The Contingency Fee Agreement Is The Best Deal For Clients
Most, but not all, of my prospective clients are familiar with how the fee structure in a personal injury case works. With big Philadelphia law firms charging $1,200 per hour, as reported in the Wall Street Journal last week the contingency fee is proven once again as the best deal going for consumers. Under the contingency fee, the client pays nothing until the very end of the case. That’s right, no up front fees or costs. The entire financial risk of the case including the expenses of prosecuting the case are borne entirely by the lawyer. So, while the insurance companies can afford to pay fees at the going rate of $1,200 for partners and $700 for associates, by and large my clients can’t afford those rates.
Here's a quote from the Texas Supreme Court in a 2006 opinion on the value of the contingent fee agreement.
Although contingent fee contracts are increasingly used by businesses and other sophisticated parties, their primary purpose is to allow plaintiffs who cannot afford an attorney to obtain legal services by compensating the attorney from the proceeds of any recovery. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). The contingent fee offers “the potential of a greater fee than might be earned under an hourly billing method” in order to compensate the attorney for the risk that he or she will receive “no fee whatsoever if the case is lost.” Id. In exchange, the client is largely protected from incurring a net financial loss in connection with the representation. This risk-sharing feature creates an incentive for lawyers to work diligently and obtain the best results possible. A closely related benefit is the contingent fee’s tendency to reduce frivolous litigation by discouraging attorneys from presenting claims that have negative value or otherwise lack merit.
That’s not to say that in a fee petition matter, for instance in a civil rights case, or in a PIP suit against an insurance company for non payment of medical bills, or in an insurance bad faith case, I would not petition the court for fees at the rate that Morgan, Lewis and Bockius is charging, that is, $1,200 per hour. (These fees would be paid by the defendant, not by my client). I would charge $1,200 per hour. I know my work is worth that much.
