#26
Contracts & DealsHigh Risk
In a contingency fee contract, the lawyer sets an extremely low bar for 'winning'
Contingency Fee Trap
Why It's Dangerous
A contingency fee arrangement means the lawyer charges little or nothing upfront and takes a percentage after winning. But some lawyers define 'winning' so broadly — any payment from the other side counts — that even a token recovery triggers a hefty fee. You win the case but lose money.
Real Case
A client signed a contingency fee agreement to pay 30% of recovered amounts 'upon winning.' But the contract defined 'winning' as 'any favorable judgment or any payment from the opposing party.' The court ruled partially in the client's favor, the opponent paid only a fraction, but the lawyer still charged 30% based on the full judgment amount.
* This case has been anonymized. Details have been adjusted to protect privacy.
What To Do
1
Carefully review how 'winning' is defined in the contingency fee contract2
Clearly specify that the lawyer's fee is calculated on the amount actually received, not the judgment amount3
Compare whether contingency or fixed-fee billing is more cost-effective for your case4
Be wary of contingency contracts with excessively high percentage fees