Hourly Lawyers Get Paid Per Diem - Contingent Lawyers Get Paid Perchance (Why You Should Always Incorporate Contingency Into Fee Arrangements In Cases Where You Are A Plaintiff)

There is an old saying amongst plaintiffs' lawyers -- "Defense lawyers get paid per diem, plaintiffs' lawyers get paid perchance."  This ditty carries with it a powerful economic truth  - hourly lawyers get paid no matter what while contingent lawyers get paid only if the case produces a positive result. 

Anyone contemplating bringing a case as a plaintiff, should pay heed to this truth - even large corporations with large potential recoveries.   I have already written on why law firms - particularly large firms - should incorporate contingency ("Contingency 101 - For Large Firms" published in ABA Section Litigation Magazine "Tips From The Trenches" Column click here - as long you are an ABA member), but it  is also in the interest of every client or general counsel who is considering bringing a lawsuit, because there is an urgency created by the economic incentive of contingency that beckons making it a part of your fee arrangements with your counsel.

Contingency is a truth serum.  A lawyer asked to handle a matter on a contingent basis automatically has his or her economic self-interest incorporated into the equation.  If a case has problems, the lawyer working on a contingent basis is going to find them and point them out to the client - if only to negotiate a larger contingent percentage. 

By definition, a lawyer working on an hourly basis, even if they have every intention of doing the client right,  has less economic incentive to point out problems to the client.  The lack of having any economic skin in the game, at a minimum, subtly colors the way most hourly lawyers will look at a case's problems.  Anyone who thinks otherwise is deluding themselves.

I am not talking about glossing over gaping problems.  No lawyer interested in keeping a client is going to do that.  But having an economic interest necessarily heightens one's senses so to speak - particularly in initial case acceptance and analysis.  It creates an incentive for greater scrutiny - early on-  of any less evident problems - problems that may cumulatively spell a weak case.

It also makes economic sense, even if you believe that your plaintiffs' case is strong and you are reluctant to share the spoils with your counsel.  If it is really that strong, then there are going to be great law firms out there who would be willing to take the case on something lower than the standard 1/3 contingency.

When the case does come to a conclusion, just live buy another maxim - "don't count other people's money."  If the result is great and your lawyers are walking away with a lot of money don't forget that this means that you too have walked away with an even greater amount.  And look at it this way, you are not paying a single cent to your lawyers, the other side is paying their entire fee.

So, if you or  your company is contemplating bringing an action as a plaintiff - from a breach of contract to IP litigation -  consider incorporating contingency into your fee arrangement with your outside counsel.  If they won't do it because of "institutional" constraints [a questionable contention since even large firms are now accepting matters on a contingent basis] then do one of the following:  (1) find a firm that will or (2) at least have your outside counsel evaluate the matter as if they were going to take it on a contingent basis and have them answer a very simple question "Would you take this matter on a 1/3 contingent basis?" 

For those of you thinking like a trial lawyer, you will immediately see that the latter is a perfect cross examination question.  If they answer no, then the next question is why in the heck you should be bringing the case - and paying them an hourly rate to boot?  If they answer yes, the next question is "Then why won't you accept a fee arrangement incorporating contingency?"

In other words, when it comes to incorporating contingency into your plaintiffs matters you shouldn't take no for an answer. If your current outside counsel is unwilling even after this series of questions, there are numerous firms out there who are willing to handle complex commercial plaintiffs matters on a contingent basis and who are capable of doing as good if not a better job than their hourly counterparts.

Remember the best complex contingent commercial contingent lawyers have made a successful practice out of going up against the best lawyers from the best firms.  For some of you this will require getting over your mistaken belief [based on emotion rather than reason] that all contingent lawyers are bottom feeders - the top ones are darn good lawyers that you would do well to hire on any matter - be it plaintiff or defense.