross recovery, the attorney fee, itemized case costs, each lien payment, and the net amount to the client. Anything unclear on that statement should be questioned before funds are disbursed.
Frequently asked questions
- Can a contingency percentage change during the case?
- Some agreements use a tiered rate that increases if a lawsuit is filed or if the case reaches trial, because litigation requires substantially more work. Any tier must be stated in the written agreement up front.
- What happens to case costs if the case is lost?
- That depends entirely on the written agreement. Some firms absorb advanced costs on an unsuccessful case and others do not, so confirm the term in writing.
- Can I change attorneys mid-case?
- Yes. A client may change counsel, though a prior firm may assert a lien for the value of work already performed, which is typically resolved out of the eventual recovery.
Talk through your situation — free and confidential
Law Offices of Ronald B. Laba, APC · 217 Civic Center Dr #7, Vista, CA 92084
(760) 940-6231This page is general information about California law and is not legal advice. Reading it does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. The Law Offices of Ronald B. Laba, APC is licensed to practice in California. Back to Costs & Fees.