Professional services
Law Practice Contingency Fee Calculator
Works a contingency fee, where the written agreement is a conduct requirement rather than good practice.
Result
Business arithmetic for running a practice, not legal advice. Fee agreements, contingency limits, trust accounting and advertising are all governed by the rules of professional conduct where you practise, and several are strict. Check the applicable rules before any of this affects a client agreement or a marketing decision. Contingency percentages are capped by statute or court rule in many jurisdictions and for many matter types, often on a sliding scale, and some categories require court approval of the fee. The agreement must state whether costs come off before or after the fee, because the difference is material. This does not value a claim and cannot.
Get a Free Business AuditHow the calculation works
The percentage applied to the recovery gives the gross fee, with costs and disbursements handled according to the agreement, and the client's net shown. The order matters: deducting costs before or after calculating the percentage produces different results, and which applies has to be stated in the agreement rather than assumed.
What moves the number
- The percentage, which may step with the stage reached.
- Whether costs come off before or after the fee percentage.
- Disbursements advanced and how they are recovered.
- Liens and third-party claims against the recovery.
Where this one goes wrong
Contingency fee agreements must be in writing, signed by the client, and must state the method of calculation including which expenses are deducted and whether they come off before or after the percentage, under the conduct rules states have adopted from the Model Rules. Some matter types cannot be taken on contingency at all in many states, domestic relations being the usual example. Beyond the rules, the client needs the net figure explained before signing, because a recovery that looks substantial can net very little once costs and liens are taken.
Before you quote
- Put the agreement in writing with the calculation method stated.
- Confirm contingency is permitted for the matter type in your state.
- Show the client the expected net, not just the percentage.
Where the rules come from
Questions
About this calculator
Must a contingency fee agreement be in writing?
Yes, under the conduct rules states have adopted: signed by the client and stating the method of calculation, including which expenses are deducted and whether they come off before or after the percentage. Check your own state's version, since adoption varies in detail.
Are contingency fees allowed in all matters?
No. Many states prohibit them in domestic relations matters and in criminal defence, and other restrictions exist. Confirm the position in your jurisdiction before offering one, since a prohibited fee arrangement is unenforceable as well as a conduct problem.
Does deducting costs before or after the percentage matter?
Substantially, and on a case with large disbursements the difference can be considerable. Which applies has to be stated in the agreement rather than assumed, and the client should see the expected net rather than just the percentage before signing.
The formula
fee on gross or net depending on the agreement; practice profit = fee less overhead absorbed by the hours
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How to use this calculator
- Recovery ($). Enter your own figure; the page starts at $95,000.
- Contingency rate (%). Enter your own figure; the page starts at 33.33%.
- Costs advanced ($). Enter your own figure; the page starts at $7,200.
- Fee calculated. Enter your own figure; the page starts at On the gross, before costs.
- Hours invested. Enter your own figure; the page starts at 78.
- Overhead per hour ($). Enter your own figure; the page starts at $62.
The result updates as you type, so you can try a figure, see what it does to profit to the practice, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Recovery | $95,000 |
| Contingency rate | 33.33% |
| Costs advanced | $7,200 |
| Fee calculated | On the gross, before costs |
| Hours invested | 78 |
| Overhead per hour | $62 |
What comes out
| Result | Value |
|---|---|
| Profit to the practice main result | $26,828 |
| Fee | $31,664 |
| Client receives | $56,137 |
| Effective hourly on the fee | $405.94 |
| Overhead absorbed | $4,836 |
The fee is $31,664 on 78 hours, an effective $405.94 an hour. After $4,836 of overhead the practice keeps $26,828, and the client receives $56,137.
How sensitive the answer is
Holding everything else steady and changing only recovery, this is what happens to profit to the practice. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Recovery ($) | Profit to the practice |
|---|---|
| $47,500 | $10,996 |
| $71,250 | $18,912 |
| $95,000 example above | $26,828 |
| $142,500 | $42,659 |
| $190,000 | $58,491 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Recovery ($)
- A money amount, starting at $95,000.
- Contingency rate (%)
- A percentage, between 0 and 50, starting at 33.33%.
- Costs advanced ($)
- A money amount, starting at $7,200.
- Fee calculated
- Choose from On the gross, before costs, On the net, after costs.
- Hours invested
- A number, between 0 and 5000, starting at 78.
- Overhead per hour ($)
- A money amount, starting at $62.
What the results tell you
| Result | What it is |
|---|---|
| Profit to the practice | The headline result. A money figure. |
| Fee | A money figure. |
| Client receives | A money figure. |
| Effective hourly on the fee | A money figure. |
| Overhead absorbed | A money figure. |
Keep going
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