What Is the Contingency Fee Limit in Texas? Rules and Exceptions

There is no universal contingency fee limit in Texas. State law does not cap the percentage a lawyer can charge in most civil cases, but every fee has to be reasonable under Rule 1.04 of the Texas Disciplinary Rules of Professional Conduct, and a few case types carry hard limits of their own. In practice, personal injury attorneys quote between 33% and 40%, criminal defense lawyers cannot use contingency fees at all, and Social Security disability fees are capped by federal law.

What Texas Lawyers Actually Charge

Most personal injury attorneys in Texas propose a fee somewhere between 33% and 40% of the recovery. Those numbers are a starting point rather than a fixed rate, and the structure usually tiers up with the amount of work the case requires. A common arrangement sets the fee at 33% if the case settles before a lawsuit is filed, 40% after litigation begins, and sometimes higher if an appeal becomes necessary.

Rule 1.04(d) requires that tiered structure to be spelled out in the written agreement. If the percentage changes depending on whether the case settles, goes to trial, or reaches appeal, each tier has to be listed separately.¹

The Reasonableness Ceiling

The closest thing Texas has to a general cap is the unconscionability standard. Rule 1.04(a) defines an unconscionable fee as one that no competent lawyer could reasonably believe is fair.¹ That ceiling applies to every contingency arrangement in the state, no matter the case type.

Rule 1.04(b) lists eight factors courts use to decide whether a specific fee crosses the line:

The time, labor, novelty, and skill the case required.
Whether taking the case kept the lawyer from accepting other work.
The customary fee charged in the area for similar work.
The amount involved and the results obtained.
Time constraints imposed by the client or circumstances.
The nature and length of the professional relationship.
The experience, reputation, and ability of the lawyer.
Whether the fee was fixed or contingent.

The Texas Supreme Court adopted these factors in Arthur Andersen & Co. v. Perry Equipment Corp. as the test for whether any attorney fee is reasonable. A contingency fee agreement is evidence of reasonableness, but the agreement alone cannot justify the fee; the lawyer still has to show it holds up under the eight factors.¹

The Texas Supreme Court addressed this ceiling directly in Hoover Slovacek LLP v. Walton. It struck down a termination clause that required immediate payment of the full fee regardless of when or whether the client recovered anything. The clause was unconscionable because it shifted all risk to the client, could produce fees exceeding the total recovery, and gave the attorney a financial incentive to get fired after establishing the case’s value. Fee arrangements that eliminate the lawyer’s risk or create perverse incentives face serious judicial skepticism.

Courts also pay closer attention to certain cases. Settlements involving minors require court approval, and judges routinely examine whether the contingency percentage is appropriate given the work performed. Wrongful death claims and class actions receive heightened judicial review for the same reason.

Where Real Caps Exist

A few case types do have specific limits, and they are the ones most likely to catch a client off guard.

Criminal Defense: Contingency Fees Are Prohibited

Rule 1.04(e) flatly bars contingency fees in criminal defense. A criminal defense attorney cannot tie their fee to the outcome of the case. The rule has no exceptions, and a lawyer who enters into that kind of agreement faces disciplinary action.¹

Social Security Disability: 25% Federal Cap

Federal law caps attorney fees in SSDI and SSI cases at 25% of past-due benefits or a fixed dollar amount, whichever is less, under 42 U.S.C. Section 406.² As of January 2026, the dollar cap is $9,200. The federal limit overrides any state fee agreement, so a Texas attorney handling your disability claim cannot charge more regardless of what the contract says.

Medical Malpractice: Heavier Scrutiny, Not a Fixed Cap

Health care liability claims fall under Chapter 74 of the Civil Practice and Remedies Code, which caps noneconomic damages and requires pre-suit expert reports within 120 days of filing.³ Section 74.303 itself caps damages in wrongful death and survival actions against health care providers; it does not cap attorney fees.

An older Texas statute (former Article 4590i, Section 13.02) imposed a sliding scale on medical malpractice contingency fees, and some fee agreements in practice still follow a tiered structure for these cases. Because of the damage caps and procedural complexity, attorney fees in medical malpractice cases receive closer scrutiny under the Rule 1.04 reasonableness factors. If you are evaluating a fee agreement for a medical malpractice claim, ask the attorney to explain how the Chapter 74 damage caps affect both the likely recovery and the proposed fee.

