Contingency Fee and Client Expectations: The Difficulty in Not Billing For Your Time, By Pamela Michelle, J.D., M.S.
The contingency fee is often a source of great freedom for lawyers and their clients. The courts have held it ethical in that it prevents an unfair barrier to the access to the legal system. Many lawyers embrace it for their practices as under favorable circumstances it often creates a ‘windfall’ in that the time expended is greatly exceeded by the recovery when compared to counting billable hours. There are many things which lead to much dissatisfaction in the lawyer-client relationship, even in cases of favorable outcomes, as well as issues that relate directly to lawyer satisfaction within the practice that I would like to discuss in this blog.
Unfortunately, there are many times the contingency fee relationship itself results in a great deal of strife and stress for lawyers and clients alike. I would like to identify at least a few of the areas of concern that a lawyer needs to be aware of so that these areas can be addressed proactively. This list is by no means exhaustive, but based on my almost twenty years of practice within the contingency fee arrangement; the challenges which come to mind immediately are as follows:
- Clients expect unlimited time on demand.
- Greater competition for fewer cases.
- It is difficult to assess when to say no.
- The volume of cases can outpace a lawyer and their staffs’ ability to keep up effectively.
- Higher value cases get pushed to the top of the work priority while lower value cases get less time.
- A lawyer may fail to account for the overhead and staff needed to fund and handle the cases.
- Many lawyers are unprepared or unable to take the cases through the litigation process despite spending much time on them trying to resolve them pre-suit.
- The end of a case is determined by a client who may have unreasonable expectations or fail to recognize the risks of not resolving the case when they can. This is further complicated by the fact that the client has no money invested in pursuing a costly and risky case.
- Case flow is often volatile and difficult to predict causing difficulties in staffing and assessing overhead costs and spend.
- Staff turnover or finding the right team greatly impacts the outcome and good feeling of the clients and the lawyers.
The truth is I could keep writing the list of challenges for quite some time. It is important to acknowledge the challenges of this practice as it is a ripe ground for client complaints/dissatisfaction, Bar grievances, malpractice, and psychological symptoms and pain. Like most things in life, a lawyer may himself forget these challenges when a few cases go well and perhaps also have inordinate stress when a few of these factors begin to create stress and overwhelm. Awareness is key and is half the battle. I would like to offer a few solutions to manage the issues effectively and to further open the conversation that is possible around these issues:
- Have monthly client contact and do not operate on the ‘squeaky wheel gets the grease’ model of client contact. In an effective client relationship, the client will regularly be told what the lawyer is doing on the clients behalf and why.
- Train the client up front as to when the communication will occur and always honor your word.
- Set the next date for communication at the end of each contact.
- Begin to set the stage for evaluation of settlement demands and offers early; by setting proper client expectations for the outcome you are less likely to foster an environment of unreasonable expectations which prevent amicable and timely resolutions.
- Make it clear to the client up front that you do not represent their principle but rather this is a costly endeavor that must be based on the probability of a particular outcome.
- Decide often and assess regularly whether you have the proper time and staff to finalize cases in a timely manner. If you cannot afford the proper support, by all means limit the number of cases that you take in.
- Always consider the cost to pursue cases to trial and consider whether it is ethical or good business practice to take a case you know you would not pursue in trial up front. At the minimum, be honest with the client that you would not litigate the case if it does not settle in pre-suit negotiations so the client can make an informed decision on whether to have you begin the case.
- If you are not going to pursue a case in litigation, let the client know as soon as possible and before valuable time is lost, witnesses and defendants relocate or become harder to find, etc.
These are only a few of the challenges and suggested solutions for a contingency fee practice. Money is not the cure all and the fact is despite a good result in a few cases, a lawyer can quickly get outrun by emotional and practical problems and challenges that are not talked about often enough in the profession. As Henry David Thoreau wrote, “Wealth is the ability to fully experience life.” There is no ability to experience life fully when you are a miserable lawyer or one facing the impact of poor decisions, indecision or inaction. Be very mindful of your duties and the challenges in the contingency fee practice.
Pamela Michelle has been a practicing lawyer for 23 years. She has her M.S. in Mental Health Counseling and is an ICF certified coach. Contact Pam@SoulofLaw.com for a consultation. You deserve an advocate for yourself while you develop your practice mindfully and successfully.