What contingency means
A contingency fee is exactly what it sounds like: the lawyer's fee is contingent on a recovery. If you do not win or settle, you pay no attorney fee. If you do recover, the attorney is paid a percentage of the gross settlement or verdict.
The standard percentages
Across most states, the standard contingency fee for personal injury cases is 33% (one-third) of any pre-suit settlement, rising to 40% if a lawsuit is filed and 40–45% if the case goes to trial. A few states cap fees by statute or by court rule — Texas, for example, generally enforces a 40% ceiling.
Costs vs fees
The contingency fee covers the lawyer's time. Costs are out-of-pocket expenses — filing fees, court reporter charges, expert witness fees, medical record copies, and so on. Most firms advance these costs and then deduct them from your settlement on top of the fee. Read your fee agreement carefully and ask whether costs are deducted before or after the fee is calculated.
Lien resolution
Health insurers, Medicare, Medicaid, and sometimes hospitals have legal liens against your settlement. A good attorney negotiates these down, often substantially. Make sure you understand what liens are pending and how they will be paid out of your settlement.