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Simple English definitions for legal terms
negative contingent fee
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A quick definition of negative contingent fee:
A negative contingent fee is a type of fee that a defense lawyer charges based on how much money they save their client. The lower the settlement or judgment, the higher the lawyer's fee. For example, 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).
A more thorough explanation:
A negative contingent fee is a type of fee arrangement between a lawyer and a client. It is also known as a reverse contingent fee. In this arrangement, the 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.
For example, 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).
This type of fee arrangement is commonly used in defense cases where the lawyer is trying to minimize the amount of damages the client has to pay. The lawyer has an incentive to negotiate a lower settlement or win a smaller judgment because it means a higher fee for them.