A negative contingent fee is a fee charged by a defence lawyer based on the amount of money they save their client. The fee increases as the settlement or judgement decreases, with the lawyer receiving a higher fee for a lower settlement. For example, if a client is potentially liable for $2 million and agrees to pay the lawyer 40% of the difference between $1 million and the settlement amount, a settlement of $800,000 would result in a fee of $80,000 (40% of the $200,000 under the $1 million threshold).
A negative contingent fee, also known as a reverse contingent fee, is a fee arrangement between a lawyer and a client. Under this arrangement, the lawyer’s compensation is determined by the amount of money they save the client in relation to their potential liability. The lawyer’s fee increases as the settlement or judgement decreases. For instance, if a client could be held liable for up to $2 million and agrees to pay the lawyer 40% of the difference between $1 million and the settlement or judgement amount, a settlement of $800,000 would result in a fee of $80,000 (40% of the $200,000 below the $1 million threshold). This fee arrangement is commonly utilised in defence cases where the lawyer aims to minimize the client’s damages. The lawyer is motivated to negotiate a lower settlement or secure a smaller judgement as it leads to a higher fee for them.
A negative contingent fee is a fee arrangement where the attorney agrees to waive their fee if they are unable to win the case or obtain a favorable outcome for the client.
Under a negative contingent fee agreement, the attorney takes on the risk of not receiving any payment if they are unsuccessful in the case. If they are successful, they will receive a percentage of the client’s recovery as their fee.
Yes, negative contingent fees are legal in many jurisdictions. However, the specific rules and regulations governing such fee arrangements may vary, so it is important to consult with a local attorney to ensure compliance.
A negative contingent fee allows clients to pursue legal action without the financial burden of paying attorney fees upfront. It also incentivizes attorneys to work diligently on the case, as their payment is contingent on a successful outcome.
One potential risk is that if the attorney is unsuccessful in the case, the client may still be responsible for other costs, such as court fees or expert witness fees. It is important to discuss these potential costs with the attorney before entering into a negative contingent fee agreement.
While many personal injury cases are commonly handled on a negative contingent fee basis, other types of cases, such as contract disputes or family law matters, may not be suitable for this fee arrangement. It ultimately depends on the attorney’s discretion and the specific circumstances of the case.
The percentage for a negative contingent fee is typically negotiated between the attorney and the client. Factors such as the complexity of the case, the potential recovery amount, and the attorney’s experience may influence the agreed-upon percentage.
In some cases, attorneys may offer a hybrid fee arrangement that combines a negative contingent fee with other fee structures, such as an hourly rate or a flat fee. This allows for more flexibility and can be tailored to the specific needs of the client and the case.
The terms of a negative contingent fee agreement can be subject to negotiation and modification, but any changes should be agreed upon by both the attorney and the client in writing. It is important to discuss any concerns or potential modifications with the attorney as early as possible.
To find an attorney who offers negative contingent fee arrangements, you can start by researching local law firms or contacting your local bar association for referrals. It is important to schedule consultations with potential attorneys to discuss your case and fee arrangements before making a decision.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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