A Contingent Fee Agreement: Questions About the Calculation
To read a proposed contingent fee agreement in Pennsylvania, identify its calculation method and the treatment of expenses before looking only at a percentage. The written method is the subject of this guide; it does not quote a personal fee or decide whether proposed WC terms are legally permissible.
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Pennsylvania Rule 1.5(c) calls for a written contingent agreement explaining the fee method, relevant percentages and expense deductions, including whether expenses come before or after the fee calculation. Read that requirement together with the actual proposed terms, not as a substitute for them.
Trace the calculation in words
Make a private note with four entries:
- Starting amount: what money or benefit does the agreement say the method applies to?
- Fee step: what stated method applies, and does it differ by the event or stage described?
- Expense step: which expenses are identified, and where are they placed in the sequence?
- Result explained: how will the amount remitted to the client be shown?
Use the agreement’s words. If “recovery” or another important term is undefined, flag it rather than assigning your own meaning. An undefined starting amount can make an apparently clear percentage impossible to understand.
Request a worked explanation tied to the clause
Ask the lawyer to explain the sequence using a clearly labeled illustration and to identify assumptions. The purpose is to understand the method, not predict the case result. Do not treat an illustrative amount as an estimate of what your matter will produce.
Check the illustration against the written wording. Does it use the same starting amount? Are expenses placed in the same order? Does it explain how a change of stage affects the method? If the illustration needs a term absent from the agreement, ask where that term will be stated.
Check what the method leaves open
A calculation can be clear while the scope of work remains unclear. Ask which services and stages the agreement covers and what happens if the contemplated work changes. Keep those scope questions separate from the arithmetic so an answer about one does not appear to resolve both.
Pennsylvania WC counsel’s fee agreements and expense claims also have an approval requirement under section 131.55(a). Ask how the proposed terms relate to the applicable approval and request the resulting document when available. Do not infer that signing alone supplies that approval.
This is a way to read a document, not a universal permitted percentage, fee-shifting rule or estimate of net proceeds. For related tasks, see agreement versus approval and expense responsibility, within payments and fees.