What’s a commercial or business contingency fee? This is the kind of payment agreement typically settled between a client and a law firm. In this arrangement, the firm would be paid a portion of the amount recovered rather than an hourly rate. This portion of the funds recovered would be paid out to the attorney whether the agreement is reached in the form of a negotiation from settlement or at trial.

How are Contingency Arrangements Crafted?

Typical contingency fee agreements in Arizona can range based on the attorney’s experience and opinion about the case. The advantage of an agreement like this in a commercial case is that without a successful outcome, the client does not pay for the attorney’s fees. Instead, the client would pay only the firm’s expenses in terms of copying, postage and the like. There are several different kinds of fee arrangements like this in commercial cases in Arizona.

The Hybrid Contingency Fee

This situation is one in which the client agrees to pay the law firm a reduced rate, hourly as well as a reduced contingency fee. This is usually used in situations where the client doesn’t want to give up the full contingency fee.

Contingency Fee Arrangement with Client Responsible for Costs

The firm might ask that the client take financial responsibility for the preparation costs like travel, filing fees and expert witness costs. The client in this situation would not be responsible for paying the firm for the lawyer’s fees, as these would be covered by the percentage of the amount recovered in the settlement.

Contingency Fee with the Law Firm Advancing Costs

In some situations, the attorneys might advance costs on the client’s behalf. These costs would then be reimbursed to the law firm out of the settlement or the recovery. If you’re concerned about the expenses to manage a case growing quickly, you might want to ask your attorney if this is an option. If the firm is successful, you could avoid having to pay the costs for research and preparation in the interim and allow the firm to reimburse itself out of a settlement.

You should always consult with your attorney to determine whether or not he or she accepts these kinds of arrangements. Being clear about payments upfront can help to avoid problems down the line and establish clear guidelines for interacting with the attorney. You should always know how payment is expected at the beginning of a business relationship with an attorney.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Commercial or Business Contingency Fee, or any other litigation matter, please feel free to contact us at 480.461.5300,  log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.