Almost nobody hires an injury attorney with cash on hand. You are out of work, the medical bills have started, and paying an hourly rate on top of that is not realistic.

That is the problem contingency fees exist to solve. The attorney is paid a percentage of what is recovered, and if nothing is recovered, no attorney fee is owed. Simple in principle, and people still sign these agreements without understanding two things that matter: how the percentage is calculated, and how case costs are handled separately.

Here is how it works in California, and what the agreement must tell you.

What a contingency fee actually is

A contingency fee ties the attorney's payment to the outcome. Rather than billing hourly as work is performed, the firm takes an agreed percentage of the money recovered through settlement, arbitration award, or judgment.

Two consequences follow. You can hire representation without money up front, and the firm absorbs the risk of a case that recovers nothing, which is why firms evaluate cases carefully before accepting them.

The percentage is not fixed by the state for ordinary injury cases. That surprises people who assume a standard rate exists somewhere in the law. It does not, and California requires attorneys to say so in writing.

What California requires in the written agreement

Business and Professions Code section 6147 governs contingency fee contracts, and it is unusually specific about what has to be in the document you sign. The agreement must be in writing, and you must receive a fully executed copy.

It must state:

• The contingency fee rate you and the attorney agreed on

• How disbursements and costs incurred in the case will affect the contingency fee and your recovery

• The extent, if any, to which you could be required to pay the attorney for related matters not covered by the agreement

• That the fee is not set by law but is negotiable between attorney and client, unless the case falls under section 6146

That fourth item deserves attention. Outside the medical malpractice cases covered by section 6146, the contract must state plainly that the rate is negotiable. You are allowed to discuss it. Many people treat the number on the page as fixed.

Section 6147 also gives the requirement teeth. Failure to comply with any provision of the section renders the agreement voidable at the option of the client, and the attorney is then entitled to collect only a reasonable fee.

Fees and costs are not the same thing

This is where most confusion lives.

The fee is what the attorney earns. Costs are what it takes to build the case: court filing fees, service of process, medical record retrieval, deposition transcripts, accident reconstruction, and expert witness time. Expert costs can be substantial in a case heading toward trial.

Some firms advance these costs and recover them from the settlement. What you need to know before signing is who pays if the case recovers nothing. Some agreements make the client responsible for advanced costs regardless of outcome, others do not. Section 6147 requires the contract to address how costs affect the fee and your recovery, so the answer should be in the document. If you cannot find it, ask.

Gross or net changes the math

Two agreements with identical percentages can produce different results depending on when costs come out.

If the percentage is applied before costs are deducted, the fee is calculated on the full recovery. If costs come out first, the percentage applies to a smaller number. The order affects what you take home, sometimes significantly in a case with heavy expert expenses.

For the medical malpractice cases governed by section 6146, the statute defines the amount recovered as the net sum after deducting case costs and disbursements, excluding medical care costs and the attorney's office overhead. For ordinary injury cases this is a matter of contract, so read the clause and ask for a worked example using round numbers.

Medical malpractice is the exception with legal limits

For most injury claims, the fee is negotiable. For claims of professional negligence against a health care provider, California sets maximums.

Business and Professions Code section 6146 limits the attorney's contingency fee to 25 percent of the amount recovered if the recovery comes through a settlement agreement executed before a complaint or demand for arbitration is filed, and 33 percent if the recovery comes through settlement, arbitration, or judgment after that filing. An attorney may petition the court for a higher fee based on evidence establishing good cause. These limits apply whether the plaintiff is an adult, a minor, or a person deemed mentally incompetent.

When section 6146 applies, section 6147 requires the agreement to state that those rates are maximum limits and that the client and attorney may negotiate a lower rate.

What comes out of a settlement besides the fee

A recovery rarely converts to cash one for one, and knowing that early prevents a surprise at the end.

Beyond the attorney fee and case costs, a settlement may need to satisfy medical liens or reimbursement claims. Health insurers, government health programs, and providers who treated on a promise of payment from the recovery may all have claims against the proceeds. Those amounts are sometimes negotiable, and reducing them is part of resolving a case.

Ask any firm how it handles liens, and whether that negotiation is included in the fee or billed separately.

Questions worth asking before you sign

People searching for a personal injury law firm near me are usually comparing two or three options. These questions separate them:

• What is the percentage, and does it change if the case is filed or goes to trial?

• Is the percentage calculated before or after costs are deducted?

• Who is responsible for advanced costs if there is no recovery?

• How are medical liens handled, and who negotiates them?

• Who will actually be working on my file, and how do I reach them?

• Can I have a copy of the agreement to read before signing?

Any firm should answer these plainly. A written agreement you are given time to read is a good sign.