Under a pure contingency arrangement – most easily envisioned and applied when
recoveries are sought – the law firm would be compensated via a portion of the
amounts recovered, and would receive no compensation if no amounts are recovered.
The terms can be adjusted and tempered to better manage the down-side risk, and the
model can also apply to the defense contexts (earn X if you win, earn zero if you lose)
– but that is harder to do.
>>Advantages: The interests of client and law firm are closely aligned under
this structure. The more the client succeeds, the more the law firm gets paid –
>>Drawbacks: Under a contingency approach, a law firm could earn much more
than it might under a conventional hourly rate approach. Some clients are not
comfortable with this.
The following diagrams are intended to help facilitate the analytical process of sorting through
the various options.