What is a business or commercial contingency fee arrangement?
A business or commercial contingency fee agreement is a type of fee agreement between a law firm and a client in which the law firm is paid a percentage of the recovery, whether it is a settlement or a recovery at trial.
The standard contingency fee agreement in Florida is 40% of the gross recovery, excluding costs. Sometimes the percentage will vary depending on the amount in controversy, the strength of the case, and who is paying costs.
The benefit of a contingency fee for the client is that if there is no recovery or settlement, the client is not responsible for any attorney’s fees.
Several types of contingency fee agreements exist in business cases. They are as follows:
- Contingency fee with law firm advancing costs
In some cases, the law firm may advance costs on behalf of the client. The costs are then reimbursed to the law firm out of the recovery or settlement.
- Contingency fee with the client paying costs
In some cases, the law firm may have the client pay the ongoing costs, e.g., filing fees, travel costs, expert witness fees, etc., in the case. The client, however, is not responsible to pay the law firm for attorney’s fees as those are the subject of the contingency fee.
- Hybrid contingency fee
A hybrid contingency fee is where the client agrees to pay the law firm a reduced hourly rate (compared with the attorney’s standard rates) and a reduced contingency fee. This type of arrangement usually is used when the client does not want to give up a full contingency fee based upon the client’s confidence in the case and the amount in controversy.
Please Note: McCabe Rabin, P.A. provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, please contact one of our attorneys.