EveryBody's Guide to the Law

Let’s say that your case settles for $100,000 and the contingent fee contract calls for your
lawyer to get a third of that. Your lawyer advanced $7,500 in costs and expenses on your
behalf. Is your lawyer’s fee based on the full $100,000, or on $92,500 (the settlement amount
minus the $7,500 in advance costs and expenses)? That depends on what the contingent fee
agreement states. Most of the time, the contingent agreement will provide that the lawyer’s
fee is based on the gross amount of the settlement, here the full $100,000, and the costs and
expenses are deducted from your share. So the settlement would break down like this:
AMOUNT OF SETTLEMENT $ 100,000.00
Lawyer’s 33.33 percent $ 33,333.33
Costs and Expenses Advanced by Lawyer $ 7,500.00
NET TO LAWYER $ 40,833.33
NET TO CLIENT $ 59,166.67
Now let’s look at the difference if the costs and expenses are deducted from the award
before the lawyer’s fee is calculated:
AMOUNT OF SETTLEMENT $100,000.00
Costs and Expenses Advanced by Lawyer $ 7,500.00
Net Award $ 92,500.00
Lawyer’s 33.33 Percent $ 30,830.25
Plus Costs and Expenses Advanced by Lawyer $ 7,500.00
NET TO LAWYER $ 38,330.25
NET TO CLIENT $ 61,669.75
You receive $59,116.67 when the costs and expenses are deducted from your share alone,
and $61,669.75 when they are deducted from the entire award, a difference of approximately
$2,500. The higher the costs and expenses, the larger this discrepancy. Before signing a
contingent-fee agreement, read it carefully to determine how costs and expenses are deducted.
Ask the lawyer to explain it in simple terms if you don’t understand it. And if the agreement
calls for the costs and expenses to be deducted from your share, try to negotiate for them to be
deducted from the gross settlement or award before the lawyer takes his or her fee.
Loans to Clients for Living Expenses
Suppose you’ve been injured in an automobile accident that was the other driver’s fault, and
you can’t work for a long time. Or suppose you’re retired and rely mainly on your investment
Finding the Right Lawyer 597