The Document That Makes Everything Else Possible: The TX Contingent Fee Agreement and Limited POA
(Art. 5)
The Document That Makes Everything Else Possible: The TX Contingent Fee Agreement and Limited POA
A Reading for Paralegal Students
Every welcome letter, every spoliation letter, every demand package, every pleading, every settlement check the firm will ever touch on a personal injury matter rests on one foundational document: the Contingent Fee Agreement and Limited Power of Attorney.
Without it, there is no representation. There is no fee. There is no authority to request records, endorse settlement checks, or negotiate liens. There is just a meeting that happened and a client who walked back out the door. That is why this is not paperwork — it is the document that turns a conversation into a case.
Why This Document Matters So Much
The Contingent Fee Agreement is the only place in Texas where the entire economic and procedural structure of a personal injury representation is locked into writing. It is required to be in writing — not as a courtesy, but as a matter of law.
Section 82.0651 of the Texas Government Code makes contingent fee agreements voidable by the client if they fail to comply with Section 82.065, which requires them to be in writing and signed by both attorney and client. Rule 1.04(d) of the Texas Disciplinary Rules of Professional Conduct reinforces that a contingent fee must be in a writing signed by the client, stating the method of calculation, the expenses to be deducted, and whether expenses come out before or after the fee is calculated. Skip the writing, and the fee can be challenged — sometimes erased entirely.
Look at what this agreement actually does:
It defines the scope of representation (Sections 1.01–1.02) — what the firm is hired to do and, just as importantly, what it is not. No appeals. No bankruptcy. No tax advice. No unrelated claims. This clarity prevents the dreaded “I thought you were handling that too” conversation months down the road.
It sets the fee structure (Section 2.01) — pre-appeal and post-appeal percentages, gross recovery definitions, and the disclosure required by Rule 1.04(d).
It allocates litigation expenses (Section 2.02) — filing fees, expert witnesses, depositions, record retrieval, e-discovery — and forces the parties to check a box on what happens if there is no recovery.
It creates a contractual attorney’s lien (Section III) on the recovery, securing the firm’s fees and expenses without assigning ownership of the client’s claim.
It preserves the client’s settlement authority (Section 4.01) — the client, not the firm, has the exclusive right to accept or reject any offer. This tracks Rule 1.02(a)(2) of the Texas Disciplinary Rules of Professional Conduct, which reserves settlement decisions to the client.
It grants a Limited Power of Attorney (Section V) — narrow, defined, revocable authority to request records, endorse joint settlement checks, negotiate liens, and file pleadings. Not a blank check. A scalpel.
It addresses referral or association of counsel (Section IX) consistent with Rule 1.04(f), ensuring fee-splitting is disclosed in writing and never increases the client’s total fee.
It includes a binding arbitration provision (Section XII) with the conspicuous warning Texas law and ethics opinions require for arbitration clauses in attorney-client agreements.
It addresses file retention (Section XI) — when the file can be destroyed, what the client can request, and what the firm may keep.
It closes with the Notice to Client required by the State Bar, advising clients of their right to file a grievance with the Office of Chief Disciplinary Counsel.
This is the operating system of the representation. Every other document the firm produces — every welcome letter we’ve reviewed in this course — assumes this contract is already signed and in the file.
Why Continued Written Communication Cannot Stop Here
The contract creates the relationship. Written communication sustains it.
Rule 1.03 of the Texas Disciplinary Rules of Professional Conduct requires lawyers to keep clients reasonably informed about the status of the matter and to promptly comply with reasonable requests for information. The Contingent Fee Agreement itself echoes this commitment in Section X, where the client consents to communication by email, text, electronic signature platforms, and client portals.
But there is a deeper reason every meaningful update needs to be in writing: the file may leave the firm.
Rule 1.15(d) of the Texas Disciplinary Rules of Professional Conduct requires that, upon termination of representation, the lawyer “take steps to the extent reasonably practicable to protect a client’s interests, such as . . . surrendering papers and property to which the client is entitled.” The State Bar’s Professional Ethics Committee removed any doubt in Ethics Opinion 657 (May 2016): documents received from the client, documents generated during the representation, work product, and notes are all the property of the client and must be made available on request.
In a personal injury matter, that file — including this signed Contingent Fee Agreement — may end up in front of:
a successor attorney taking over the case,
a court ruling on a fee dispute or motion to enforce the lien,
an arbitrator hearing a malpractice or fee-dispute claim under Section XII,
opposing counsel during discovery,
a grievance committee, or
the client themselves.
