Be wary of the “straight percentage.”  Your claim may settle early on. This sometimes happens, even in circumstances where you and your lawyer anticipated a long, hard battle.  Your lawyer will still expect his percentage.  He (or she) may be thinking of those instances when his percentage fee after a long trial seemed like very poor compensation.  You may resent the fact that your lawyer expects a large fee without having done much work. It is better to agree that an early settlement will command a lower percentage, which increases as the matter progresses.

You should try to arrange, therefore, what some lawyers call a “graduated” fee arrangement, whereby the percentage fee increases as the matter progresses.
 

Be wary of the “assignment of costs.”  Be wary also of what the percentage applies to.  Some lawyers quote a percentage for contingency fees but also include a provision in their fee agreements with clients that whatever legal costs are awarded in the lawsuit get paid to the lawyer over and above the percentage contingency fee.  Moreover, some lawyers charge a contingency fee which is applied to all recovery, including costs. This can make a 20% contingency fee arrangement much more expensive to you than a 33% arrangement.  For example, assume a total recovery at trial of $500,000.00, where the court orders the defendant to pay an additional $165,000.00 as a contribution to legal costs.  A simple 33% arrangement yields a fee to the lawyer of 1/3 of the $500,000.00, which is $165,000.00, which is exactly equal to the $165,000.00 cost award.  In that case, the costs award fully pays the lawyer, and the client’s net recovery is $500,000.00.  By contrast, imagine a 20% arrangement that applies the percentage to the total recovery (including costs) and also “assigns” the cost recovery to the lawyer.  In that case, the lawyer’s fee is $298,000.00 (20% x $665,000.00 plus $165,000.00), and the client’s net recovery is $367,000.00.

You should insist that whatever legal costs are awarded reduces your legal bill otherwise calculated.  The percentage should apply to recovery net of costs awards.  Furthermore, if there is already an offer to settle in place at the time you hire your lawyer, the percentage should apply only to whatever increase ultimately occurs above the existing offer.
 

Ask if your lawyer has experience charging contingency fees.  In other words, you need to know that your lawyer has experience waiting for his or her fees and has built up a track record of success.  It is a good sign if he or she earns his living by succeeding in court.

Make sure your lawyer has experience picking winning cases.
 

Ask your lawyer if he or she is paying a referral fee to anyone for having referred you.  You are entitled to know everything about your economic relationship with your lawyer, and there should be no hidden costs. There should be a referral fee only if you agree to it, and you should be sure that it is the lawyer, and not you, who is paying it.

You may wish to avoid retaining a lawyer who has agreed to pay someone a referral fee.  In our view, it is far better that you should be referred to a lawyer purely because of that lawyer’s competence rather than a willingness to “buy” your file from someone who has steered you in his or her direction.
 

Make sure your contingency fee agreement contains a provision that you are entitled to have the lawyer’s fee reviewed by a Superior Court judge to ensure that the agreement is fair and reasonable and is void of improper motive or conduct by the lawyer involved.

You should insist on this provision.  Try to get your lawyer to agree that he or she will make this application if you require it and that he or she will pay the cost of doing so–not you!
 

Consider alternatives to contingency agreements.  Depending on the nature of your case, other types of arrangements may save you a lot of money, especially if you are prepared to share in at least some risk as to the outcome.  For instance a simple deferral of the lawyer’s expectation for payment until the conclusion of the matter can ensure that your lawyer gets paid on your file only for work actually done–and without creating artificial incentives.  There is also a hybrid arrangement, popular in England, called a “conditional fee.”  This fee arrangement anticipates that your lawyer will receive a portion of his or her fee strictly conditional on success.  This is really only a formalization of the rule that a lawyer’s fee should bear some relation to the outcome of the matter.

You may want to be wary of signing a standard form contingency agreement which does not answer your individual concerns and needs.
 

Negotiate with your lawyer.  It may well be advisable to pay a separate, independent lawyer to negotiate the contingency agreement with the lawyer who is taking your case.  Don’t laugh.  If a small up front fee saves you $100,000.00 in fees down the road, it is money well spent.

It is crucial to the success of your claim that you and your lawyer function as an effective team.  A contingency fee agreement creates a community of economic interest between you and your lawyer, and you should avoid all possible sources of friction in that relationship.  Also, your lawyer should be willing to commit to writing anything he or she says at the time you hire him or her.