The questions often come up. Why should a lawyer take a case on a contingency? Why should a client seek or agree to a contingent fee arrangement? Don’t contingency cases promote frivolous litigation? Isn’t this just a form of ambulance chasing?
To those who look down on the contingency fee lawyer I ask, “are you willing to risk your time and effort for your client?” (If your answer is “yes, but only at $500/hour,” I consider that a “no.”) The fact is contingency fee arrangements have a proud and honorable place in legal practice. Often, they are the only way individuals and smaller companies can actually gain access to the courts and legal system their taxes support.
As to when to use a contingent fee arrangement, the answer is quite simple: Contingent fees should be used only when the high cost of litigation prevents you from bringing an otherwise meritorious case. They should not be used when you can easily afford hourly fees. And they should not be used when a case is weak.
The truth is, if your case is successful, you will most likely pay more to your lawyer under a contingency fee arrangement than you would had you paid hourly fees. The reason for this is straightforward. The money your contingency fee lawyer makes on successful cases has to make up for the money he does not make on the cases that aren’t. The key words here are “if your case is successful.” No case is guaranteed, and there is always the risk of losing. In short, the winning cases subsidize the losing ones. Now given these economic truths, why should anyone agree to this? Again, the answer is simple. If you lose, you don’t pay. For individuals and small companies who would otherwise face financial ruin in the event of a loss, the prospect of paying fees only out of actual winnings is very, very attractive. They are willing to pay somewhat more in the event of a win in order to offset the very real economic devastation that would result in the event of a loss.
Despite popular rhetoric to the contrary, it is also true that contingent fee arrangements discourage rather than promote frivolous litigation. How so? Well, for starters, the contingency fee lawyer only gets paid when a case is successful. He doesn’t get paid for effort. He doesn’t get paid for churning paper. He doesn’t get paid for beautifully drafted research memos. He gets paid for results. Contingent fee arrangements thus weed out and discourage frivolous cases. Those who claim the contrary – that contingent fees cause frivolous litigation – don’t know what they’re talking about. How, pray tell, are you going to win if the facts and law don’t support your case? If you don’t have a reasonable, indeed likely, chance of winning, why invest your time and effort in a hopeless case?
The successful contingency fee case thus blends the common interests of both lawyer and client. The client who has a strong case and can afford hourly fees is probably money ahead to pay on an hourly basis. Only when he cannot does a contingent fee arrangement make economic sense. Similarly, it does the contingency fee lawyer absolutely no good to take on a meritless case. Even 100% of zero is still zero.
The contingency fee arrangement has had a long and proud tradition in the legal profession and is unworthy of the attacks it receives. Far from promoting injustice, the contingency fee lawsuit achieves just the opposite. It brings to justice those who count on their victims being unable to fight back.
Soon we will explore what makes up a “good” contingency fee patent case. Stay tuned.