Why I Stopped Taking Cases on Pure Contingency
As a plaintiff’s lawyer working in employment law (or even a plaintiff’s lawyer in other areas), I found it increasingly hard to keep up with the volume of cases I had to take on in order for a pure contingency model to work. The times when revenue was lean were really tough, very stressful. I also became frustrated when some of my cases would leak into year two, year three, no end in sight and my client would just…lose interest in continuing. I found that the longer the cases when on (and the more I had to put my card down for expenses), the less responsive the clients would be, the more frustrated they’d become that things weren’t progressing quicker, and the more money they’d want out of it for their wait. So, I’d get one of two reactions: 1) the client either believed the value of their case had grown over time when, in fact, the damage calculation never changed and the expenses only went up and so they wanted more money than when we started; or 2) they’d settle for pennies on the dollar just to “be done with it.”
How on earth could I fix this problem? How could I ease my own stress of keeping all these cases afloat with little to no money coming in for months while at the same time keeping my clients engaged in the fight with me?
Well, I decided maybe the client putting money on the table could fix it, a small investment in their own case. Now, most of my clients are folks that are good, hardworking people that have been put at a disadvantage due to mistreatment they’ve faced with an employer – up and including losing their jobs and income. However, I also know that these cases aren’t really designed to make anyone “rich” anyway, even if we win. With damages caps, burden shifting, and more, the laws are seemingly designed to right a wrong and put a person back to where they were financially before it all went wrong.
I also noticed a consistent source of tension when it came “check-issuing time” in a settlement. Frequently, I’d have clients be aghast at the amount of money I’d had to spend to get us to that point. Service of process for an evasive Defendant? That adds up after multiple attempts. Multiple Defendants? Also very costly. Depositions? Those cost an arm and a leg…each! Not only that, but the “nothing out of your pocket” arrangement isn’t so appealing when I, after I recoup my expenses, receive 40% of the payout. That seemed like “too much,” all of a sudden and I’d have clients try to bargain me out of my attorneys’ fees after the fact. “Would you take 30%?”
So, I started a subscription-based hybrid model for my fees. Now, my clients are required to put down a deposit of $500, no matter the case type. Whether in state court or federal court, that barely covers the filing fee to initiate a lawsuit. Then, beginning the day after the lawsuit is initiated and my work really begins, my clients are required to pay a subscription payment each month, not to exceed $375/month. That’s my hourly rate, by the way. I don’t think I’ve ever had a case pending at the trial court level where I haven’t worked at least an hour a month on it.
The underlying fee arrangement is still mostly contingency. If we win at trial or even if we settle, I give my clients their subscription payments back, crediting them as pre-paid expenses and attorneys’ fees. So, while the underlying agreement is still 1) expenses off the top; 2) 60% to the client; 3) 40% to my firm, now the expenses could be completely paid for over the course of a two-year lawsuit and they could have prepaid some attorneys’ fees. The cut might be 70/30 or even 80/20 at the end. My client’s ultimate payout is bigger because they’ve been paying these things slowly over time. Most clients have been extremely happy with this arrangement. I don’t know if it’s because most people expect to pay something for a lawyer, or if it simply feels fairer at the end for their check to be much bigger than mine, or some other reason. However, if we lose, they forfeit those subscription fees, but paid for an experienced lawyer who fought as hard as she could for them for as long as it took at a very, very low hourly rate.
Regardless, I’ve noticed several improvements changing to this model. First, my clients stay more engaged throughout the case. There’s less phone tag and feet-dragging when it’s time to respond to discovery or sit for a deposition and more engagement, responsiveness, and drive to win the case even after they move on to another job. I also notice that my income is more consistent and I’m able to move cases more quickly. There’s no concern as to how many depositions I can do (and pay for) in a month. I also notice less frustration towards settlement time once my clients see the breakdown, that they do – in fact – get the money they invested in the case back in their settlement. No one has asked me to lower my contingency rate.
While I do get the occasional, “I can’t pay that,” that’s completely fine. There are still a number of employment lawyers out there that do this on a pure contingency basis. I just am no longer one of them. And I believe that my clients, their cases, and I are all the better for it.
Originally posted on Bridget’s LinkedIn