Simple English definitions for legal terms
Read a random definition: jus edicendi
A defense contingent fee is a type of fee that a lawyer charges only if they win the case or settle it in favor of their client. The fee is usually a percentage of the amount the client receives as compensation. A reverse contingent fee is a fee in which a defense lawyer's compensation depends on how much money they save the client, given the client's potential liability. The lower the settlement or judgment, the higher the lawyer's fee.
A defense contingent fee is a type of fee charged by a lawyer for their services only if the lawsuit is successful or is favorably settled out of court. This fee is calculated as a percentage of the client's net recovery, such as 25% of the recovery if the case is settled, and 33% if the case is won at trial.
For example, if a client hires a lawyer for a personal injury case and the lawyer charges a 30% contingency fee, and the case is settled for $100,000, the lawyer would receive $30,000 as their fee.
Reverse contingent fee is a type of fee in which a defense lawyer's compensation depends on how much money the lawyer saves the client, given the client's potential liability. The lower the settlement or judgment, the higher the lawyer's fee. For instance, if a client might be liable for up to $2 million, and agrees to pay the lawyer 40% of the difference between $1 million and the amount of the settlement or judgment, then a settlement of $800,000 would result in a fee of $80,000 (40% of the $200,000 under the threshold amount of $1 million).
These examples illustrate how a defense contingent fee and reverse contingent fee work in practice. They show how lawyers can be incentivized to work harder to win a case or negotiate a better settlement for their clients, as their fees depend on the outcome of the case.