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Billy Cunningham
Billy Cunningham
Attorney • (800) 574-4332

Contingency Fees in Business Litigation

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Last week I wrote a blog on labor and materialmen liens and suggesting to contractors and suppliers that they protect themselves before getting into construction project. What happens in other business matters when contracts are broken, promises are not kept, misrepresentations occur, business or intellectual secrets are stolen, or two business entities just disagree about a matter? During most of my 35 years of practice I have watched those business entities hire their corporate lawyers who charge on an hourly basis to represent them. More recently, I have noticed that businesses are looking to contingency fee lawyers like those of us who have handled personal injury claims this way for years. There are several good reasons this is occurring.

Perhaps the most obvious is the costs . Instead of having to pay a lawyer to work on the case with hopes of a successful ending, businesses can hire a lawyer on a contingency basis and if there is no recovery there Is no fee. If you are the client, there is no concern that if I call or meet with my lawyer, I will have more fees to pay. On the lawyer’s side , there is an interest to get to the core- ‘let’s see what we have and get this resolved.’ If the case is not won, the lawyer does not get paid. Often the only cost if the case is not successful will be the court fees, court reporter fees, copying etc.

It also allows a business to pursue a case they may not otherwise pursue because they do not have to worry about up front attorney’s fees. They can hire a firm who works on contingency basis to look at the case basically cost free before the other side is contacted or suit is filed.

Cases have to be put through a grueling due diligence review by firms working on a contingency basis before filing. We do not want to file suits that are not going to be rewarding to both the client and the law firm. Experts are hired to review the case to ensure that the best possible outcome will be known before money, time and effort are expended. The law firms needs to have a comfort level that after months or years of litigation there will be sufficient recovery so that the client is compensated for the wrong and the law firm gets paid for its effort. .

I also believe that lawyers working on a contingency basis often have a closer lawyer-client relationship because both parties are taking a risk- in effect forming a joint venture for the purpose of recovering money.