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Contingency Fees in Illinois Commercial Litigation Lawsuits

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A contingency fee is a fee that is contingent upon the outcome of the case. In other words, if you win, you pay a percentage to your lawyer. If you lose, you pay nothing. The lawyer’s percentage is usually agreed upon before the lawyer is hired and in most cases it is at least 1/3 of what is recovered (either in court or in a settlement).

Contingency fees are common in commercial litigation. The alternative is to pay your lawyer hourly. The fees can vary greatly depending on which method you and your lawyer choose. For example, if you think your case is worth $600k, agreeing to a contingency fee would mean you could end up paying $200k to your lawyer. If instead you agree to pay your lawyer hourly, at a rate of $250/hour, the fees could be $60k-$80k if your case goes through trial. In the hourly example, the fee is much lower, but it must be paid whether you win or lose.

A contingency-fee agreement is risk-reward for both the client and the lawyer.

For the client, a contingency fee may be the only way they can afford a lawyer, because if they lose, they do not have to pay. Another benefit to the client is that a contingency fee motivates the lawyer to work hard and win their case. The risk, however, is that if the case is won, the client could end up receiving less than they would have had they paid by the hour. An attorney that works on a contingency basis usually gets the same percentage whether it takes them two hours or two hundred hours.

Another benefit of hiring a lawyer for commercial litigation on a contingency basis is that the attorney will usually also advance all of the costs of litigation. Whether it be expert fees, paying court reporters, court filing costs, etc., these costs can quickly add up into the five figures.

For a lawyer, a contingency fee is often larger than what would be earned hourly. In other words, if an attorney takes a case knowing that he only gets paid if he makes a recovery, he will do so knowing that the eventual money he might earn would be significant. However, the risk is that if the case is lost the lawyer ends up with nothing after possibly hundreds of hours work.

Whether you and your lawyer agree to a contingency fee depends overall on your ability to pay and the value of your case. If you are the plaintiff, but suing to get another company to ship you a product that you have ordered there is no way for your lawyer to work on a contingency basis because there is nothing to collect on.

Lawyers representing defendants are almost always paid hourly, as there is really no other way to compensate them. Unlike a plaintiff, when a defendant wins a case there is almost never a monetary award.

A plaintiff’s lawyer can charge on an hourly or a contingency basis. They are less likely to work on a contingency basis if the defendant doesn’t have insurance or the funds to pay a settlement, or if the amount of the loss is not large enough to justify taking the case on a contingency basis. In other words, if you are suing a business for $10,000.00, while that is not a small sum of money, it’s not enough for a lawyer to take on a contingency basis.

It is up to you and your lawyer to weigh all these factors and determine how fees will be paid. A fee agreement should always be put in writing at the beginning of a case. This will avoid any disagreement down the road as to how fees are to be paid.

If you are owed a substantial amount of money (more than one million dollars), but can’t afford an attorney (usual fees up front for an hourly lawyer are at least $5,000 and $250 an hour) you can inquire with your attorney as to whether or not they would consider a reduced fee after a certain amount of money is recovered. This is a unique request and not all Illinois commercial litigation lawyers that work on a contingency basis would consider it, but it doesn’t hurt to ask if the lawyer will take 1/3 of the first million and 25% on anything on top of that.

Does this sound in any way confusing? It can be. If you have questions about contingency law firms in Illinois for commercial litigation cases or want an attorney referral please contact us and we will do whatever we can to point you in the right direction.