“Fees Fi Fo Fum”: Part 3 – My Contingent Fee and Me!

Welcome to Part 3 of talking about fees here on Lawyers & Liquor, where we endeavor to provide the best in profane prose about the legal profession to both the laity and those who are damn near laity, the baby lawyers and law students.  Over the past couple posts, prior to our brief break for a sojourn into the land of the furry animal people on Friday, I’ve been talking my way through lawyer fees and answering the age old questions of rapping clowns everywhere:  “How the fuck do they work?”

We started off recognizing that there’s really no system outside of the rapidly dwindling support of the government through the Legal Services Corporation for the poor and downtrodden to obtain legal representation in their civil matters.  We moved on to discuss the unmitigated evil that is the billable hour, and how it sucks both the souls of associated and the wallets of the clients they represent.  Now we’re going to move on to the third portion of our rather obvious discussion of the many different fee agreements out there, and the one that most people who call your office obviously want you to use: “We don’t pay unless you win!”  Or, as we know it professionally, the “Contingent Fee Agreement.”

And we’re gonna talk about why that still isn’t a good solution to the issue with there being massive underfunding in legal aid and isn’t really a good business model except for a few restricted areas of practice.

So, What’s a Contingent Fee?

A contingent fee is a fee that the lawyer takes from the collection at the end of the case.  For example, say you’re in a car wreck.  The lawyer, instead of demanding you sign on the line in blood when you walk into his office and start giving him checks, will agree to defer his payment for the matter until you actually get some money from the other party.  Generally, you’re going to pay a heavy percentage of the collection to the lawyer, anywhere from 25% to 40% depending on the lawyer, their experience, their knowledge, the amount of work required, and the potential size of the collection in the case.  For example, a lawyer may be willing to take 25% of $20,000,000, but may want 40% of $100,000.  Them’s the breaks, kids, especially when you’re essentially asking the lawyer to bear all the risk of the case.

Bear all the risk?

Yep.  Because the lawyer is the only one who really loses out if the case is a real pile of shit that doesn’t become obvious until halfway through discovery.

Sure, you as the client may not be getting anything out of the case, but really what are you out if the case transforms into a rancid mass of meritless claims? You’re literally in no worse of a position than you were to begin with.  You may not have the money that you’re salivating over and waking up at night thinking about as you reach for the bottle of baby lotion you keep in your special “litigation drawer,” but there’s no real monetary value in “disappointment at the fact my meth habit contributed to that 20 car pile-up.”  The lawyer, on the other hand, has now spent a good chunk of time on your case only to find out that it sits on a throne of goddamn lies, wrapped in gold foil, and instead of chocolate under the foil it’s pure shit.

But they’re only out their time!

Hey, fuck-o, you understand that lawsuits cost money, right?  Who the fuck do you think paid the filing fee? Or for that chiropractor? Or all the costs of the deposition where you admitted to driving under the influence of about 27 different substances and slamming on your brakes directly in front of the school bus? That’s the lawyer’s cash right there, paid directly from the reserves of cash lawyers that take cases on contingency set aside and affectionately call the “war chest.”  That’s money that ain’t coming back just because it turned out your case is a real turd-on-ice, wither.

The end result of this is attorneys heavily fucking vet cases they take on contingency to determine if they’re really worth the risk of losing your shirt.

And yeah, a lot of contingent fee agreements have a clause that make the client responsible for the costs of the action, but that’s really there so that the lawyer can recoup the costs in addition to their fees so the war chest can be replenished and added to over time for the next dipshit with a broken arm who fell down the icy backsteps of a whorehouse. Rarely will a plaintiff’s lawyer go out and try to actually collect on those costs if they lose the case.  They just eat the shit sandwich your less-than-complete-candor ass served them and move on to the next case.  I mean, if they’re still in business afterwards.  Because sometimes, losing a case with a lot of costs wrapped up in it means you gotta close your office and become the legal equivalent of a sex worker, selling your ass to document review companies and per diem appearance firms to make ends meet.

