Current Economic Climate Likely to Cause Law Firms to Offer Flexible and Creative Fee Arrangements

Law firms have long offered alternatives to the traditional hourly billing framework, such as monthly retainers and flat fees, predominantly in the areas of real estate and corporate transactions. For litigators, taking certain cases on contingency, such as personal injury also is a norm. But flat fee and contingency compensation arrangements are challenging for trial attorneys because the time lawyers spent litigating a case can be unpredictable. Similarly, the size of a damages claim often is not quantifiable. This is especially true in areas such as construction defects litigation, where developing discovery and experts drive the numbers, and in class actions, where acquiring class action status is uncertain.

Despite a litigator's need to navigate these tricky judgment calls when determining whether to accept a lawsuit on a contingency, client requests for contingency arrangements in litigation likely will increase. One way that litigators can offset the risk is to build in a more sizeable reward from the opposing side by seeking a multiplier if they are the prevailing party.