Legal Definitions - success billing

Success billing is a legal fee arrangement where a lawyer's compensation is primarily or entirely dependent on achieving a specific, favorable outcome for their client. Instead of billing for the total hours spent working on a case or matter, this method ties the payment directly to the successful resolution or achievement of the client's objective. It serves as an alternative to traditional hourly billing, incentivizing the lawyer to achieve the best possible result, as their compensation is directly linked to that success.

• Example 1: Patent Grant

  A small inventor hires an attorney to help them secure a patent for their innovative new device. They agree that the attorney will receive a predetermined fee only if the U.S. Patent and Trademark Office successfully grants the patent. If the patent application is ultimately denied, the inventor owes the attorney nothing for their work on the application.

  This illustrates success billing because the attorney's payment is entirely contingent upon the favorable outcome of the patent being granted, directly aligning their financial interest with the client's goal of protecting their invention.

• Example 2: Regulatory Approval for a New Product

  A pharmaceutical company develops a new drug and engages a specialized legal firm to navigate the complex regulatory approval process with the Food and Drug Administration (FDA). The agreement stipulates that a substantial portion of the legal fees will only be paid if the FDA grants final approval for the drug to be marketed and sold to the public.

  In this scenario, the legal firm's compensation is directly tied to the successful achievement of a critical regulatory milestone – FDA approval. If the approval is not secured, that portion of the fee is not earned, demonstrating the core principle of success billing.

• Example 3: Commercial Lease Negotiation

  A startup business needs to secure a prime retail location and hires a real estate attorney to negotiate a favorable long-term lease agreement. They agree that the attorney will receive a bonus payment equivalent to a percentage of the annual rent savings achieved below a certain threshold, but only if the lease is successfully executed with those savings.

  This is an example of success billing because the attorney's additional compensation is contingent on achieving a specific, measurable favorable outcome for the client – securing a lease with significant cost savings. If the savings are not met or the lease isn't finalized, the bonus is not paid.