Most personal injury lawyers take 33.3% of your settlement if the case resolves before a lawsuit is filed, and 40% once litigation begins. So the short answer to what percentage a lawyer takes from a settlement is one-third to forty percent, with some agreements climbing to 45% if the case goes all the way to a verdict. Those numbers are the industry default, not a law, and in several types of cases the government caps the fee at a lower rate. The percentage is also only one deduction. Case costs and medical liens come out of the same pot, and in taxable settlements the IRS treats the lawyer’s share as income to you.
The Standard Tiered Percentages
Contingency fees usually follow a sliding scale tied to how far the case travels:
- Pre-lawsuit settlement: 33.3% is standard. On a $100,000 recovery, that’s $33,333.
- After a lawsuit is filed: 40% is common, reflecting the added work of discovery, depositions, and trial preparation.
- At or after trial: Some agreements step up to 45%, though this tier is less uniform.
Your lawyer gets paid only if you recover money. That’s the whole point of the contingency model: the firm fronts the time and often thousands of dollars in expenses, and in exchange takes a meaningful share of the result. The American Bar Association’s ethics rules require the arrangement to be in a written agreement you sign, spelling out the percentage at each stage, what expenses you’re responsible for, and whether costs come out before or after the fee is calculated.1American Bar Association. Rule 1.5 Fees
The Percentage Is Negotiable
Contingency rates aren’t fixed by law, and several states require the fee agreement itself to say so. You won’t always be told this up front, but you have real room to push in the right circumstances.
Your leverage is strongest when liability is obvious and the case is straightforward. A clear rear-end collision with solid medical documentation carries less risk for the attorney than a contested case, and the fee can reflect that. Large expected recoveries also give you room, because one-third of a $2 million settlement is a lot of money for roughly the same work as a $200,000 case. If you’re comparing firms, say so. Some will match a lower rate to win the engagement.
What you probably can’t talk down is a risky, complex, or modest-value case. The standard rate is pricing the attorney’s genuine chance of being paid nothing.
When the Law Caps the Fee
Certain case types override whatever percentage you’d otherwise agree to.
Claims Against the Federal Government
Under the Federal Tort Claims Act, attorney fees are capped at 20% of the recovery for cases resolved administratively, and 25% for cases that reach court. Charging more is a federal crime punishable by a fine of up to $2,000 or up to one year in prison.2GovInfo. 28 USC 2678 – Attorney Fees; Penalty
Social Security Disability
Attorney fees in SSDI claims are limited to 25% of past-due benefits or a set dollar maximum, whichever is less. The current cap under Social Security’s fee agreement process is $9,200.3Social Security Administration. Fee Agreements For cases decided in federal court, the statute caps fees at 25% of past-due benefits, with the court determining the reasonable amount within that limit.4Office of the Law Revision Counsel. 42 US Code 406 – Representation of Claimants Before Commissioner
Workers’ Comp and Medical Malpractice
Most states cap workers’ compensation attorney fees, typically between 10% and 20% of the benefits recovered, and a judge usually has to approve the fee before the attorney gets paid. Many states also impose sliding-scale caps in medical malpractice cases, with the percentage dropping as the recovery grows. The specifics vary significantly by state, so ask your attorney how your state’s cap applies.
Case Costs Come Out Too
The attorney’s percentage isn’t the only thing subtracted from your settlement. Case costs are out-of-pocket expenses the firm advances while working your case, and in a serious injury or complex case they can run into the tens of thousands.
Typical costs include:
- Court filing fees
- Expert witness fees (often the single largest expense)
- Medical record retrieval charges
- Deposition transcripts
- Private investigator fees
- Postage, copying, and service of process
Most firms advance these and reimburse themselves from the settlement. Some agreements allow the firm to charge interest on advanced costs, so read that section carefully. The agreement must also specify whether costs are deducted before or after the fee is calculated, and that single choice meaningfully changes your check.1American Bar Association. Rule 1.5 Fees
How the Math Actually Works
Take a $100,000 settlement with a 33.3% fee and $10,000 in case costs.
If the fee is calculated on the gross amount first:
- Attorney fee: $33,333
- Case costs: $10,000
- Your net: $56,667
If costs come off first and the fee is calculated on what’s left:
- Case costs: $10,000
- Attorney fee: $30,000 (33.3% of $90,000)
- Your net: $60,000
Same settlement, same percentage, same costs, $3,333 difference. The “costs first” method is friendlier to you. If the agreement says the fee is based on “gross recovery,” that means costs come out after the fee, which is the less favorable version. Ask about this in the initial consultation.
Medical Liens Can Take a Bigger Bite Than You Expect
Even after the fee and costs, your settlement isn’t necessarily yours to keep. If Medicare, Medicaid, or your private health insurer paid for treatment tied to the injury, they may have a legal right to be repaid out of the proceeds.
Medicare’s payments for injury-related care are considered “conditional” and must be repaid under the Medicare Secondary Payer statute.5Centers for Medicare & Medicaid Services. Conditional Payment Information You or your attorney must report the case to Medicare’s Benefits Coordination and Recovery Center. If you don’t respond within 30 days of the conditional payment notice, Medicare can demand the full amount without reducing it for your attorney fees or costs.6Centers for Medicare & Medicaid Services. Medicare’s Recovery Process The federal government can collect double damages from parties who fail to comply.7GovInfo. 42 USC 1395y – Exclusions From Coverage and Medicare as Secondary Payer
Employer-sponsored health plans governed by ERISA can enforce reimbursement clauses against identifiable settlement funds in your possession. Your attorney should identify and negotiate these liens before distributing any money, because ignoring them creates legal exposure for both you and the firm.
What Changes If You Switch Lawyers Mid-Case
You can fire your attorney at any time, for any reason. That doesn’t mean leaving free of charge.
A discharged attorney is generally entitled to the reasonable value of the work actually performed, a doctrine called quantum meruit. They can’t collect the full contingency fee, because the contingency hasn’t happened yet. If you hire a new lawyer and eventually win, the former lawyer can assert a claim against the recovery. In practice, you can end up paying two attorneys out of one settlement: the former lawyer’s reasonable value plus the new lawyer’s agreed percentage. Some new attorneys will absorb or negotiate around the overlap, but ask before you sign.
The Tax Trap on the Fee Portion
Damages for personal physical injuries or physical sickness are excluded from your gross income under federal law, so you owe no income tax on those proceeds. The exclusion covers compensatory damages, including pain and suffering, as long as the underlying claim is a physical injury. Punitive damages are always taxable. Emotional distress by itself doesn’t count as physical injury, so those proceeds are taxable except for the portion that reimburses actual medical expenses paid to treat the distress.8Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
For taxable settlements, the IRS treats the entire settlement as your income, including the share your lawyer takes. Settle an employment case for $300,000 with a $100,000 fee, and the IRS says you received $300,000. The Tax Cuts and Jobs Act suspended the miscellaneous itemized deduction that used to let you offset that fee, so for most case types you can’t deduct it.9Internal Revenue Service. Publication 529, Miscellaneous Deductions
One important carve-out: federal law allows an above-the-line deduction for attorney fees paid in unlawful discrimination claims (civil rights, wage and hour, FMLA, and similar statutes) and certain whistleblower awards, capped at the income you received from the settlement.10Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined Outside that carve-out, a tax professional familiar with settlement taxation is worth paying for before you file.