.png){kind=small}
(956) 276-8819
After a serious collision on Expressway 83, I-69C, I-35, or another Texas road, you may need legal help while facing medical bills, lost income, and uncertainty about your future. You may also wonder how you can afford an attorney if you are not working.
In many Texas personal injury cases, the answer is a contingency fee arrangement. You do not pay the attorney by the hour. Instead, the attorney’s fee is generally a percentage of the recovery obtained for you. The fee is contingent on obtaining a recovery.
That structure allows injured people in the Rio Grande Valley, Hidalgo County, San Antonio, Brownsville, McAllen, and Edinburg to pursue compensation without paying a large retainer at the beginning of the case. However, “no fee unless we win” does not mean that every cost disappears. The written fee agreement controls the details.
What Is a Contingency Fee?
A contingency fee is an attorney’s fee that depends on the outcome of the case. Under a standard Texas personal injury agreement:
- You do not pay the attorney by the hour.
- The attorney’s fee is typically a percentage of the amount recovered.
- The fee is usually paid from the recovery rather than from your personal funds.
- If there is no recovery, you generally do not owe an attorney’s fee.
The specific percentage depends on the written contract. Many personal injury firms charge approximately one-third of a gross recovery in cases resolved before a lawsuit is filed. Some agreements provide for a lower percentage before suit and a higher percentage after litigation begins, a trial date is set, or an appeal becomes necessary. Complex commercial-truck collisions and catastrophic-injury cases may use different structures because they often require extensive investigation and expert testimony.
There is no universal percentage that applies to every Texas case. The contract must explain the fee clearly.
The Written Contract Is the Most Important Document
Under Texas Disciplinary Rule of Professional Conduct 1.04(d), a contingent fee agreement must be in writing and signed by both the client and the lawyer.
The agreement must explain:
- How the fee will be determined.
- The percentage or percentages that will be charged.
- Whether the percentage is calculated before or after case expenses are deducted.
- Whether the percentage changes based on the amount recovered or the stage of the proceeding.
Read the percentage language line by line before signing. Ask for an explanation of every term you do not understand. Keep a complete copy of the signed agreement for your records.
The contract should also explain how litigation expenses are handled, whether another law firm may participate, and what happens if you end the representation. A clear agreement protects both the client and the attorney by reducing misunderstandings later.
Gross Recovery Versus Net Recovery
The most important financial issue is whether the attorney’s percentage is calculated from the gross recovery or from the amount remaining after expenses.
A gross recovery is the total settlement or judgment before deductions. A net recovery is the amount remaining after fees, expenses, liens, and other valid claims are addressed.
Illustrative Example Only
Assume the following:
- Gross settlement: $100,000
- Contingency fee: one-third
- Advanced case expenses: $8,000
- Medical liens or reimbursement claims: $18,000
If the contract calculates the fee from the gross recovery:
- Gross settlement: $100,000
- Attorney’s fee: approximately $33,333
- Case expenses: $8,000
- Medical liens: $18,000
- Estimated amount to client: $40,667
If the contract requires expenses to be deducted before calculating the fee:
- Gross settlement: $100,000
- Less case expenses: $8,000
- Amount used to calculate fee: $92,000
- Attorney’s fee: approximately $30,667
- Case expenses: $8,000
- Medical liens: $18,000
- Estimated amount to client: $43,333
This is an illustration only. The actual calculation depends on the written agreement, the amount recovered, expenses, liens, insurance claims, and other facts. The client’s net share is what remains after the attorney’s fee, expenses, liens, and valid subrogation claims are resolved.
What Case Expenses Can Be Advanced?
A personal injury law firm may advance expenses necessary to investigate and pursue a claim. Depending on the case, expenses can include:
- Filing fees.
- Service-of-process costs.
- Court reporter and deposition fees.
- Expert witness fees.
- Accident reconstruction.
- Medical experts.
- Economists and life-care planners.
- Medical record retrieval.
- Investigation and surveillance.
- Process server charges.
- Mediation fees.
- Photographs, videos, and other evidence-related costs.
Under many Texas contingency fee agreements, the firm advances these costs and is reimbursed from the recovery. However, contracts differ. Ask directly:
- Who pays case expenses while the case is pending?
- Are expenses deducted before or after the attorney’s percentage?
- Will I owe expenses if the case is unsuccessful?
- Are administrative charges, copies, or telephone calls billed separately?
Do not assume that “no fee unless we win” means “no possible financial obligation under any circumstance.” The phrase usually addresses the attorney’s fee. It may not cover medical bills, liens, expenses, or obligations created by the specific contract.
What Happens to Medical Liens and Subrogation Claims?
A settlement does not necessarily go directly from the insurance company to the client. Before the client receives the final payment, the attorney may need to resolve claims asserted by:
- Hospitals and emergency medical providers.
- Medicare or Medicaid.
- Private health insurance companies.
- ERISA health plans.
- Workers’ compensation carriers.
- Medical providers operating under letters of protection.
Texas hospital liens are addressed in Chapter 55 of the Texas Property Code. A hospital lien may attach to a personal injury claim and settlement proceeds when statutory requirements are met.
