Many are under the mistaken belief that the “losing” party in a lawsuit must pay for the legal costs of the “winning” side. While this is how England and some other countries deal with litigation costs, the “American Rule” generally holds that each side must pay for their own costs. It is possible in some cases, however, for the plaintiff to be compensated for legal costs by the defendant if the plaintiff wins the case.
To help cover lawsuit costs—which can be significant—many lawyers work on a “contingency fee” basis, meaning that they charge no legal fees up front, and charge nothing unless they win the case. Contingency fees are standard in personal injury lawsuits but may not be used for other types of litigation.
Under a contingency fee arrangement, if the plaintiff doesn’t win the case, he or she pays nothing. And if the plaintiff does win the case, he or she pays their attorney roughly 1/3 of the total recovery. The actual contingency fee percentage depends on a number of factors, including the complexity and difficulty of the case and the lawyer’s experience.