contingency fee

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contingency fee

a fee for legal services that depends upon success and is related to that success. Such charging schemes are permitted in (among other places) the USA, Canada, Spain and Germany. A contingency fee proper is a fixed fee that is paid only on success. A fee that is a share of the litigation in the event of success might be treated differently.

In England, a conditional fee agreement has been permitted in English law since 1990, providing the case does not relate to criminal, family or children cases. Such an agreement allows that fees are payable only if the action is won.

No win, no fee’ is a marketing slogan that can be used by lawyers. It can equally be used by unqualified claims handlers who may or may not refer the cases to solicitors. What the phrase conceals is that the claimant may face the costs of his opponent if the claimant is unsuccessful - indeed, normally the claimant may have to pay disbursements or outlays such as for medical reports. Recently, the more generous ‘no win, no cost’ has been seen, which means that the claims handler or lawyer will cover disbursements and cover the costs of the opponent, albeit perhaps by funding an insurance premium. Both of these, however, do not mention the consequences of winning. A claims handler may take a percentage of the damages regardless of the fact that very little work has been done. The uplift (or increased fee) when a case is won on a ‘no win, no fee’ basis is called a success fee, and it is a fee because it is related to the work done, albeit uplifted. Some solicitors may take a substantially uplifted success fee or take a contracted work rate. In both cases the claimant has to pay money for the claims service from his damages. Where a lawyer charges a normal fee, both in England and Wales and in Scotland, it is not uncommon for the claimant to recover all or most of his legal costs and be able to keep his damages. In Scotland, a pactum de quota litis (‘a promise of a share of the action’) is ex facie illegal and unenforceable so far as lawyers are concerned. Curiously, it has been held in Scotland that unqualified unregistered claims handlers are free to take a share of the action. However, since statutory reform in 1990, the charging of an increased fee of up to 100 per cent if the action is successful is permitted to lawyers. These fees are known as speculative fees.

In the USA it is possible for any share of the proceeds of the litigation to be the subject of agreement on condition that no charge is made if the action is not successful. Note, however, that in the USA, as opposed to the UK, there is no basic rule that the loser pays the winner's costs.

References in periodicals archive ?
They do not analyze the effect of contingency fees on settlement.
At the center of his case is the fact that contingency fees are generally uniform, with rare deviations from the standard in any particular jurisdiction.
The Eleventh Circuit Court of Appeals reaffirmed and clarified its position that, in states such as Alabama, taxpayers who give their attorneys special liens under contingency fee agreements do not have to report those amounts as income.
All of this is offered to justify the need for a change in contingency fees.
Contingency fees ensure that injured people, no matter what their economic situation, can get access to justice by retaining an experienced, competent attorney.
The board had earlier proposed an amendment allowing the hiring of attorneys to handle medical and other liens under a reverse contingency fee with the consent of the client.
The new section banned the use of contingency fees in connection with the election, assignment or claim for the refund.
Contingency fees are one means of compensating third-party consultants for SR&ED consulting and compliance arrangements.
His decision to take millions from a client trust fund account to shore up personal cash-flow problems put at risk millions of dollars in contingency fees and his law license.
The agency had contracts in place that included contingency fees.
He also wrote that while the petition asked for a change in the fee schedule, it did not cite any evidence of more abuse of contingency fees than there was in 1986, when the court last addressed the fee schedule.
It's too soon for the Florida Supreme Court to consider a proposed new Bar rule based on a constitutional amendment approved by voters last fall to limit attorney contingency fees in medical malpractice cases.

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