Helping clients understand the contingent fee system can lead to greater trust.
Wary clients often think the contingent fee system sounds too good to be true. No fee unless we win? What’s the catch?
On the other end of the spectrum, clients who don’t understand the system may be surprised when their legal team receives a sizable share of an award. If you can help your clients comprehend how the contingent fee system works, you can increase their trust level and avoid unpleasant surprises later.
Here are some tips on how to make sense of the system and avoid misunderstandings.
Use Comparisons in Your Explanation of Contingency Fees
Comparison, contrasts, and analogies can all be useful tools to help clients understand the contingent fee system. You might start by comparing contingency fees to a commission system since many clients are familiar with the concept of working on commission. Just like a salesman, a lawyer working through the contingent fee system only earns money when they succeed at their job.
If that concept is not what you had in mind, you might suggest that legal representation in a personal injury case compares in some ways to a partnership. You work together, and if you succeed, you both share in the proceeds. If you do not succeed, you still share the same fate.
Use Contrast to Explain the Risk/Reward Concept
To help clients understand the difference between fee systems and the reason for the high percentage in contingency cases, it can be helpful to contrast contingency fees with a traditional legal fee system. You might explain that ABC divorce lawyers require clients to pay a certain amount upfront and then various fees later, depending on the actions needed in the case. You could mention that XYZ criminal lawyers charge a specified amount per hour of work performed. Remind them that clients must pay these fees regardless of what happens or even if they discontinue representation. Total up the hypothetical fees.
Then contrast those costs with the contingency fee, which will be earned only if the client’s personal injury case succeeds. Use hypothetical numbers that show the fees coming out similar or slightly lower than the traditional fee structure. Point out that clients have nothing to lose and much to gain under the contingency fee structure. Meanwhile, the attorney takes the risk of losing valuable time and resources. You might also mention that the contingent fee system provides the legal team with a great incentive to work as hard as possible to achieve an advantageous outcome.
The Bottom Line
Overall, make sure your client understands the percentage of the award you will collect so that there are no surprises at the end. Additionally, if the client will be required to pay court costs even if they don’t win, it is essential to explain that up front and stress that those expenses are entirely separate from any fees you collect. Knowing what to expect is one way to keep your clients satisfied.
