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Fee Arrangements for Business Litigation Cases

Posted by Attorney Stephen Hance | Sep 21, 2015 | 0 Comments

As most people know, business lawyers typically charge an hourly rate for their work and they typically expect to get paid up front or as you go. For business litigation, that can often mean tens or hundreds of thousands of dollars out of pocket before any outcome in the lawsuit, with no guarantees regarding results.

What many people don't know is that business lawyers are often open to contingent fees or similar arrangements in the right circumstances. So what are the circumstances that might support a contingent fee arrangement?

First, and probably this is obvious, you need to be a plaintiff who is likely entitled to money from a defendant that has it. So, for example, we have had defendants who themselves had no claims to assert against a plaintiff ask whether we would work based on a contingent fee. The answer is no. If you don't have a claim to share with a lawyer, the lawyer will not be interested in working for a share of the claim.

Also, whomever is your target needs to have money. So if you may be entitled to $1,000,000.00 in damages against Joe Blow, the unemployed homeless guy, no lawyer will work for a share of that claim. On the other hand, if your claim is against Donald Trump, things might be different.

Second, the claim has to be strong. So to use a car accident comparison, your case against the driver who ran a red light and t-boned your car is strong. Your slip and fall claim against the department store for not cleaning up a wet spot near the entrance on a snowy day is not strong. In business litigation, only an experienced business lawyer will be able to properly evaluate the strength of your case, so it will be important to talk to a lawyer who knows the area of practice if you hope to ask them to take the case on a contingent fee basis.

Third, the claim needs to be valuable. Lawyers have staff to support, families to feed, etc. Lawsuits take a lot of time and can be complex. Often law firms have to front huge costs to get a case to trial. If your potential business case is complex, it will have to be very valuable for a lawyer to consider taking it on a contingent fee basis.

How much value depends on the case, but, in general, for simple cases, business lawyers probably would need to see a potential contingent fee in excess of $50,000.00, and for complex cases that amount could be over $250,000.00. I recently recall a conversation with a big firm colleague who felt the value of the case needed to be over $1,000,000.00 to justify their involvement! So much for an accessible court system.

There are other factors that come into play as well. One x-factor is whether the opponent may assert a credible counterclaim. Obviously, a lawyer working for a percentage of your claim may not be interested in defending you against a credible counterclaim. Also, the forum could be a factor. Many business disputes are subject to arbitration agreements. If there is an arbitration agreement in place, it might lower the potential cost of prosecuting the case.

Finally, lawyers occasionally enter into other alternative fee arrangements if the circumstances are right, such as a discounted hourly rate together with a lower contingent fee, or where the client provides an up-front non-refundable retainer as further incentive for the lawyer to take on a case that would otherwise be too risky or not quite valuable enough.

Hance Law Firm, like most other firms, is typically more than happy to meet with you, free of charge, to help evaluate whether you have a case and discuss what fee arrangements might be suitable.

About the Author

Attorney Stephen Hance

Steve represents and advises clients that are dealing with business and real estate disputes. Steve is an investor and business owner, and his approach is unique from other attorneys.

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