Lawsuits are expensive. Lawyers cost money, the court charges fees, expert witnesses are expensive, even subpoenaing bank or medical records can cost a small fortune. There are times when someone’s rights may not be protected because there simply is not enough at issue to justify the cost of litigation. It can be a shame.
But when you have enough at issue to justify the expense, then litigation may be financially viable. Of course, no one wants a lawsuit, but the court system is the only way to force a resolution when the opposing party refuses to “do the right thing.”
So how do you pay for all of this? It can be a challenge. Traditionally, most lawyers work on a billable hour basis—meaning they charge you for their services by the hour and you pay the lawyer’s invoice monthly. In most cases, the lawyer will ask for an up-front retainer to bill against so the money is in hand at the end of the month when the invoices are generated. This system works fine for people who have the funds to pay the lawyer currently. But when cash is in short supply, this system may not work for the client.
Contingency is another common arrangement, where you pay the lawyer a percentage of the assets recovered in your lawsuit. The typical contingency percentage is forty percent of the total amount recovered in your lawsuit, but that is subject to negotiation. Contingency fees usually cost more than the hourly fee arrangement, but they come with the added benefit of not having to pay out of your own pocket during the life of the lawsuit. And most contingency arrangements prevent you from having to pay the lawyer if nothing is recovered. In that sense, contingency is a shared-risk scenario that aligns your interests nicely with the lawyer.
And then there is everything else. Some firms offer hybrid contingencies where you pay either an up-front fee or a reduced hourly rate and then have a reduced contingency fee percentage. Some lawyers who engage in transactional work, will offer flat-fee arrangements. Litigation work is not typically done on a flat fee basis, but who knows, maybe someone has figured that out too.
For a while, we entertained the idea of using a monthly “subscription” fee for clients, where we would do whatever legal work was required for a set monthly fee. Surprisingly, no one took us up on the idea. Overall, a set monthly fee would make litigation costs more manageable and less surprising because there are months when a lot of work is required (meaning a big bill) and other months when less work is required. While most people liked the idea of paying less than the work billed in a given month, they did not like paying more than the work billed on a subsequent month—so the idea never took off.
The point here is that you can get creative to find mutually beneficial solutions to pay for your legal services. So if you do not have enough cash to pay for a lawyer, get creative!