We can attempt collection on a contingent fee. If there is no recovery of money, property, or benefit, we receive no fee. The advantages are that you need not put any new money in for legal fees to chase money you have already lost. Even if the legal efforts exceed our percentage or no recovery is made, you are not responsible for any additional fees, and you are not burdened by continuing expenses on a bad situation from the past. The only disadvantage of a contingent fee is if the debtor pays quickly or recovery is obtained with little legal effort, our percentage may be higher than you would have paid hourly. It is rare that there is an extreme difference and most clients are satisfied with contingent fees.
We are frequently asked which is best, contingent or hourly fees. There is no constant answer. Each has advantages and disadvantages. There can be no advance certainty of how much legal work is necessary, how long the process will take, or whether it is economically justifiable to incur legal fees. Some debtors file bankruptcy, become insolvent, die, disappear or conceal assets. Others settle quickly. Winning cases is generally far easier than collecting the money.
We recommend hourly fees on good secured claims (such as Mechanic’s Liens, Payment Bonds or Trust Deeds & UCC-type cases), on larger cases (over $75,000), fresh cases, and for creditors with over 10 to 15 cases per year who can balance the risk of loss of fees paid on unsuccessful cases against recovery on many.
Contingent fees are the choice for cases under $50,000 to $75,000, older claims, claims with questionable solvency of debtors, all cases where the creditor does not wish the aggravation of continued monthly bills, and all cases where the creditor believes the case might be delayed through the court system or might go to trial resulting in higher fees than the contingent percentage. A good rule of thumb is to select contingent fee if your projection of hourly fees could exceed 15% of the claim.