A contingency fee should be explained before you sign
A contingency fee ties the lawyer's fee to a recovery rather than an hourly bill as the injury case proceeds. New Jersey regulates these arrangements in tort cases through Court Rule 1:21-7. The written agreement should explain the fee and how case expenses will be handled. You should have an opportunity to discuss those terms before representation begins.
You should understand what comes out of a recovery before deciding whether to accept it. That means separating the lawyer's fee from litigation expenses and from medical reimbursement obligations. They can all affect the amount you receive, but they are not the same thing.
I want that discussion to be understandable without a legal or accounting background. A percentage is only part of the explanation. The calculation and the deductions matter just as much.
Distinguishing legal work from case expenses
The attorney's fee pays for legal services within the representation. Case expenses are amounts incurred to develop and pursue the claim. A court filing charge is a straightforward example. An expert's charge for reviewing medical records is another. Those expenses should be tied to the work needed in the particular case.
The retainer should explain who advances expenses and what happens if the case does not recover money. A statement about no attorney's fee without a recovery should not leave the treatment of expenses unclear. Ask about that distinction before signing, rather than assuming that every agreement uses the same terms.
As the case develops, significant expenditures should have an identifiable purpose. An engineering review may be necessary to explain a disputed defect. An unrelated investigation would not become useful simply because the case is serious. The client should understand why a proposed expense contributes to proving the claim.
Understanding the calculation
Rule 1:21-7 sets limits for covered contingent fees and addresses how the calculation is made. It is not appropriate to assume that every New Jersey injury recovery is subject to a single unrestricted percentage. Special provisions may apply when the client is a minor or legally incapacitated, and some circumstances require court review.
The rule distinguishes litigation disbursements from medical liens when defining the amount on which the permissible fee is calculated. That distinction is one reason a client should be shown the actual computation. A phrase such as net recovery can be confusing if it is used to mean different things at different stages of the statement.
An explanation should identify the total recovery first, then show the applicable expenses, fee and other deductions. The amount payable to the client should be clearly stated. If a deduction remains estimated because a reimbursement claim has not been finalized, it should be labeled as an estimate.
Medical bills and reimbursement claims are separate
Some medical expenses may have been paid by a program or plan that asserts a reimbursement right. Other providers may have unpaid bills. Neither category automatically becomes part of the lawyer's fee. The basis and amount of the obligation need their own review.
A client's recovery should not be reduced simply because someone sends a letter using the word lien. Counsel should determine whether there is a valid legal or contractual right. At the same time, an enforceable obligation cannot be disregarded just because paying it reduces the amount available for distribution.
This work can take time. When settlement is being considered, I would want the client to know which obligations have been confirmed and which are still being addressed. A clear estimate is more useful than presenting a gross settlement number as though it were the client's check.
Discussing scope and decisions
The written agreement should identify the matter being handled. A personal injury representation does not necessarily include a separate employment dispute or every benefits proceeding arising from the same event. If another issue requires additional counsel, that should be discussed rather than left to assumption.
Questions about appeals also deserve a clear explanation. The court rule addresses the fee treatment of appellate and retrial services, while an attorney is not automatically required to take every appeal. The scope of the engagement and any later decision about an appeal should be reviewed under the governing rules.
The settlement decision belongs to the client after consultation with counsel. My role is to explain the evidence, the available choices and the financial consequences of those choices. A fee arrangement should support an informed decision, not make the client feel that asking about the calculation is inappropriate.
Reading the closing statement
When the matter concludes, the written closing statement should allow you to follow the money. If several insurers contribute, the statement should make the total understandable. Expenses and reimbursement payments should be distinguishable from the attorney's fee.
Ask about an unfamiliar item. An explanation may be simple, such as the cost of obtaining a necessary transcript. If an obligation is disputed or funds must remain held while it is resolved, you should be told what remains open and how that affects distribution.
The best time to begin understanding these issues is the first fee discussion. The final statement should confirm an arrangement you understand, not introduce a financial structure you have never seen. If you are considering an injury claim, I am happy to explain how the agreement and likely case expenses would apply to the matter you bring to us.
Sources and Further Reading
About Michael B. Fusco
Michael B. Fusco is a New Jersey personal injury attorney certified by the Supreme Court of New Jersey as a Civil Trial Attorney. Read Mike’s biography and credentials.
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General Information
This article provides general information, not legal advice for a particular situation. Laws and policy terms must be applied to the actual facts. Reading this article or contacting the firm does not, by itself, create an attorney-client relationship.