Is it customary for an attorney to ask for money ($500) up front on a contingency suit?

The small amount of $500 is probably for out-of-pocket expenses. It is important to review the written retainer or contingency fee agreement closely so that you know what your financial obligations are. Generally the lawyer will take one third of any recovery as his only fee. The expenses however are in addition to the fee. If the written agreement is not clear regarding exactly how expenses are defined, I would ask that they be clarified.