What the Contract Must Say

Every contingency fee agreement in Texas has to be in writing and signed by both the attorney and the client.⁴ Rule 1.04(d) requires the written agreement to state the method of calculating the fee, including the percentage, and to identify what litigation expenses will be deducted from the recovery.¹

The detail that matters most to your take-home is whether expenses come out before or after the fee is calculated. Assume a $100,000 settlement, a 33% fee, and $10,000 in case expenses:

Expenses deducted first: the attorney takes 33% of $90,000 ($29,700), and you keep $60,300.
Fee calculated first: the attorney takes 33% of $100,000 ($33,000), expenses are then subtracted, and you keep $57,000.

That $3,300 difference comes entirely from the order of operations. When the agreement is silent or vague on this point, it almost always benefits the attorney. Once the case concludes, Rule 1.04(d) also requires the attorney to provide a written settlement statement showing exactly how the recovery was divided.¹

Costs the Fee Does Not Cover

Nearly every personal injury case generates out-of-pocket expenses that the attorney advances during litigation and then deducts from the recovery. Common items include court filing fees, expert witness fees (often the largest single expense), medical records retrieval, court reporter and transcript charges, process server fees, and trial exhibits.

In a straightforward soft-tissue injury case that settles before trial, total expenses might run $2,000 to $5,000. A complex medical malpractice case that goes to trial can generate $20,000 or more. Ask for a realistic estimate early, and compare both the proposed percentage and the firm’s approach to costs when choosing an attorney. A lower percentage paired with aggressive cost accumulation can leave you with less money than a higher percentage at a firm that manages costs carefully.

Negotiating the Percentage

Contingency percentages are negotiable. Several factors give you leverage.

Timing is the strongest. Cases that settle before a lawsuit is filed involve less work and less risk, which supports a lower pre-litigation tier. If the proposed agreement is a flat percentage, ask for the tiered structure described above.

Case value matters next. In high-value cases, even a modest reduction in the percentage translates to a significant dollar amount. An attorney earning 33% of a $2 million recovery takes home $660,000. At 25%, the attorney still earns $500,000 while you keep an extra $160,000. Many firms are willing to negotiate on larger cases where their total compensation remains substantial.

Liability clarity gives you additional leverage. If fault is obvious and the defendant has clear insurance coverage, the attorney’s risk is lower, and that reduced risk justifies a reduced fee. If liability is genuinely contested and the case requires expensive expert testimony, a higher fee makes more sense because the attorney is absorbing real financial risk.

If You Think the Fee Was Excessive

If you believe your attorney charged an unconscionable fee, you can file a grievance with the State Bar of Texas. The Office of Chief Disciplinary Counsel classifies each grievance within 30 days to determine whether it warrants investigation. If it qualifies as a formal complaint, the attorney has 30 days to respond, and the Chief Disciplinary Counsel must make a determination on whether to proceed within 60 days after that response is due.⁵ Sanctions range from a private reprimand to disbarment and may include restitution.

There is an important limit on this route. The State Bar grievance process addresses ethical violations, not ordinary billing disagreements. The State Bar itself acknowledges it “cannot intervene or resolve general disputes over the amount of fees charged for legal services,” and will often direct complaints about fee amounts to a local fee dispute resolution service, which is voluntary and requires the attorney to agree to participate.⁶ If mediation fails, the remaining option is a lawsuit for breach of contract or breach of fiduciary duty, where a court can modify or void the fee agreement under the same Rule 1.04(b) factors used in a disciplinary case.

1
University of Houston Law Center. Texas Disciplinary Rules of Professional Conduct – Rule 1.04 Fees
2
Office of the Law Revision Counsel. 42 USC 406 – Representation of Claimants Before Commissioner
3
State of Texas. Texas Civil Practice and Remedies Code Section 74.303 – Limitation on Damages
4
State of Texas. Texas Government Code Chapter 82 – Licensing of Attorneys
5
Texas Courts. Texas Rules of Disciplinary Procedure
6
State Bar of Texas. Resolving Fee Disagreements