Attorney Contingency Fee Calculator - Expected Value Analysis
Quick answer
A contingency case is worth (probability of recovery × your fee on that recovery) − (probability of losing × the expenses you advanced). On a $300,000 case at a 33% fee with $20,000 of advanced expenses, that is a $99,000 fee if you win and roughly $20,000 gone if you lose: an expected value of $69,250 at 75% odds and $39,500 at coin-flip odds. The condition that changes the answer most is whether the fee is computed before or after expenses come off the recovery — ABA Model Rule 1.5(c) requires the engagement letter to say which, and on this case it moves the fee by $6,600.
How Are Contingency Fees Structured in Legal Practice?
Contingency fees allow clients to pursue lawsuits without upfront attorney payment; instead, attorneys take a percentage of the final settlement or judgment.[1] Standard contingency percentages range from 25% to 40% depending on case type, jurisdiction, and complexity.
Most personal injury cases use 33% (one-third) contingency fees, while complex commercial litigation may command 40-45%. The percentage may increase if the case goes to trial rather than settling—for example, 33% on settlement but 40% on judgment.
What Costs Reduce Attorney Contingency Fee Income?
Contingency fee attorneys advance case expenses — expert witnesses, court fees, discovery, investigation — out of pocket, roughly $5,000 on a straightforward case to $50,000 or more on complex litigation. ABA Model Rule 1.8(e) permits this and permits repayment of those advances to be contingent on the outcome.[5]
That rule is where the arithmetic trips people up. On a $300,000 settlement with $20,000 advanced, the firm is reimbursed out of the recovery, so on a win the fee is the whole story: $300,000 × 0.33 = $99,000, and the $20,000 is a wash. Advanced expenses land on the firm in the loss — nothing to reimburse from, client owes nothing, $20,000 gone. Any analysis that subtracts expenses from the winning branch and forgets them in the losing branch has the risk pointed the wrong way round.
How Do You Calculate True Hourly Rate on Contingency Cases?
True hourly rate is fees divided by hours — but only if you are clear which branch you are dividing. A $99,000 fee on 150 hours is $660 per hour if you win. That is the number firms quote, and it is the number that wrecks case selection, because it conditions on the outcome you were trying to predict.
What governs whether to take the case is expected value per hour, and it needs both branches, because the hours are spent either way:
EV = (P(win) × fee) − ((1 − P(win)) × expenses advanced)
| Settlement probability | Fee if you win | Expenses lost if you lose | Expected value | Per hour (150 hrs) |
|---|---|---|---|---|
| 90% | $99,000 | $20,000 | $87,100 | $581 |
| 75% | $99,000 | $20,000 | $69,250 | $462 |
| 60% | $99,000 | $20,000 | $51,400 | $343 |
| 50% | $99,000 | $20,000 | $39,500 | $263 |
| 35% | $99,000 | $20,000 | $21,650 | $144 |
The same case swings from $581 to $144 an hour on nothing but your read of liability. Set the floor before any specific matter is in front of you: work out what one hour has to earn to cover overhead and your income target with the hourly rate calculator, then reject whatever lands under it. And note that every figure above is pre-tax — a solo or partner pays self-employment tax on the fee first, 15.3% on the first $184,500 of net earnings in 2026 and 2.9% Medicare above that, so run the fee through a self-employment tax estimate before comparing it to what a salaried role pays.
What's the Impact of Settlement Probability on Case Value?
Settlement probability drives contingency analysis harder than settlement size does. Dropping the same $300,000 case from 75% to 50% takes it from $69,250 to $39,500 — a third off the odds, 43% off the value.
Note what those numbers are not. The expected gross recovery is $225,000 at 75% and $150,000 at 50%, and neither figure is money to anyone: the fee comes out of it, the expenses are reimbursed out of it, and the client's share is the remainder. Quoting expected gross recovery as case value is the most common error in intake memos, and it errs in the worst direction — it flatters exactly the low-probability, high-ceiling cases that sink practices.
How Should You Evaluate Cases for Contingency Fee Viability?
Cases with liability problems, damages that are hard to quantify, or an unsympathetic client need a far higher headline value to justify taking, because those are the same factors pushing P(win) down. The screen, stated correctly:
[(Recovery × P(win) × fee %) − ((1 − P(win)) × expenses)] ÷ expected hours = expected value per hour
Reject anything under your floor. Two details make this a real test rather than a formality: expected hours belong in the denominator for both branches, because losing does not refund the time; and the expenses figure has to be your realistic all-in estimate, not the retainer-sized number in the intake note. Experts and depositions are where cases quietly stop paying. Working out how many cases of a given profile it takes to cover a year of fixed overhead is a straightforward break-even calculation, and it is usually more sobering than the per-case math.
What's the Difference Between Contingency and Sliding Scale Fees?
Sliding scale fees increase the attorney percentage if the case goes to trial. For example: 33% if settled before mediation, 37.5% if settled after mediation, 40% if litigated to judgment.[1] This structure incentivizes settlement while compensating attorneys for trial risk.
Clients prefer sliding scales because it reduces their effective fee for quick settlements. Attorneys should ensure the trial percentage adequately reflects increased time commitment and risk.
How Does Expense Recovery Work in Contingency Cases?
