“I was injured in a car accident or in a fall at a store. I’ve been contacted by the insurance company for the responsible party, and now I don’t know what to do. How much does it cost to have an attorney represent me?”

This is a common question from our clients. Personal injury attorneys work on what is called a “contingency fee” basis. This means that their recovery, or payment, is dependent upon their success in recovering money for you. If your attorney is successful in recovering money for you, you will pay an attorney’s fee; if there is no recovery, you do not owe an attorney’s fee.

Contingent fees may be subject to regulation by state judicial authorities. In New Jersey, the New Jersey Supreme Court regulates contingent fees for attorneys through New Jersey Court Rule 1:21-7. Contingent fees are calculated on the ‘net recovery’ to the client. Net recovery means the amount recovered, less the costs and expenses of prosecuting the claim. This rule holds that an attorney may not charge more than the following percentages of the net recovery for the client:

  • 33 1/3 % of the first $500,000
  • 30% of the next $500,000
  • 25 % of the next $500,000
  • 20% of the next $500,000

Contingent fees on net recoveries in excess of $2 million must be set by the court. Contingent fees for claims involving infants (children under the age of 18) and incompetent persons of any age are limited to 25% (if the matter is settled without a trial). While there is no fee charged unless a financial recovery is made, some attorneys will seek reimbursement for the costs they expended in prosecuting a claim that was unsuccessful. This is permitted by New Jersey law. Be sure that you know what, if anything, your attorney will charge you in the event that you do not make a recovery.