Which fee arrangement is commonly used when payment depends on the outcome of the case?

Which fee arrangement is commonly used when payment depends on the outcome of the case?

• A. Hourly rate
• B. Contingency fee
• C. Fixed fee
• D. Retainer

Answer: (B)

Contingency fee. This type of arrangement has the attorney’s pay depend on winning or reaching a settlement, which is why it’s commonly used in civil cases where clients may not be able to pay hourly fees upfront. The lawyer typically receives a percentage of the recovery if there is a win or favorable settlement, and if there isn’t a recovery, the attorney may receive little or nothing, depending on the contract. This aligns the lawyer’s incentives with achieving a favorable outcome for the client. Costs and expenses are often handled separately—advances or reimbursements may be charged from the recovery, if any. Other fee structures—charging by the hour, a fixed fee for a defined service, or an upfront retainer—do not depend on the case’s outcome.

Contingency fee. This type of arrangement has the attorney’s pay depend on winning or reaching a settlement, which is why it’s commonly used in civil cases where clients may not be able to pay hourly fees upfront. The lawyer typically receives a percentage of the recovery if there is a win or favorable settlement, and if there isn’t a recovery, the attorney may receive little or nothing, depending on the contract. This aligns the lawyer’s incentives with achieving a favorable outcome for the client. Costs and expenses are often handled separately—advances or reimbursements may be charged from the recovery, if any. Other fee structures—charging by the hour, a fixed fee for a defined service, or an upfront retainer—do not depend on the case’s outcome.