A contingency-fee agreement connects payment to an outcome defined in the writing. Before signing, a prospective client should be able to identify the legal matter covered, how the fee is calculated, which expenses are separate, who makes settlement decisions, how the relationship may end, and what accounting will be provided at the conclusion.

A percentage alone does not describe a contingency-fee arrangement; the signed writing should be read together with the scope, expense terms, calculation base, client responsibilities, settlement authority, ending provisions, and closing statement requirements.

Confirm the matter and scope

  • Clients and law firm named, adverse and related parties identified, event date, claim or lawsuit, court and file number when applicable, and related matters excluded
  • Pre-suit investigation, insurance claims, filing, service, discovery, experts, mediation, trial, post-judgment collection, appeal, liens, benefits, and property-damage work included or excluded
  • Responsible lawyer, other lawyers and staff who may work on the matter, co-counsel or referral terms, outside vendors, and communication route
  • Client decisions, information and cooperation duties, address changes, record preservation, expense approvals, and actions the firm is not undertaking
  • Effective date, conditions before work begins, signatures, complete copy delivered, amendments, and which writing controls if terms differ

Trace the fee calculation

North Carolina Rule of Professional Conduct 1.5 addresses fees. For a contingency fee, the rule requires a writing signed by the client stating the method by which the fee is determined, including the percentage or percentages tied to settlement, trial, or appeal; expenses deducted from recovery; and whether expenses are deducted before or after the fee is calculated. The writing must also clearly notify the client of expenses for which the client will be liable whether or not the client prevails.

Work through sample arithmetic

  • What counts as the recovery: cash, periodic payment, property, benefit, interest, fee award, judgment, or another amount
  • Which percentage applies at each procedural point and what event changes the percentage
  • Whether specified expenses are deducted before or after the percentage is applied
  • Which costs require advance approval, how they are documented, whether they may accrue interest or a service charge, and when they become due
  • How liens, medical balances, benefit repayment, taxes, structured payments, disputed funds, and other disbursements are shown without assuming their amount or legal treatment

Use hypothetical numbers to reproduce the calculation in more than one scenario, including no recovery, a settlement before filing, a settlement after filing, trial, appeal, and a recovery that is smaller than expected expenses or asserted obligations. The example is a comprehension check; the signed language controls.

Separate settlement authority from fee terms

The agreement should explain how offers are communicated and who has authority to accept or reject them. Rule 1.4 addresses communication, consultation, status, requests for information, and explanation sufficient for informed decisions. Ask how written offers, estimated fees and expenses, known liens or balances, material nonmonetary terms, and estimated net proceeds will be presented.

Understand staffing and outside costs

Ask who will make legal decisions, who will communicate routine updates, who may appear in court, and when another lawyer or vendor may be involved. For experts, investigators, records, filing, service, depositions, transcripts, travel, demonstratives, and technology, identify who authorizes the cost, who contracts with the provider, how invoices are reviewed, and whether the client remains responsible if the case ends without a recovery.

Read the ending provisions

Rule 1.16 addresses declining or terminating representation and steps to protect a client’s interests when representation ends. Review withdrawal, discharge, notice, court permission when required, file and property return, unresolved deadlines, expense balance, asserted fee or lien, successor counsel, and how a later recovery may affect payment. Do not assume that ending the relationship automatically erases all responsibilities or permits an immediate change in pending court representation.

Expect a closing statement

Rule 1.5 requires a written statement at the conclusion of a contingency-fee matter showing the outcome and, if there is a recovery, the remittance to the client and how it was determined. Preserve the settlement or judgment record, deposit, fee calculation, itemized expenses, lien or balance resolutions, disbursement authorization, final statement, and receipt.

The related case staffing and communication guide provides questions about who will handle the work and how decisions and updates will be routed.

Rosensteel Fleishman Car Accident & Injury Lawyers provides information about Charlotte car-accident representation and fee agreements. Any proposed agreement should be read as a whole and discussed before it is signed.

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