📌 Key Takeaway: How case costs are deducted relative to the attorney fee can create a real dollar difference — on a $100,000 settlement with $5,000 in costs, a "fee-before-costs" agreement nets $62,000 while "costs-before-fee" nets $63,650.

The Two Calculation Methods

  • Fee-before-costs: The attorney's percentage is calculated on the full settlement first, then case costs are deducted from what remains.
  • Costs-before-fee: Case costs are deducted from the settlement first, then the attorney's percentage is calculated on the smaller remaining amount.

Costs-before-fee is generally more favorable to the client, since the percentage fee applies to a smaller base amount — worth specifically asking which method your agreement uses before signing.

A Worked Example

On a $100,000 settlement with a 33⅓% contingency fee and $5,000 in case costs: Fee-before-costs = $100,000 × 33.3% = $33,333 fee, then minus $5,000 costs = $61,667 net to attorney costs deducted, client receives roughly $62,000. Costs-before-fee = $100,000 - $5,000 = $95,000, then × 33.3% = $31,635 fee, client receives roughly $63,650. A real, meaningful difference from one contract clause.

Why This Detail Gets Overlooked

Clients naturally focus on the headline percentage (33% vs. 40%) since it's the number most prominently discussed, while the calculation method — often buried in contract language — can swing the actual take-home by a comparable amount. Both details deserve equal attention before signing.

Frequently Asked Questions

Is one calculation method more common than the other?

Practices vary by firm and jurisdiction — there's no universal standard, which is exactly why it's worth asking directly rather than assuming a specific method applies to your agreement.

Can I negotiate the contingency percentage itself?

Sometimes, particularly for cases with very high expected recovery values or straightforward liability — though the 33⅓%/40% structure is a well-established industry standard that many firms don't deviate from significantly.