You said “Plaintiff’s Attorneys.”

sure fucking did, Carole Client!

What does that mean?

That means the lawyers who bring lawsuits against other people.  That’s one of the big reasons going Oprah and screaming “Contingent fees for everyone!” won’t do a goddamn thing to alleviate the inability of the indigent to find reasonable representation.  Contingent fees only work when there’s something to collect at the end of the case.  That means if you’re the party suing someone, then you may find a lawyer willing to take the case on a contingent arrangement.  But, if like the majority of the poor folk out there, you’re on the shit end of the litigation stick, you’re fucked.  Ain’t nobody going to take a case with no payoff at the end on a contingent fee arrangement unless there’s a really fucking good counterclaim or some area of law that allows them to collect their attorney’s fees when they win.

And, as we talked about way back at the beginning of this whole mess, that whole “loser pays the winners attorney fee” is severely fucking limited in the United States, ain’t it? So fuck you, Harry Homeless, there’s no chance in hell someone is agreeing to take your case on a contingent basis when you get sued.

Not to mention that there are a lot of case types where we ethically cannot take a contingent fee.

What do you mean you can’t do it? It’s your business!

Yeah, see, we’re bound by these things called “ethics,” and while a lot of people don’t put the word “ethical” and “attorney” beside each other in a sentence without the preface of “un-,” most lawyers take that shit really seriously.  Because if we don’t, it’s our fucking license (and if you’re a baby lawyer, your fucking license).  Now, each state sets its own ethical standards for attorneys that govern what we can and cannot do as members of that jurisdiction’s Guild of Fools, but generally they’ll track the American Bar Association’s Model Rules of Professional Conduct.

[WARNING:  Check your local fucking standards.  If I have to warn you about this, though, you probably shouldn’t be practicing law in the first place.  Is McDonald’s hiring? Go check.]

One of our ethical standards that’s generally applicable can be found in Model Rule 1.5, which at Rule 1.5(d) states:

(d) A lawyer shall not enter into an arrangement for, charge, or collect:

(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or

(2) a contingent fee for representing a defendant in a criminal case.

So what does that mean? It means that in two huge areas of law that underserved portions of the populace need, we can’t take a payment that is contingent on the outcome.  These two areas are: family law and criminal law.

The idea is that these are two areas which are so important that making our fee contingent on a specific outcome, i.e. getting child support in x amount or securing a not guilty verdict,   would likely cloud our judgment.  For example, if I only get paid if I get you off the hook for a crime, fuck it, we’re going to trial even if it isn’t in your best interest because I want my fucking money.  Likewise, if the only way I get paid is if you get alimony, so goes the logic, then the Bar assumes that I’m too likely to let that factor heavily into my representation and counsel you to refuse good positions and agreements in order to make my payday.

See the logic here?  And it’s a valid worry, because every lawyer out there who has done anything on contingency has at some point wanted to convince a client to settle not because it was the best deal possible by because it meant they got fucking paid.  Now, the majority of us won’t do that, because we recognize we have ethical duties that transcend our desire to eat something other than Ramen, but some do and therefore our rules of ethics try to remove the specter of a tainted suggestion by barring us from taking these fees to begin with.

So…There are problems with the contingent fee solution?

Yeah, there are.  A contingent fee agreement doesn’t guarantee representation, and doesn’t guarantee a diligent attorney for the poor and downtrodden.  Likewise, it is barred from areas where people with the least amount of money often need the most amount of representation.

But if you have a good personal injury or contract claim against another party it can be a viable way to get the whole thing in front of the court with an attorney bearing the risk.  Just be aware, we know the risk and will try to limit a contingent fee to only the cases that give us the least amount of exposure.

Are there other options?

Yep.  And we’ll talk about another one on Wednesday when I start telling you guys about the unicorn of legal practice, the flat fee litigation!

Till then,