Oftentimes, I am asked why one attorney will accept a case while another lawyer has declined to do so. Simply stated, lawyers are like snowflakes, no two are identical. However, some general rules apply.

As a threshold issue, you need to determine whether or not your matter is susceptible to a straight fee or a contingency fee arrangement. A ‘straight fee’ means what it implies; you pay the lawyer for his time on an hourly or project basis. Here, the lawyer is most concerned about the legitimacy of the claim, and the ability of the client to pay for the legal services rendered. Under this scenario, the lawyer is not primarily concerned with the risks/rewards matrix.

By distinction, a contingent fee arrangement is premised upon the understanding that the lawyer will receive no fee for his services unless and until he recovers money for his client, either by settlement, or by a judgment obtained in court or, in the alternative, achieves the client’s objectives. Since there is no guarantee of compensation, a responsible lawyer in any contingent fee arrangement will undertake a preliminary assessment of two critical issues: (i) liability and (ii) damages.

Generally, the amount of risk that a lawyer may accept is directly proportional to the level of damages associated with the claim. When liability is high, meaning that the likelihood of proving and assigning fault upon the defendant(s) is great, the amount of recoverable damages can be low. This is true because the lawyer believes that he will have to invest little in time and effort to obtain an adequate judgment or settlement. Here, the risk of losing is low, thus, recoverable damages can be low, too. However, where liability is remote or difficult to prove, the amount of damages must be considerable to cause the lawyer to undertake the associated risks. Here, the risk of losing is high and, therefore, the recoverable damages must be high, too.

This risks/rewards analysis is applicable whether a lawyer is evaluating a personal injury claim or a claim to purchase the assets of another’s business. In the example of purchasing another’s assets, the lawyer under a contingent fee arrangement will necessarily assess the likelihood that the deal will be consummated. As a practical matter, the parties to the transaction possess as much, if not more, information than the lawyer retained; consequently, contingent fee arrangements are rarely used outside the area of personal injury actions.

In conclusion, while there is no such thing as a sure thing, like all businesspeople lawyers need to hedge their risks whenever possible.

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