Of course, there is some risk always for a lawyer in a contingency case, but without that risk, you could not ethically charge more than a reasonable hourly fee. [And, note that most Main Street lawyers charging hourly fees work with the risk, every day, of not being fully paid.] However, without in some way setting a fee percentage that jibes with the lawyer’s good faith perception of risk, you are very likely to overcharge many clients.

Yes, there is rabid competition to secure clients by p/i lawyers, but there is no indication in the real world of any meaningful price competition of any sort. Indeed, there is so much competition to attain the clients precisely because that lack of fee competition makes the potential pay-off so big for the law firm.

It is obvious that every kind of fee arrangement has a potential for conflict with the client’s interest. But, unlike any other kind of fee mechanism, using a standard contingency fee — one unrelated to the risk presented by the particular client — has a built-in certainty of overcharging, automatically, a very large percentage of clients.

You seem to be arguing that a fee is reasonable so long as the client agrees to it, no matter how little risk you are taking and how little work you are likely to do, or actually do on the case. That position is, at best, ethically-challenged. It doesn’t matter what defense counsel may or may not do (except to note that they are far more likely to be dealing with sophisticated clients who have the information and leverage they need to bargain for a fair fee). What matters is how fairly and ethically each p/i lawyer treats each particular prospective client when setting a contingency fee. By abusing an otherwise fine concept by turning into a “racket”, p/i lawyers are the enemies of the contingency fee, not I.

Note: I have added an “afterthought” to the body of this post that repeats an important excerpt from a prior post on fees and fiducuary duties and the need to have a fully-informed client.

Most of the time when you sign a client you are pretty sure about liability, but damages are an open question, as the full extent of injury is only rarely apparent when you sign a client. It probably is correct that around 90% of signed contracts end up producing SOME kind of recovery, but some of them turn out to be trivial, and viewed from a time-is-money perspective the lawyer has lost money on the case. Also, money the lawyer advances on a case, such as court costs or experts or court reporters for transcripts, could run in the thousands, and are not recouped by the lawyer until the end of the case (and interest is not charged on these items, at least in my state).

Any time a lawyer represents a client for money there is the potential for “conflict,” whether by contingent, hourly, or flat fee. Contingent fees have long been recognized in this country. Often, you see defense firms charge a mirror-image version of this to their own clients, in the form of a “success fee” calculated on the amounts of money saved for their clients.

[Editor's Note: Hey, GTL, why not make a serious suggestion and act like you really care about and and are finally willing to give serious thought to the ethics of contingency fees? When you take on a client you assume a lot of responsibility for the case, so the appropriate time to set a contingency fee is at the time you agree to handle the case. Of course, the responsible lawyer who is surprised when a case settles much or quickly than expected has the right to accept a much smaller fee out of fairness to the client. ]

David Giacalone is a lawyer who hates contingency fees. Although he and I have never met, David and I have bumped into each other a few times in the blogosphere, most recently through a long-running but very civil discussion in the comments section his…