In a new article, Stanford Law Professor Nora Freeman Engstrom and University of Montana Professor Brianne Holland-Stergar tackle one of the longest-standing and most hotly debated questions in civil justice: Is the market for personal injury (PI) contingency fees actually competitive? 

Their answer: Not really. And that has big implications for policymakers, reformers, and plaintiffs’ lawyers alike.

We sat down with the authors to discuss the key findings from their article, Competition and Contingency Fees, which has recently been published in the Georgetown Law Journal.

Q: You note that contingency fees are incredibly common, yet hotly debated. Why is there so much interest in the competitiveness of contingency fees?

Nora: You’re right that contingency fees are incredibly common. Virtually every PI attorney in the U.S. uses a contingent fee model. If the plaintiff doesn’t win the case, the attorney doesn’t make a cent. If the plaintiff secures a settlement or a favorable monetary judgment, the attorney takes a percentage of that amount as their fee (usually, between 33 and 40%).

Contingency fees certainly attract considerable attention. For years, tort reformers have launched various attacks, claiming that these fees tempt lawyers to engage in unethical conduct, fuel frivolous litigation, and put too much money in lawyers’ hands. The last critique has struck a chord, and, worried about this overcharging, various states have capped contingency fees in certain contexts. 

Brianne: These longstanding debates are heating up. Recently, Uber (which is facing thousands of personal injury claims, including those brought by survivors of sexual assault who allege they were attacked by Uber drivers) has funded efforts to enact harsh, contingency fee caps via ballot measures in California, Colorado, and Nevada. 

The Nevada Supreme Court nixed Uber’s ballot initiative in early 2025, concluding that the company’s description of the reform was “misleading and confusing.” But, rather than giving up, Uber brought the fight to California. In October of last year, Uber’s interest group proposed a ballot initiative that would cap fees at 25% in all automobile accidents. If the ballot initiative is passed, California will have the toughest limits on contingency fees in the country. 

Q: So, what did you set out to explore in Competition and Contingency Fees?

Nora: We wanted to determine whether the market for contingency fee attorneys is, in fact, competitive—a question that academics have been pondering for decades. The answer matters because, if the market is functioning, there’s less need for regulation; stakeholders can simply let the market continue to operate. But if the market isn’t competitive, intervention may be required—and we need to explore which interventions would most effectively correct existing market inefficiencies. 

Q: What did you find?

Brianne: That the contingency fee market is not meaningfully competitive. Numerous data analyses and observations led us to this conclusion. We’ll only highlight a couple here: 

First, we document remarkable price uniformity—most PI lawyers charge around 33%, regardless of case complexity, quality of representation, or expected value. That means that, while plaintiffs’ attorneys fiercely compete along some dimensions (you’ve no doubt seen their billboards), they don’t appear to compete on the basis of price. In fact, we reviewed 500 websites for PI attorneys practicing across the country and found that only 22 firms (4.4%) disclosed any information related to the fees they charged.

Nora: Second, we identify principles of behavioral economics that, together, strip contingency fees of salience. Generally, the price of a good or service is salient to consumers; price is often the thing that we, as consumers, consider first. But contingency fees are different. That’s partly because clients don’t write a check to the lawyer; the contingency fee is deducted from a future recovery that may or may not materialize. Payment is also delayed, uncertain, and bundled together with costs and expenses. In that setting, prospective clients tend to focus on other attributes—like a lawyer’s advertising presence, perceived reputation, or promises about results—rather than the percentage the lawyer will ultimately take. 

Q: You compare the legal market to the real estate market. Why?

Brianne: Because both the contingency fee market and the market for real estate commissions, historically speaking, aren’t competitive. For years, real estate agents have charged commissions of 5% to 6% of a home’s sale price (meaning each agent pockets ~2.5%-3%), even as the cost of homes has skyrocketed. Furthermore, realtors’ commissions are comparatively huge—more than double the rates in other developed countries. And we see surprisingly little differentiation: Realtors with different levels of experience and different track records charge comparable rates. 

