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  • Jeff Vail

Contingency-Fee Business Litigation (and other Alternative Fee Agreements)

At Vail Law, one of our focuses is representing businesses with meritorious claims in litigation on a contingency-fee or hybrid-fee basis. Most people are familiar with the concept of the contingency fee from personal injury litigation, but very few firms will consider taking a business case on a contingency fee basis. We have over a decade of experience focusing on exactly that—with an excellent success record, and a demonstrated willingness to see cases through to trial or arbitration hearing. Despite the often complex and highly contentious nature of business litigation, we never take a “settlement mill” approach - we have tried over 30% of the cases we file, and we’ve prevailed at trial or in arbitration in over 90% of those cases.

What are the different types of fees? We have experience with and will offer (depending on the specifics of each case) all of the following:

Contingency Fee: A contingency fee structure means we are paid a percentage of the money you actually recover. In the vast majority of cases, this includes the client paying the “hard costs” of a case (e.g., deposition transcript costs, expert witness fees), though in some cases we will advance costs or assist with obtaining litigation financing (effectively a non-recourse loan that pays costs and is repaid only if the case is successful). Contingency fee percentages often escalate, and may start at 25% if the case settles, 33% if the case proceeds a certain point into litigation, and 40% if the case goes through trial or appeal. One of the most important features of a contingency fee structure is that it aligns the financial interest of lawyer and client – whereas a large firm billing you by the hour is financially incentivized to rack up hours and staff your case with junior lawyers, a contingency fee ensures that the financial incentives of both attorney and client are in synch. We normally only represent businesses on a contingency fee basis if they have subscribed to our monthly ‘Business Risks’ legal plan.

Hybrid Fee: A hybrid fee structure is nothing more than a combination of two or more of the types of fees listed. The most common is half the standard hourly rate and half the normal contingency fee percentage. The bottom line, however, is that we have the flexibility very few large firms can match, and we will combine contingency, hourly, flat fee, and success fees as necessary to develop a fee structure that works for everyone.

Hourly Fee: This is the modern legal standard (though historically almost all legal work was done on a flat fee). Attorneys (and normally paralegals) record their time in tenth-of-an-hour increments (though we’ve seen some firms bill in quarter hour increments), and then charge the client a fixed rate per hour devoted to the clients’ case. One of the big legal “mysteries” when hiring an attorney is knowing what a lawyer’s hourly rate is, and firms usually keep this a loosely guarded secret. We believe in transparency: our firm bills $375/hour for our lead attorney Jeff Vail ($275/hour for subscribers to our ‘Business Risks’ monthly plan – the only discount we offer). We never bill for many up-charges other firms bill, such as copying, printing, long-distance phone calls, thinking about your case while napping, and electronic legal research. It may be possible to hire a first-year associate with no experience for as little as $185 an hour at some firms (and up to $500/hour for that same first-year associate at the AM Law 100 firms we regularly defeat at trial). Partners at big firms tend to bill $350 to $1000+ an hour (the most I’ve personally seen is $2200/hour). We work to be efficient and bill conservatively, but we also put our money where our mouth is by offering alternative fee agreements. If you want to know if an attorney’s billing rate is “reasonable,” ask them to show you the written order from the last time a judge actually awarded them fees and had to rule on the “lodestar” hourly rate appropriate for their specific location and experience (if they can’t do this, you may want to question their litigation experience). In Frey v. Jackson Hole Airport, 2019-cv-00050 (D. Wyo. Mar. 24, 2020), [ECF No. 114], the United States District Court for the District of Wyoming (Judge Freudenthal) awarded fees and determined the reasonable government-awarded rate for our lead attorney Jeff Vail (universally lower than firm billing rates, and in Wyoming rates are often up to 50% lower than those in Denver) at $275/hour.

Flat Fee: A flat-fee agreement can be either a single fee (e.g., $50,000 to defend the case) or a monthly rate (e.g., $5,000 per month until conclusion of litigation). Sometimes this makes sense on its own, though often it is combined with a success fee, a partial hourly fee, or a partial contingency fee.

Success-Fee: A success-fee is essentially a fixed “bonus,” that may be the sole fee, or a component of a hybrid fee structure. For example, often in return for a reduced hourly rate, we can identify certain performance benchmarks (e.g., dismissal of the case pursuant to Rule 12, or victory at trial), that hourly fee is supplemented by a pre-agree bonus payment.

Reverse-Contingency Fee: Most clients assume that contingency fees only work for plaintiffs – not so! While our case load is more than 50% plaintiff’s cases, we have extensive defense experience. Defense representation in business litigation is traditionally only offered on an hourly basis, but in select cases we will offer reverse-contingency fee representation. In other words, we work off of the Plaintiff’s demand or a coordinated estimate of how much an effective defense could save, and then get paid a percentage of that savings based on the success of our defense.

Contact us today to discuss the specifics of your case, and what types of Alternative Fee Agreements we can offer.

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