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Hi, this is Stewart Albertson with Albertson & Davidson. I want to talk to you about the upside and the downside of contingency fee agreements. We’ve got several videos that we put out on contingency fee agreements because we want people to better understand how they can use them in a trust or will contest case in California.
The biggest upside to a contingency fee agreement is you don’t have to pay any cash to a lawyer to take your case – as long as that lawyer will take it on a contingency fee basis.
The downside is that you have to pay a high percentage, generally 40% in the state of California, to that attorney to take the case on. That’s a negotiable – the contingency fees are negotiable in California and so you can ask your lawyer if they would take less than that, if they would maybe do a stair-step agreement on a contingency fee agreement. There’s all kinds of hybrids out there. But, generally speaking, you’re going to pay more on a contingency fee agreement, and that is a bit of a downside.
On the other hand, if nobody would take your case, because you don’t have money to pay them for an hourly fee, then the contingency fee is probably worth it at the end of the day, because there is a recovery and there is money that comes back to you.
Another upside of the contingency fee agreement is a trust contest with difficult facts, facts that may not win the case. In that case, if an attorney’s willing to take on that risk, that it’s not the best case in the world. Let’s say the attorney works that case for two years and loses that case at the time of trial. This is where the biggest upside to the contingency fee agreement comes in – and that is, you owe that lawyer zero dollars for that lawyer’s two years of work in the case. You probably also owe that lawyer zero for the costs of the case. That’s the point of taking a contingency fee agreement. The lawyer takes on the costs and if they’re not successfully will have to eat those costs and you owe the lawyer nothing if the case loses.
Of course, if the case wins, then you would owe the percentage that you agreed to pay the lawyer on any recovery to you.
The other issue that I personally like in a contingency fee agreement is that I get to run the case the way that I like to run the case. That is, if I need to do subpoenas to ten different banking institutions, financial institutions. If I need to get four or five medical providers, get subpoenas out to four or five medical providers. If I need to get subpoenas out to several drafting attorneys, I don’t have to worry about the cost so much as I would on an hourly case. In an hourly fee arrangement, I would be calling the client and the client would have to consider if the costs were worth it in pursuing the ends of what we’re trying to do in getting documents, for example.
I like contingency fee agreements because it allows me, the lawyer, to spend the money how I see fit, how I think will improve the case, and not have to worry that the client’s going to become shy about how much we’re spending in costs on the case as we move the case forward.
Overall, contingency fee agreements have their place. They’re not right for everybody. Sometimes, if you have money to pay on an hourly basis, you’re going to be better off doing that. But, for those individuals who don’t have the ability to pay hourly, contingency fee agreements are a nice tool available for you to enter into an agreement with a lawyer so that lawyer can fully and effectively represent you in an trust or will contest.