(Hons), BVC, LL.M, P.C.H.E
CLIENTS are not always in the position to pay their legal fees before their lawyer commences work on their matters. Contingency fees fill that gap, allowing those who would not ordinarily be able to afford legal fees to have access to legal services with this structured and mutually agreeable payment plan – almost immediately. Let us consider whether or not contingency fees are a good idea- for the client and the lawyer.
What are contingency fees?
Contingency fees are dependent on the outcome of a case. A lawyer will typically agree to such an arrangement if he or she believes that his or her client has a strong case and is very likely to succeed in his or her matter. At the end of the case, once the client has in fact been successful, the lawyer would be entitled to compensation at the agreed percentage of the settlement. If the client is unsuccessful, the lawyer does not get his or her legal fees, however, the client may be required to pay costs as ordered by the court for the other side. In other words, the loser pays the winner’s costs.
For what type of cases do lawyers use contingency fees?
Lawyers usually agree to use this method of payment in particular cases such as personal injury, property damage, and cases involving a large settlement. On the other hand, it is not usually used in divorces, child support or spousal support matters. There are ethical considerations in domestic cases which prevent the lawyer from accepting this payment method for these types of cases.
How much is the contingency fee?
The contingency fee would varies from lawyer to lawyer and is based largely on the following:
– Legal education and training of the lawyer;
– Lawyer’s legal experience in handling similar cases;
– Lawyer’s reputation and success rate;
– Number of hours spent preparing for the case; and,
– The typical legal fees in handling a similar case.
Once all of these factors are considered, the lawyer will discuss a contingency fee usually ranging from fifteen per cent (15%) to thirty per cent (30%) of the settlement. This is an average, and it does not mean that your lawyer cannot negotiate fees that fall outside of this range.
The main advantage for the client in agreeing to a contingency fee is that the lawyer does not receive any legal fees if the case is unsuccessful. Further, it means that the lawyer has a lot of confidence in the merits of the client’s case to agree to such a payment plan. Please be advised that the client is likely to be required to pay disbursements to cover out of pocket expenses for filing a case, preparing the bundle, office service charges including telephone calls, photocopying and printing documents needed for the case, buying stamps for filing and the like. This list is by no means exhaustive.
For the lawyer, the main advantage is that the fee earned in this case can be more due to waiting period – until the case is settled rather than legal fees being satisfied up front. It is a great risk that the lawyer is taking as he or she will not be able to do this in every case. Law is ultimately a business, and there are still bills to be paid, overheads, salaries for staff and other expenses associated with operating a law office.
Contingency agreements are usually used in a small percentage of cases in Saint Lucia. This American tradition of a ‘no win, no fee’ has not gained much momentum here yet, however, as our society becomes increasingly litigious, we may see a preference for contingency agreements to cater to the needs of our litigants who cannot engage a lawyer and pay the legal fees up front.
It is fair to say that contingency agreements are not suitable in all cases. Lawyers consider the merits of the case and determine whether the time and energy dedicated to the case, especially when they can be earning for another case immediately, will be worth it in the end.
Ms. Trudy O. Glasgow is a practising attorney at the law firm Trudy O. Glasgow & Associates, a court-appointed mediator and author in Saint Lucia (and has also taught law at University level in the UK)*
This column is for general use only, for advice specifically for your case, please see your lawyer.
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Next week: Should lawyers charge a consultation fee?