Alternative Fee Arrangements
In most firms, legal work in litigation matters is billed to the client strictly on the basis of an hourly rate. Many of our clients also prefer this arrangement. However, at Burke, Costanza & Carberry, we pride ourselves on our flexibility and innovation in devising fee arrangements that align our interests with those of the client. Examples of our creative fee arrangements, which provide greater certainty for our clients, are:
- Fixed Fees. Just what the name implies, attorney and client agree up front on a price for the representation. More commonly used in routine transactions and repetitive types of litigation.
- Contingent fees. Can be customized to fit any type of matter in which a recovery is sought. Hourly plus contingency. The client agrees to pay a lower hourly rate than the firm usually charges, but also to pay a “bonus” of some sort based on the achievement of an agreed-upon result. Can be very beneficial for both parties to the agreement if done properly.
- Fixed fee plus contingency. Firm and client agree on a fixed price for the matter. They also agree on what a “good” result would be. If the outcome is less desirable than that result, the firm receives less than 100% of the agreed-upon fee. If the result is better, the firm gets a specified bonus.
- Defense contingency. Firm and client agree on the difference between a good and bad result in the matter. If the case ends with a better result than the “good” result agreed upon, the firm gets a percentage (or multiple) of the difference between that result and the “bad” result. In other words, the fee is dependent on how much the attorney “saves” the client from paying.
- “Unit or “task-based” billing. The lawyer and client agree to unit costs for the component parts of the representation, e.g., the discovery phase of a litigation, or the pursuit of a potentially dispositive motion. With this arrangement, the client knows what each portion of the representation costs if the matter is terminated earlier than expected.
Poorly thought-out legal fee agreements can be an obstacle to a productive and mutually satisfactory attorney-client relationship. Well-conceived arrangements, clearly understood by all parties at the outset of the matter, however, can create the climate of mutual confidence and incentive between lawyer and client that makes for a successful relationship. Such arrangements can also reduce client uncertainty over the cost of legal representation.
For more information about alternative fee arrangements in litigation matters, contact Robert F. Parker in our Merrillville office.