The signed agreement is often the first document anyone reviewing the file will open. If it is missing, ambiguous, unsigned, or contradicted by later undocumented promises, every page that follows is on shakier ground.
Takeaway for Paralegals
The welcome letter introduces the representation. The Contingent Fee Agreement creates it. Every signature line, checkbox, and percentage in this document defines what the firm can do, what the client owes, and what the file will look like when someone else eventually reads it. Treat the executed original like the foundation it is — because everything you draft for the rest of the case is built on top of it.
[FORM]
TEXAS CONTINGENT FEE AGREEMENT
AND LIMITED POWER OF ATTORNEY
(PERSONAL INJURY MATTER) BASIC
This Contingent Fee Agreement and Limited Power of Attorney (“Agreement”) is entered into by and between:
Client: __________________________________________
(“Client”)
and
Law Firm: _______________________________________
(“Firm” or “Attorneys”)
Effective Date: _____________________
I. SCOPE OF REPRESENTATION
1.01 Representation
Client retains Firm to investigate, prosecute, negotiate, settle, and, if necessary, litigate claims arising from injuries or damages allegedly caused by:
(“Defendant”)
related to the following occurrence:
(“Matter”).
Representation includes pre-suit investigation, insurance claims, settlement negotiations, litigation, and post-judgment collection efforts reasonably necessary for the Matter.
1.02 Limited Scope
Firm represents only the persons specifically identified as Clients in this Agreement. No attorney-client relationship is created with any other person or entity unless confirmed in writing by Firm.
Representation does not include:
appeals unless separately agreed in writing;
bankruptcy matters;
tax advice;
business or transactional matters;
unrelated legal claims;
collection disputes unrelated to the Matter.
II. CONTINGENT FEE
2.01 Attorney’s Fees
This is a contingent fee contract. Client will owe no attorney’s fees unless Firm obtains a recovery for Client.
If Firm obtains a recovery through settlement, verdict, arbitration award, or otherwise, Firm shall receive:
Pre-Appeal Resolution
_____ % of the gross recovery obtained before a notice of appeal is filed.
Post-Appeal Resolution
_____ % of the gross recovery obtained after a notice of appeal is filed.
“Gross recovery” includes all monetary amounts recovered on Client’s behalf, whether by settlement, judgment, arbitration award, insurance payment, or otherwise.
2.02 Litigation Expenses
Litigation expenses are separate from attorney’s fees and may include:
filing fees;
service fees;
medical records;
deposition expenses;
mediation fees;
expert witness fees;
investigation costs;
travel expenses;
exhibit preparation;
record retrieval fees;
electronic discovery expenses;
courier/postage expenses;
legal research charges reasonably incurred.
Firm may advance litigation expenses on Client’s behalf.
Unless prohibited by law, reimbursable case expenses shall be deducted from Client’s recovery after attorney’s fees are calculated unless otherwise required by law or agreed in writing.
If no recovery is obtained, Client shall not owe attorney’s fees. Responsibility for litigation expenses if there is no recovery shall be:
☐ Waived by Firm
☐ Paid by Client
☐ Other: __________________________________
III. ATTORNEY LIEN
To secure payment of attorney’s fees and reimbursable expenses, Client grants Firm a contractual lien against any recovery obtained in the Matter, subject to applicable Texas law.
This provision does not assign ownership of Client’s legal claims to Firm.
IV. CLIENT AUTHORITY AND SETTLEMENT
4.01 Settlement Decisions
Client retains the exclusive right to accept or reject any settlement offer.
Firm will communicate all material settlement offers promptly.
Firm may not settle Client’s claims without Client’s consent.
4.02 Negotiation Authority
Client authorizes Firm to communicate and negotiate with insurers, opposing parties, medical providers, and lienholders concerning the Matter.
V. LIMITED POWER OF ATTORNEY
Client appoints Firm as Client’s limited attorney-in-fact solely for purposes reasonably necessary to prosecute and resolve the Matter, including authority to:
request records;
execute routine procedural documents;
endorse settlement checks made jointly payable to Client and Firm;
obtain disbursement checks;
negotiate lien reductions;
file pleadings and litigation documents.
This Limited Power of Attorney does not authorize Firm to:
settle claims without Client consent;
execute a final release without Client approval;
execute wills, trusts, deeds, or unrelated legal documents;
access accounts unrelated to the Matter.
This Limited Power of Attorney terminates automatically upon conclusion or termination of representation.
