3 Advantages of Hiring a Lawyer on Contingency (and 1 Disadvantage)

I had a famous relative who used to say: “Never hire a lawyer not on a contingency”.

Is that true? Let’s consider the positives and negatives of a contingency arrangement.

To those who aren’t familiar, a contingency agreement with a lawyer is an arrangement in which the lawyer earns a percentage of a client’s recovery, rather than charging an hourly rate. This arrangement is ubiquitous in some areas of law, e.g., personal injury, but doesn’t lend itself to others, e.g., criminal law. Not to be confused with a straight fixed-fee arrangement, a contingency fee can be a percentage or a fixed fee plus a percentage of the recovery.

What are the advantages?

1. You limit your out-of-pocket expenses. Since you only pay if you recover, your lawyer charges no hourly rate. Usually, you’ll still have to pay expenses, like court costs and expert witness fees. If you have limited funds (and don’t we all), this is essential.

   
   

2. You limit your downside. Unfortunately, I’ve encountered many people who have sued, racked up huge legal fees, and their recovery/settlement was dwarfed by their legal bill. With a contingency arrangement, this isn’t possible.

   
   

3. Your lawyer has enough confidence in your case that she is willing to “bet” her fee on the outcome. If you lose, she doesn’t get paid. Clearly, she considers your case worthwhile and spends time on it.

   
   

What is the disadvantage?

1. Your lawyer is your partner. Now, that sounds great, but the problem with having a partner is that you give up autonomy and the dynamic changes. You aren’t the absolute boss anymore.

What does this mean?

It means your lawyer is going to decide how to run the case. If you don’t have a contingency arrangement, you decide how to run the case. If you tell your lawyer to ask for mountains of discovery, she’ll happily do it. After all, she’s getting paid for every hour. If she’s on a contingency, she’ll decide if your requests are worth her time. She’ll weigh her time expenditures against her share of the potential recovery.  And, you won’t always agree.

As an aside, there is an interesting legal ethics question here, as the lawyer should not act this way, but she will.

To conclude: If you can, hire a lawyer on contingency, as the advantages are substantial. But be aware of how the arrangement will affect the dynamics of the relationship.

Avrum Aaron

US-Israeli Lawyer

avrum@lop-llc.com

054-398-4380