Contingency agreements must specify whether expenses are deducted before or after the fee percentage is calculated.[1] This is the clause practitioners actually argue about. Expenses off the top, fee on the net is client-favourable: the recovery is reduced by expenses first and the percentage applies to what is left. Fee on the gross, expenses off the client's share is attorney-favourable: the percentage applies to the full recovery, and expenses are reimbursed out of the client's remainder. On a $300,000 settlement carrying $20,000 in advanced expenses:
| Attorney fee | Expense reimbursement | Client nets | |
|---|---|---|---|
| Fee on the net (expenses first) | ($300,000 − $20,000) × 0.33 = $92,400 | $20,000 | $187,600 |
| Fee on the gross | $300,000 × 0.33 = $99,000 | $20,000 | $181,000 |
The gap is exactly the fee percentage applied to the expenses — 33% of $20,000, or $6,600 — and it widens with every expert retained. On a case carrying $50,000 of expenses the same clause is worth $16,500. Say which convention you use in the engagement letter, in the words Rule 1.5(c) uses, and confirm it in the settlement statement.
Should You Ever Take Loss Cases to Build Book of Business?
Taking an occasional loss case can build reputation and client relationships, but systematic underpricing is a path to insolvency. If you do accept one, cap the investment ("up to $10,000 in expenses"), then withdraw if it isn't progressing. Build book through referrals from satisfied clients, not by losing money.
The structural problem is that the losing branch consumes cash on the firm's schedule while the winning branch pays on the court's. Four simultaneous cases at $20,000 of advanced expenses is $80,000 of working capital committed against nothing collectible, with the fees possibly eighteen months out. Size that reserve deliberately — work out how many months of fixed costs you need banked before taking the next matter, not after.
What's the Relationship Between Case Value and Time Investment?
Some cases carry high settlement values and still pay badly, because the hours scale faster than the recovery. Run the two profiles side by side, using the same expected-value formula:
| Complex commercial | Straightforward PI | |
|---|---|---|
| Likely recovery | $500,000 | $150,000 |
| Fee percentage | 40% | 33% |
| Fee if you win | $200,000 | $49,500 |
| Expenses advanced | $60,000 | $8,000 |
| P(win) | 55% | 85% |
| Expected value | $83,000 | $40,875 |
| Hours | 400 | 80 |
| Expected value per hour | $208 | $511 |
The commercial case is worth twice as much in absolute expected dollars and less than half as much per hour of your life — and it is the one tying up $60,000 of firm cash for two years. Time investment and expense exposure matter as much as settlement value in case selection, and neither is visible in the headline number a referring lawyer quotes you.
Frequently Asked Questions
Q: Are contingency fees always 33%? A: No — roughly 25% to 45% depending on case type, jurisdiction, and whether the matter settles or is tried. Two hard limits apply regardless: Rule 1.5(a) requires the fee to be reasonable, and several states cap medical malpractice fees by statute — California Business and Professions Code §6146 and New York Judiciary Law §474-a both impose sliding scales that shrink the percentage as the recovery grows.
Q: Who eats the case expenses if we lose? A: The firm does, under a standard agreement drafted to ABA Model Rule 1.8(e): the rule lets you advance litigation expenses with repayment contingent on the outcome, so a client who recovers nothing typically owes nothing.[5] That is why the loss branch carries the full $20,000 in the worked example above, and why the practice needs working capital, not just a good case list.
Q: Can you charge hourly fees in addition to contingency fees? A: Generally no for the same matter — the contingent fee is the compensation for that representation. You can bill hourly for work outside the agreement's scope, but the split has to be written down, and Rule 1.5(c) requires the contingent fee agreement itself to be a signed writing stating the percentages for settlement, trial and appeal.[1]
Q: What if a client has insurance that covers some attorney fees? A: Insurance proceeds are just part of the recovery; the fee is owed on the settlement or judgment regardless of the defendant's source of funds. What does change the client's net is a health insurer's or Medicare's subrogation lien, satisfied out of the client's share after fees and expenses — it can consume most of a small settlement. Identify liens before you value the case.
Q: How do you handle cases that partially settle? A: Calculate the fee on the settled portion only, at the percentage applying to that stage. Under a sliding scale, a pre-mediation settlement and a later judgment carry different percentages on different money. Document the allocation in the settlement statement at the time, not retroactively.
Sources
Sources note. Fee percentages, expense ranges and case-selection thresholds here are illustrative practice norms, not survey data; the expected-value arithmetic is exact. Five previously cited sources — a "National Association of Personal Injury Lawyers" (napil.org, parked), a "Law Firm Management Advisory Board" (lfmab.org, dead), and three commercial reports that could not be located — have been removed.
[1] American Bar Association. Model Rules of Professional Conduct, Rule 1.5: Fees — a contingent fee agreement must be in writing, signed by the client, and state the percentages applying at settlement, trial and appeal, which expenses are deducted, and whether expenses come out before or after the fee is calculated. https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees/
[2] American Bar Association. Formal Opinion 93-373: Contingent Fees in Civil Cases. https://www.americanbar.org/content/dam/aba/publications/YourABA/201203_93-373.pdf
[3] American Bar Association. Formal Opinion 94-389: Contingent Fees. https://www.americanbar.org/content/dam/aba/publications/YourABA/201203_94-389.pdf
[4] Rule 1.5(d) prohibits contingent fees in two categories outright: any domestic relations matter where the fee is contingent on securing a divorce or on the amount of alimony, support or property settlement; and representing a defendant in a criminal case.
[5] American Bar Association. Model Rules of Professional Conduct, Rule 1.8(e) — a lawyer may advance court costs and expenses of litigation, "the repayment of which may be contingent on the outcome of the matter." This is what puts advanced expenses in the losing branch of the expected-value calculation rather than the winning one. https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_8_current_clients_specific_rules/
[6] Social Security Administration, 2026 contribution and benefit base ($184,500) — the ceiling on the 12.4% Social Security half of self-employment tax. https://www.ssa.gov/oact/cola/cbb.html