VI. CLIENT RESPONSIBILITIES
Client agrees to:
provide truthful and complete information;
cooperate reasonably in prosecution of the Matter;
preserve evidence;
appear for depositions, hearings, mediations, and trial when necessary;
promptly notify Firm of address, telephone, or email changes;
promptly provide documents and information requested by Firm.
Client agrees not to communicate directly with represented adverse parties regarding settlement without notifying Firm.
VII. NO GUARANTEE
Firm has made no promises or guarantees regarding outcome, recovery amount, or success of the Matter.
Any estimates regarding potential value are opinions only and not guarantees.
VIII. TERMINATION OF REPRESENTATION
8.01 Client Termination
Client may terminate representation at any time by written notice, subject to Firm’s rights under Texas law to recover fees and reimbursable expenses.
8.02 Firm Withdrawal
Firm may withdraw as permitted by the Texas Disciplinary Rules of Professional Conduct and applicable law, including for:
failure to cooperate;
nonpayment of expenses if applicable;
conflicts of interest;
false statements by Client;
ethical or legal limitations.
IX. REFERRAL OR ASSOCIATION OF COUNSEL
Firm may associate or refer the Matter to other attorneys consistent with Texas Disciplinary Rule of Professional Conduct 1.04.
Any division of fees will either:
be proportional to services performed; or
be based on joint responsibility for the representation.
Client will receive written disclosure of:
the identity of participating lawyers or firms;
the fee-sharing arrangement;
each lawyer’s share or basis for allocation.
Client’s total fee will not increase because of such association or referral.
X. COMMUNICATIONS AND ELECTRONIC CONSENT
Client authorizes Firm to communicate with Client by:
email;
text message;
electronic signature platforms;
client portals;
telephone.
Client understands electronic communications may involve privacy risks despite reasonable security measures.
Electronic signatures and scanned copies shall be treated as originals to the extent permitted by Texas law.
XI. FILE RETENTION
At the conclusion of representation, Client may obtain Client’s file upon written request.
Firm may retain copies for its records.
Unless otherwise required by law, Firm may destroy the file ___ years after representation concludes.
Original documents may be destroyed if not retrieved within reasonable time after notice to Client.
XII. DISPUTE RESOLUTION AND ARBITRATION
PLEASE READ THIS SECTION CAREFULLY. IT AFFECTS IMPORTANT LEGAL RIGHTS.
Any dispute arising out of this Agreement or the representation, including claims for malpractice, breach of fiduciary duty, fee disputes, or other claims, shall be resolved by binding arbitration under the Federal Arbitration Act and the Commercial Arbitration Rules of the American Arbitration Association, unless prohibited by law.
The arbitration shall occur in __________________ County, Texas.
By signing this Agreement, Client understands:
arbitration replaces the right to trial before a judge or jury;
discovery rights may be more limited;
appellate review may be limited;
arbitration awards are generally final and binding.
Client acknowledges having the opportunity to seek independent legal advice regarding this arbitration provision.
If any portion of this arbitration provision is held unenforceable, the remaining portions shall remain enforceable to the fullest extent permitted by law.
XIII. GOVERNING LAW AND VENUE
This Agreement shall be governed by Texas law.
Subject to the arbitration provision above, venue for any permitted court proceeding shall lie in __________________ County, Texas.
XIV. ENTIRE AGREEMENT
This Agreement contains the entire agreement between Client and Firm regarding representation in the Matter.
No oral statements or promises are binding unless included in a signed written amendment.
XV. ACKNOWLEDGMENT
Client acknowledges that:
Client has read this Agreement;
Client understands its terms;
Client has had an opportunity to ask questions;
Client has had the opportunity to seek independent legal advice regarding this Agreement;
Client voluntarily enters into this Agreement.
CLIENT SIGNATURES
CLIENT:
Signature
Printed Name: ___________________________
Date: __________________________________
Address: _______________________________
Phone: _________________________________
Email: _________________________________
LAW FIRM
Law Firm Name
By: ___________________________________
Name: _________________________________
Title: _________________________________
Date: __________________________________
Address: _______________________________
Phone: _________________________________
Email: _________________________________
Potential additional provisions you may want depending on your practice model:
medical lien and subrogation authorization;
settlement statement acknowledgment;
litigation funding disclosure;
social media preservation clause;
HIPAA authorization integration;
minor-client structured settlement language;
death/probate contingency provisions;
bilingual acknowledgment clause;
TCPA/text consent language;
cybersecurity disclaimer;
Medicare/Medicaid compliance provisions.