When hiring an attorney for a business litigation matter, clients should realize that there are a variety of ways to approach fees. Just about every attorney will have an hourly rate and will generally be satisfied with undertaking a case for an agreement to pay that hourly rate with an originating retainer to get started. Hourly rates will vary based upon experience, specialty, location, and other factors. But there are other approaches to fees that can be explored and which may or may not be more desirable than a traditional hourly rate representation. A few of them are:
1. Contingency Fee – Under this approach, the attorney receives a percentage of the recovery obtained in the case. No recovery means no fee. On the other hand, when a recovery is obtained, the fee may be substantially higher than if the client had paid hourly. This is the attorney’s upside for taking the case on a contingency. But that upside come directly from the client’s share of the recovery.
2. Flat fee – Under this approach, the attorney receives an agreed upon fee for performing the service being rendered. The fee is not contingent upon an outcome, nor is it based upon the amount of time spent by the attorney. This approach is rarely appropriate in complex litigation matters where it may be difficult to predict the exact parameters of the case at its inception. Conversely, it works well in matters that are predictable.
3. Hybrid – A combination of any or all of the above. Get creative. After all, this is business and experienced business people can often develop an approach where the allocation of risks, rewards, costs and benefits inure to everyone’s benefit.