Fixed Fee: A fixed fee is negotiated for each phase of the case with payments due at the beginning of each phase.
Capped Fees with Shared Savings: The firm also uses a hybrid fixed-fee arrangement based upon a fee cap with a shared-loss component. Using a negotiated hourly rate, fees are capped for the entire engagement, or the expected phases, at a certain amount by agreement at the commencement of the engagement. The client and firm then share equally the amount by which the total fees charged are less than the agreed cap.
Fee Collar: In a fee collar arrangement the client and the firm agree on the amount the firm is to be paid at the beginning of the engagement. If the actual hours based upon a negotiated hourly fee come in on target or at a specified percentage above or below, the fee becomes final. If the hours fall below the agreed percentage, the savings are shared. If the hours exceed the agreed percentage, the firm is paid only a percentage of the excess amount.
For example, a client and the firm agree the fee is $50,000 with a 20 percent up or down collar: if the firm bills from $40,000 to $60,000, the final fee will remain $50,000. If the firm works only $30,000 in billable time, the $20,000 difference is split, and the client receives a $10,000 credit, meaning the final fee is $40,000. If the firm works $70,000 in billed time, the firm is paid 50 percent of the amount over the $60,000 collar, meaning the final fee is $65,000.
Contingency Fee: In certain cases, a contingency works well to align the interests of the client and the firm. In these cases, the firm charges a contingency fee based upon a percentage of the damages award agreed to by the client and the firm at the time of engagement.
Reverse Contingency Fee: Where the potential damages are relatively clear but liability is not, using a reverse contingency fee arrangement may be the best arrangement. The firm’s fee is based upon an agreed-upon percentage of the amount saved for the defendant. The base amount from which savings are calculated must be agreed upon in advance.
Note: Nothing in this website is intended to form the basis of an attorney-client relationship. All services to be provided and the fee structure to be used will be ratified in an engagement letter prior to the commencement of representation.