So, there are these oddities in the market for residential real estate brokerage services, just as there are oddities in the market for contingency fee services. And when we zero in, we notice that the two markets share striking similarities. Just like contingency fees, fees to real estate agents aren’t paid but are, instead, deducted from a gain (in the real estate context, commissions for both the buyer’s agent and seller’s agent typically come out of the proceeds from the home’s sale). We also notice that, just as in the PI realm, there’s a long-time lag between retention and payment. (You hire your realtor at “time 1,” but you don’t buy or sell your home until “time 2,” often months down the road.) In sum, the structures of the markets are similar. Thus, it’s not surprising that the observed outputs of the two systems (as seen through stickiness) are similar, too.

Q: So, if the contingency fee market isn’t competitive, are contingency fee caps the answer?

Nora: No. We devote a major section of the article to showing why caps are not just ineffective but counterproductive. Fee caps are price ceilings, and basic economics tells us that price ceilings tend to distort supply. 

In the contingency fee context, that means lawyers become more selective. They gravitate toward clear-liability, high-damages cases and shy away from complex, risky, or resource-intensive claims—and they also shy away from prospective clients who don’t have high wage loss (i.e., stay-at-home moms, children, and the elderly). The predictable result is that some meritorious cases simply won’t be brought.

In this way, caps are regressive. They make it harder for the most vulnerable claimants to find a lawyer—especially in cases with uncertain liability or modest damages. 

Q: What’s a better policy approach?

Brianne: If the problem is rooted in informational asymmetries (as we argue it is) then the solution needs to focus on fixing that information deficit. That’s why we propose a simple, practical intervention: mandatory “closing statements”—a reform that Nora first advocated back in 2011 but that is even more necessary now. 

The idea is to require lawyers who charge contingency fees to file, at the conclusion of each client’s case, a standardized disclosure form that clearly lays out basic information regarding the representation, including the time elapsed between the injury and the claim’s resolution, the plaintiff’s total claimed economic loss, their total recovery, and the amount of money paid to the attorney, among other things. Parts of New York have been requiring closing statements for decades, and so the idea is time-tested. It’s practical and workable.

The difference is that, in New York, the data goes into a filing cabinet; it isn’t visibly utilized. We’d protect confidential information, but we’d make aggregate data about firm performance available to consumers. Consumers, in turn, would use the information to target attorneys who best meet their needs and preferences. Consumers could find, for instance, an attorney who charges the same amount as her competitors but consistently brings in larger net recoveries (calculated by subtracting claimed economic losses from total recoveries). Or, a consumer who wants a quick settlement could target attorneys with a track record of speedy resolutions.

Nora: We want to arm clients with the information they need to evaluate lawyers by more than just the snazziness of their billboard.  That information will predictably spur competition. If people start to ask why one law firm charges 40% while another charges 30% even though both firms’ results are comparable, that could pressure the 40% firm to cut its prices. This evolution wouldn’t happen overnight. Gradually, though, as salience increases and comparisons become easier to make, firms would almost certainly respond to consumer demand by adjusting their prices.

Just as importantly, closing statements would deter firms from engaging in costly medical build-up. This point might sound a bit weedy, but it’s critical. Medical buildup refers to the fact that some firms exaggerate clients’ medical bills to goose their recoveries. In fact, Uber contends that, in advocating its draconian fee cap, one of its main goals is to clamp down on this kind of overclaiming. Closing statements would exert the same pressure, but in a responsible, narrow-gauge way because, currently, when firms “build” claims, insurers can see it—and they respond by reducing plaintiffs’ net recoveries. Thus, if firms were to compete based on their net recoveries, the ethical firms that don’t build claims would come out ahead, while the “builders” would be incentivized to change their practices.

Finally, closing statements would support regulatory oversight and empirical research. Right now, it’s incredibly difficult to study how contingency fees actually operate in practice—who’s charging what, in what kinds of cases, and with what results. Standardized closing disclosures could build a foundation for better data collection and, eventually, more evidence-based policy.

Q: What are the broader stakes of your findings?

Brianne: This isn’t just about market structure. It’s about access to justice. Millions of Americans rely on contingency fees to get through the courthouse doors. If that system isn’t working well—if it’s misallocating resources or shutting out valid but lower-value claims—then the legitimacy of the tort system is on the line.

Q: What do you hope readers take away from the article?

Nora: The contingency fee market is not competitive, but reform requires nuance. It’s tempting to reach for simple fixes like caps, but caps are sledgehammers. They hurt far more than they help. What we need instead is better information, and a more thoughtful understanding of how real people navigate legal services markets. Closing statements are crucial first step.