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Clearly Explaining the Contingency Fee to Your Law Firm’s Clients

Clearly Explaining the Contingency Fee to Your Law Firm’s Clients

On the surface level, the contingency fee appears to be a no-brainer for clients. After all, only paying if a settlement in their favor is reached relieves fears around large retainer fees and other upfront costs.

However, as you are aware, the contingency fee option is not right for all clients and all cases. To avoid frustration and loss of clients, clearly explaining this payment option to prospects becomes vital. Furthermore, your duty as an attorney is to thoroughly explain a client’s options in clear language.

1. Financing Options
Under obligation, you must explain to law firm clients any financing options available to them with regard to litigation costs. In addition, clearly laying out the details of a contingency agreement is not only wise but ethical as well.

A prospect should know the contingency fee percentage cannot exceed 25 percent, is stated upfront and completes the financial agreement between lawyer and client. And that given this fixed amount, an attorney you may receive less or more than you might normally charge. While no adjustments made for such cases, a cap does not allow you to exceed your normal charges by more than 100 percent.

2. Expenses vs. Fees
In the litigation process, expenses arise beyond the fees paid to an attorney as you are well aware. Making clear to clients these details is your duty. Be certain to include that while a client owes an attorney nothing if the case is lost, other fees still fall under his or her responsibility. Potentially, the legal fees of the other party are one such example.

3. Definition of Winning
Coming to an agreement on what defines winning and what constitutes losing keeps frustration at bay after the proceedings. Some cases may require unique considerations in this regard.

4. Termination Agreement
If a case is terminated by a client, what is that client’s responsibility to you as the attorney? A set fee? Normal rates? When can a client withdraw from the agreement? These expectations need to be clearly defined and communicated. (In fact, contingency agreements only apply if the case is concluded).

5. The Best Case Scenario
Being truthful as to the cases which work best with contingency agreements enables clients to make wise litigation decisions and protects you. Explaining that no-win-no-fee agreements work well with third party claims such as accidents or medical negligence would be examples.

A written agreement including the above details and others is signed by both parties. This ensures protection for you as an attorney and the client.