An Alternative to the Contingent Fee

Abstract

The most frequent attack on the contingent fee is that it is "unprofessional." Support for the contingent fee has been based on the argument that it encourages the lawyer to work harder because the lawyer's own compensation depends on the outcome of the case and on the argument that it enables a poor person with a valid claim to secure representation. The attorney-client relationship is built on a foundation that assumes certain incentives operate on the parties. The Code of Professional Responsibility attempts to assure that the incentives for attorneys are consistent with the interests of the client and that undesirable incentives operating on the attorney are counteracted. The success of the adversary system is premised on the attorney's wholehearted representation of his client. Inherent in a typical contingent fee arrangement, however, are tensions that frequently result in a conflict of interest between attorney and client. This article examines that conflict from an economic and fairness perspective and suggests the "risk adjusted hourly fee" as a means of more equitably aligning client and attorney interests.

Keywords: Contingent Fee, Risk Adjusted Hourly Fee