Hybrid Fee Agreement: A Win-Win Arrangement

Hybrid Fee Agreement: A Win-Win Arrangement

Beilal Chatila
 | 
While some attorneys bind themselves to traditional practices, others adapt to the changing circumstances of clients, case-types, and even their own capacities to carry out the best possible representation. Whether implementing software to save time, using LawChamps to connect with clients, or utilizing non-recourse loans to help clients get by financially, attorneys, especially solo practitioners, are constantly looking for ways to adapt. However, very few attorneys use hybrid fee agreements to accomplish the respective attorney-client goals.
 
As a solo practitioner, I know first-hand the difficulties with maintaining adequate resources to give a client the best representation possible. I have also become all too familiar with the reality that every case, and client, is different. For instance, some clients are outraged by the standard contingency-fee agreement, which starts at 33% and can go up to 45%; while some clients are happy to give almost half of their net proceeds to their attorney. Some clients can afford to pay $450 and hour, but some cannot afford more than $150 and hour. Likewise, some solos can absorb a $10,000 expert witness fee, while others need to finance it. Many cases are declined by attorneys everyday simply because the attorney failed to explore the possibility of a hybrid fee agreement—the following is how I handle these scenarios, and how I encourage other attorneys to do the same.
 
Last week, a personal injury client contacted me, and after reviewing her case and discussing the standard contingency fee agreement with her, I noticed her eyes widen when I explained that we would be taking a third of her gross proceeds, and how “gross” means before we deduct the thousands of dollars in potential costs for expert witnesses, investigators, filing fees, and other hard costs. Clearly, she was not happy with this arrangement. Instead of forcing her to agree based on “this is standard practice”, I offered her the opportunity to pay all of the hard costs associated with prosecuting her case and reduced the attorney fee down to 25% for an early resolution, and 29% if the matter goes to trial. She explained to me that none of the first three attorneys she met with offered anything close to this. She explained that she could afford up to $10,000 towards these costs. I did a quick analysis of what those costs would be, noted that I may have to contribute a few thousand bucks on top of her contribution, and agreed to enter into a hybrid fee agreement. She handed me a check for those potential costs, signed the fee agreement, and walked out of my office a happy camper.
 
I could go on with various examples where the hybrid fee agreement has worked to the benefit of my clients and my firm, but the point remains the same: too many attorneys fail to explore and offer the hybrid fee agreement, and too many clients are left either not pursuing a case, or feeling robbed by the attorney who pressured her into a traditional contingency fee agreement then obtains a quick settlement. As attorneys, one of our ethical responsibilities is to “engender public confidence in the practice of law”, and in many cases, this can be achieved by simply offering a hybrid fee arrangement.
 

This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.
 
Beilal Chatila
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