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Pros and Cons of Contingency Fee Arrangements

Pros and Cons of Contingency Fee Arrangements

In a contingency fee arrangement a law firm agrees to represent a client with the understanding that the firm will be compensated for its work, in whole or in part, out of the client’s award at the end of the case. The details of contingency fees vary depending on the nature of the case, the client’s preferences, and applicable rules. Whether a contingency fee arrangement is the right choice for the client depends on the client’s needs and goals.

Why would attorneys work on a contingency basis?

Clients can sometimes wonder why a law firm would agree to work on a case “for free” with payment dependent on a successful outcome. Firms need to pay their employees and office expenses. In many cases they also hire consultants and expert witnesses to build a strong case. As a consequence, a firm bears the risk that the final compensation in the case won’t cover its expenses.

Despite these risks, law firms work on contingency because it is still a good business arrangement and, more importantly, it allows attorneys to fulfill their role as public servants. Many potential clients lack the resources to pay fees in a conventional arrangement. By working on contingency a firm can serve a much wider population than would otherwise be possible. A firm that works on contingency isn’t concerned about the client’s ability to pay. Instead, it can focus on the merits of the case and work diligently to help the client recover compensation.

Are there downsides for clients in contingency fee arrangements?

A contingency fee agreement offers clients a range of benefits. These include:

  • Access to an attorney for clients who lack financial resources to pay fees out of pocket.
  • A clear understanding of how an attorney’s fees will be paid and what costs the client may need to bear as the case proceeds.
  • Unmistakable alignment of interests between the client and attorney, both of whom want to maximize financial recovery.

A firm that works on contingency sometimes needs to protect itself from losses when a case appears to be unwinnable. One downside a client may find in contingency arrangements is that firms are unwilling or unable to meet the client’s demands that the client would otherwise pay for. Such circumstances are relatively rare and hopefully are clear from the beginning of the relationship so the client and firm can determine early on whether they are a good fit.

Call us to learn more about how contingency fees work

For over 45 years the law firm of Greenman Goldberg Raby Martinez has represented clients in the Las Vegas area. We often work on a contingency basis to help clients recover compensation in cases involving personal injury, workers’ compensation disputes, and other matters. Call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.