How Contingency Fees Work in a New York Injury Case

What a contingency fee is

A contingency fee means the lawyer's fee is a percentage of what you recover, and it is only owed if you recover something. You do not pay an hourly rate, and you do not put money down to get started. If the case produces nothing, the fee is nothing.

The point of the arrangement is access. Injury cases take months or years and cost money to run, and almost nobody could fund one hourly while out of work with medical bills arriving. Contingency shifts that risk onto the firm.

What "no fee unless we win" means — and what it does not

It means the fee is contingent. It does not automatically mean the case costs nothing to run. Fees and expenses are two different things, and that difference surprises people at settlement more than any other part of the process.

• The fee is what the firm charges for its work — the percentage.
• Expenses (often called disbursements) are what the case itself costs: filing fees, medical records, expert reports, deposition transcripts, investigators.

Most firms advance those expenses and recoup them from the recovery. Ask specifically what happens to expenses if the case does not succeed — firms differ, and the answer belongs in the retainer, not in conversation.

What the percentage usually is

One third of the recovery is the common arrangement in New York personal injury work. It is a convention rather than a fixed rule, and the retainer you sign is what governs.

Medical malpractice is the significant exception. New York caps those fees on a sliding scale that decreases as the recovery grows, set out in Judiciary Law § 474-a. If a firm quotes you a flat third on a malpractice claim, that is worth asking about.

Net or gross — the question worth asking

A percentage means little until you know what it is calculated on. If expenses come off the recovery before the fee is worked out, the fee is smaller than if it is taken off the top first. On a case with substantial expert costs the difference is real money.

Ask the question directly: is the fee calculated before or after expenses are deducted? Any firm should answer it plainly and show you where it says so in the retainer.

What else comes out of a settlement

Beyond the fee and expenses, a recovery can be reduced by liens — a health insurer, Medicaid or Medicare may have a right to be repaid for treatment they covered. A good firm negotiates those down where it can, and tells you about them early rather than at the end.

So what does a personal injury lawyer actually cost?

Nothing up front, and nothing at all if there is no recovery. There is no hourly rate, no retainer to fund, and no bill arriving while your case is open. The fee is a share of what is recovered, which is why the consultation is free and why a firm has no reason to take a case it does not believe in.

What that means in practice is that the question is not really "what does it cost" but "what comes out of the settlement, and in what order" — which is the rest of this page.

How much do lawyers take from a settlement in New York?

In most New York personal injury matters the contingency fee is one third of the recovery. Medical malpractice is the significant exception: those fees are set by statute on a sliding scale that falls as the recovery rises, so a large malpractice recovery carries a materially smaller percentage than a third.

Two things decide what the third is actually taken from, and they are worth asking about before signing anything:

• Gross or net. A fee calculated after case disbursements are deducted leaves the client with more than one calculated before. Both are lawful. They are not the same number.
• Liens. No-fault, health insurance, Medicare and Medicaid may all have to be repaid out of the recovery where they paid for treatment. Negotiating those down is real work, and what comes off a lien goes to the client.

A worked example makes the order clear. On a $90,000 settlement with $6,000 of disbursements and a $9,000 health insurance lien: a one-third fee on the net would be calculated on $84,000, giving $28,000; disbursements and the lien are repaid; and the balance is disbursed to the client. Change the fee to gross and the arithmetic moves by $2,000. Negotiate the lien down and it moves further, in the client's favor.

What a disbursement actually is

Disbursements are the costs of running the case rather than the fee for handling it: court filing fees, the price of medical records, deposition transcripts, expert reports, investigators. On a case that settles early they are modest. On one that is tried with expert testimony they are not, which is a reason to understand at the outset whether you are responsible for them if the case is lost.

Before you sign a retainer

• What is the percentage, and does it change if the case goes to trial or appeal?
• Is the fee calculated before or after expenses?
• Who pays expenses if the case is lost?
• Who will actually handle the file day to day?
• What liens are likely, and who negotiates them?

You are entitled to a written retainer, and you are entitled to read it before signing. A firm that is impatient about either is telling you something.

Talk to us

The consultation at Davidov & Cohen Law is free, and we will walk through the fee terms in writing before you commit to anything. Call (718) 328-8001 or tell us what happened.