Contingency fee

What is a contingency fee?

A contingency fee is payment conditioned on obtaining a recovery. The attorney receives a percentage of what is recovered, and if nothing is recovered the attorney is paid nothing for their time.

It exists because injury litigation is expensive and injured people are frequently least able to pay hourly rates at exactly the moment they need representation.

It also aligns interests. The attorney has a direct stake in the size of the recovery, which is not true of an hourly arrangement.

In New Jersey these arrangements are regulated rather than left to negotiation, which is unusual and works in the client's favour.

How does New Jersey regulate the fee?

A court rule governs contingency fees in tort claims rather than leaving them to the market.

• A sliding scale applies, with the percentage declining as the recovery increases
• The fee is calculated on the net recovery after case costs are deducted
• A lower rate applies to recoveries on behalf of minors and incapacitated persons
• An attorney seeking more than the scale allows must apply to the court
• The agreement must be in writing and you are entitled to a copy

Why does net versus gross matter?

Because it changes what you actually receive. New Jersey computes the fee on the recovery after case costs are deducted, rather than on the gross figure.

Some states permit the opposite, and general information online frequently reflects that approach. The difference is meaningful in a case with substantial expert costs.

This is the single most useful question to ask when reviewing any fee agreement, because the percentage alone does not tell you what you will be paid.

What should you ask before signing?

Whether costs are deducted before or after the fee is calculated, and who bears them if the case is unsuccessful.

How liens will be handled and whether the firm negotiates them, since lien reduction increases your net recovery as directly as a higher settlement does.

What happens if you change attorneys mid case, since the first firm may assert a claim for the value of work already performed.

Common questions

What are the current percentages?

The sliding scale is set by court rule and the tiers are published. Confirm the current figures with the attorney and check them against the rule before signing.

What if I lose?

You owe no attorney fee. Responsibility for case costs depends on the agreement, so confirm in writing whether you are liable for expenses in an unsuccessful case.

Can I negotiate the percentage?

The rule sets a maximum rather than a required figure, so a lower fee can be agreed. A higher one requires court approval.