This is certainly not an ideal situation for you or for your lawyer. When your lawyer took this case I believe he/she expected a better recovery. He/she did not want to put in whatever time, effort and costs into a case that the expectation of getting $2,500.00. "Small" cases can take as much time as bigger cases and a lawyer would much rather spend time on those cases. So in your case, say you signed a 40% contingency fee agreement. If you eventually agree to a settlement of $5000.00. The fee is $2000.00 and you are now down to a net of $3000.00. From that costs will be deducted, for example, the court filing fee, costs for medical records, the police report, a report from your doctor any depositions. You may also have alien for outstanding medical expenses or medial insurance payments. You are now close or even under what the attorney fee is--here in Pittsburgh some doctors charge more than a $1000.00 to write a report on their own patient.
Personally in such circumstances I take into consideration why I am recommending a low settlement. If I told the client from the start that this was a small case and the likelihood of a meaningful economic recovery to them was slim, I probably would take my whole fee but in many circumstances, regardless of the fee agreement,--take my out of pocket expenses but drastically reduce the fee or take no fee.
So maybe it's not fair but it happens. It's not improper or illegal. Hope this helped?? If you have a more specific question, I would be happy to try and answer it for you.