Are Contingency Fees Regulated?
Yes. Contingency fees are regulated at both the national level by ABA Model Rule 1.5 and at the state level by each state's rules of professional conduct. They are prohibited in criminal and most domestic relations cases. Several states impose fee caps in medical malpractice.
ABA Model Rules
The American Bar Association's Model Rules of Professional Conduct provide the national framework for contingency fee regulation. While the Model Rules are not directly enforceable, nearly every state has adopted some version of them.
Rule 1.5(a) — Reasonableness: All fees must be "reasonable." The rule lists eight factors for evaluating reasonableness, including time and labour, complexity, customary fee in the locality, amount involved, and whether the fee is contingent.
Rule 1.5(c) — Written Agreement: A contingency fee agreement must be in writing, signed by the client, and must state the method of fee determination, the expenses to be deducted, and whether the fee is calculated before or after expenses.
Prohibited Case Types
Criminal Cases
Model Rule 1.5(d)(2) prohibits contingency fees in criminal defence. The rationale is that such arrangements could create incentives for the attorney to encourage plea bargains or discourage the client from asserting constitutional rights.
Domestic Relations
Model Rule 1.5(d)(1) prohibits contingency fees in domestic relations matters where the fee is contingent on securing a divorce, or on the amount of alimony, support, or property settlement. This does not prohibit contingency fees for collecting past-due support payments.
State Fee Caps
| State | Cap / Regulation | Case Type |
|---|---|---|
| California | MICRA sliding scale (25%–10%) | Medical malpractice |
| New York | Judiciary Law § 474-a sliding scale | Medical/dental/podiatric malpractice |
| Florida | Bar Rule 4-1.5(f)(4)(B) schedule | All personal injury (presumed reasonable) |
| Connecticut | 33⅓% cap | Personal injury |
| New Jersey | Sliding scale (33⅓%–20%) | All tort claims (Court Rule 1:21-7) |
| Federal (SSDI) | 25% / $9,200 max | Social Security Disability |
Enforcement & Remedies
If a contingency fee is found to be unreasonable or the agreement non-compliant, several remedies are available:
- Fee arbitration: Most state bars offer mandatory or voluntary fee dispute resolution programs
- Court review: Courts can reduce fees found to be clearly excessive
- Disciplinary action: The attorney may face reprimand, suspension, or disbarment for charging unconscionable fees
- Voidable agreement: In some states, non-compliant contingency fee agreements are voidable at the client's option