The challenge in any trial is to find a way to seek justice without breaking the bank. Litigation quickly becomes unnecessary when the fees and expenses incurred by a client are greater than any benefit that can be obtained. For this reason, we have concluded different types of fee contracts with our clients depending on the circumstances of the individual case. We would be open to discussing each of these different options with you in order to structure an agreement that works for you or your business as well as for our business. Another way to reduce risk is to enter into hybrid fee agreements – agreements that combine hourly rate, minimum fee and contingency fee features. Is it allowed? Do hybrid fee agreements comply with the Professional Liability Code? Three years ago, the State Bar Association for Professional Ethics addressed part of this issue in Op. cit. of the State of New York. 697 (1997). More recently, Nassau Country Bar Op.
99-4 (1999) dealt with the same theme. This article summarizes both opinions and provides some general observations and advice on hybrid fees. A contingency fee agreement is a contract between the client and the firm in which the client`s obligation to pay attorneys` fees to the firm depends on the client`s claim for a settlement or judgment. The client is not obliged to pay for the law firm`s legal services unless the law firm manages to recover money for the client. The law firm`s fees usually represent a percentage of recovery. If we lose the case, the client does not pay us any fees and is usually only responsible for legal fees. As mentioned earlier, the hybrid agreements that companies negotiate with clients are based on the unique situation of each client and each case and are limited only by the imagination of the lawyer and the client. However, the few cores mentioned here are a good and useful start to creating a marketing copy for the company`s website and other guarantees to talk to customers who are looking for flexibility in their billing agreements. Finally, the Committee reminded lawyers that any combination of hourly and contingency fees must comply with the fee limits set out in court regulations. “A fee in a personal injury case that goes beyond the Appeal Division`s fee schedule for certain contingency fees would not be appropriate,” the committee said.
In addition, paragraph DR 2-106(A) provides that a lawyer cannot charge “illegal” fees. Some of Ogborn Mihm`s business clients also like contingency fee agreements because they allow the client to better manage budgets and risks. Contingency fee agreements provide access to the courts for individuals and businesses that would not otherwise be able to afford to sue. Depending on the nature of the case, in some circumstances, even financially very successful individuals or businesses could not afford to sue without a contingency fee agreement or other alternative fee agreement. Hybrid fee clients also lose the advantage of having lawyers with the effective mindset characteristic of a contingency fee agreement. One of the most important advantages of a success fee structure is that the client and lawyer are motivated to get the maximum value from a case as quickly as possible. This is in stark contrast to hourly agreements, where lawyers actually make more money the longer it takes to find a solution. Because lawyers who negotiate a case with hybrid fees don`t have to earn to get paid, they tend to focus more on billing hours than on resolving the case. When lawyers work at a reduced hourly rate, concerns about the efficiency of billing tend to be less important. As a result, lawyers working on a hybrid fee structure tend to charge more hours for a case than if they were working on a direct hourly agreement, which translates into small cost savings for the client.
In a standard contingency fee agreement, the plaintiff is only responsible for paying their lawyer if they win the case. In these cases, payments are percentages of profits. There are different types of hybrid fee agreements. A simple version is a mixed hourly rate agreement where all lawyers and paralegals charge their time at the same hourly rate. A fee agreement is an agreement in which lawyers and paralegals charge their normal hourly rates, but the client and law firm agree on minimum and maximum fees for the case. A fixed fee plus hourly contract is a contract in which the law firm charges a fixed fee for certain tasks or projects as part of work and charges for other tasks by the hour. Hybrid royalty agreements are discussed in Section 697 (1999) of the New York State Bar. The question is simple: “Can a lawyer charge both an hourly fee, regardless of the outcome, and, in the case of recovery by regulation or judgment, a percentage of the net recovery?” Start by asking mentors and colleagues. Yes, the questions “What`s your hourly rate?” and “What are your percentages of pass fees?” are just as cheesy as asking about someone their age or if they`re pregnant. But lawyers need to be comfortable making uncomfortable requests, and if that person is really your mentor or trusted colleague, it almost certainly won`t bother them. Most states and the ABA Model Rules prohibit the use of contingency fees in all criminal cases, most family law cases, and some immigration and contract law cases.
If you practice in these areas, it may be best to check if they can be used, or skip this article (and read this handy article on fixed fees instead), but in all other areas of law, it can be helpful to understand the basis of success fees and how they work. .