Lien resolution usually occurs before the client is paid. The attorney reviews the claimed amount, confirms whether the claim is valid, and negotiates reductions when appropriate. The final settlement statement should identify each lien or reimbursement claim and show the amount paid to resolve it.
A losing case does not automatically erase medical bills or liens. You should ask how unpaid medical care and reimbursement claims will be handled before accepting a representation agreement.
What If the Case Does Not Recover Money?
Under a standard Texas contingency fee agreement, you generally do not owe an attorney’s fee if the case produces no recovery. However, the treatment of expenses depends on the contract.
Some agreements provide that the firm advances expenses and does not seek reimbursement if the case is lost. Other contracts may address expenses differently. Read the agreement carefully and ask for a direct answer before signing.
A case that does not recover money may still leave you responsible for medical bills, health insurance claims, hospital liens, or other obligations. The contingency arrangement generally concerns the attorney’s fee. It does not eliminate every financial consequence of an accident.
Can More Than One Lawyer Share the Fee?
Sometimes a case involves more than one lawyer or law firm. Under Rule 1.04(f), lawyers may divide a fee if the client agrees in writing and the arrangement satisfies the rule.
The total fee must not be unconscionable. The agreement should identify the participating lawyers or firms and explain the basis for the division. You should know the total percentage being taken from the recovery. A referral to another firm should not result in an undisclosed increase in your total fee.
Ask:
- Will another firm participate in my case?
- Will the total percentage change?
- What services will each firm provide?
- How will the fee be divided?
- Will I receive this information in writing?
Texas Limits Unreasonable or Prohibited Fees
Rule 1.04(a) prohibits a lawyer from charging or collecting an illegal, unconscionable, or clearly excessive fee. Factors relevant to reasonableness include:
- The time and labor required.
- The novelty and difficulty of the legal issues.
- The skill required.
- The customary fee in the locality.
- The amount involved.
- The results obtained.
- Time limitations.
- The lawyer’s experience and reputation.
- The fact that the fee is contingent and recovery is uncertain.
A contingency fee is not automatically unreasonable simply because it is a percentage. The agreement and circumstances must be evaluated as a whole.
Texas also restricts contingency fees in certain matters. Under Rule 1.04(e), a contingency fee generally may not be charged in a criminal case or in a divorce or suit affecting the parent-child relationship, subject to a limited exception involving the collection of post-judgment balances. Therefore, “no win, no fee” is not a universally permitted arrangement in Texas.
If you have a fee concern, the State Bar of Texas information on resolving fee disagreements may explain available options. The State Bar’s Client-Attorney Assistance Program may also help restore communication and identify resources. These programs do not automatically decide the value of a case or require a refund.
You Control Whether to Accept a Settlement
Your attorney can advise you about the risks and value of a settlement, but you, not the attorney, decide whether to accept or reject an offer. A contingency fee does not give the lawyer authority to force you to settle.
At the end of the case, request a written settlement statement or disbursement statement. It should show:
- The gross recovery.
- The attorney’s fee and calculation method.
- Each case expense.
- Each lien or subrogation payment.
- Any fee division with another firm.
- The final amount paid to you.
You are also entitled to ask for information about your case and a copy of the relevant file.
Questions to Ask Before Signing
Before hiring a personal injury lawyer, ask:
- What exact percentage applies to my case?
- Is the percentage based on the gross recovery or the net recovery?
- Does the percentage change if a lawsuit is filed?
- Does it change for trial or appeal?
- Who pays case expenses?
- Could I owe expenses if the case loses?
- Are phone calls, copies, or administrative work charged separately?
- How will medical liens and insurance claims be handled?
- Will the firm negotiate reductions?
- Will another lawyer or firm share the fee?
- What happens if I want to change lawyers?
- How often will I receive case updates?
- Will I receive a final written accounting?
Ask for a copy of the signed agreement and keep it with your important records.
Why Contingency Fees Exist
Contingency fees exist because many injured people cannot afford to pay an attorney hourly while they are recovering from an accident or unable to work. The arrangement allows the attorney to investigate the claim, communicate with insurers, gather evidence, and pursue compensation without requiring a large upfront payment.
The arrangement also places financial risk on the law firm. The firm may spend months or years working on a case without knowing whether it will recover a fee. The written agreement explains how that risk is allocated.
The Law Office of Raul A. Guajardo, P.L.L.C. represents injured Texans on a contingency fee basis. With more than 20 years of experience, a bilingual legal team, and offices serving Edinburg, McAllen, San Antonio, and Brownsville, we help clients understand the legal process before making important decisions.
If you were injured in the Rio Grande Valley, Hidalgo County, San Antonio, or elsewhere in Texas, contact us for a free consultation:
- Edinburg: 956-276-8819
- McAllen: 956-476-6055
- San Antonio: 956-318-3200
- Brownsville: 956-476-7074
Visit www.raulguajardo.com. We charge no fees unless we win, subject to the terms of the written fee agreement.
This article provides general information and is not legal advice. The specific terms of any case are controlled by the written contingency fee agreement and applicable law.
