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Simple English definitions for legal terms
reverse bonus
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A quick definition of reverse bonus:
A reverse bonus 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:
Reverse bonus is a type of fee arrangement for lawyers where their compensation depends on how much money they save their client. This is also known as a reverse contingent fee.
For example, if a client may 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 usually used by defense lawyers, where the lower the settlement or judgment, the higher the lawyer's fee.
Reverse bonus is also known as negative contingent fee or defense contingent fee.
Overall, reverse bonus is a way for lawyers to be incentivized to save their clients as much money as possible, as their compensation is directly tied to the amount saved.