Contingency

Taking cases on contingency can seem like a lucrative deal. A Minneapolis firm, Heins, Mills, Olson, took in a gigantic payday after winning a big case for AOL/Time-Warner. Then they sued amongst themselves after some were dissatisfied with the way the payout was split.

In contingency matters, the client only pays if they win and these cases have the potential for a big payout; the downside is that firms spend months if not years working on the case before they earn any money. In the case of a guy I met on a review, he had a solo practice and took on a contingency case that was too big for him to handle. Rather than the big payoff he had anticipated, he ended up filing bankruptcy and doing document reviews to generate income.

Bottom line: be mindful of the amount of time and money involved when considering contingency cases. If you have insufficient cash flow and/or credit line, this may not be a good choice for you; it may be better to consult with experts to first determine whether you're financially solvent enough to take the case without it being ultimately detrimental to your bottom line. Will you have to hire staff to help with different aspects of the project, such as document review? Can you afford to front fees for experts? Is the case an area in which you have sufficient expertise?

If the answer to any of the above questions is no or maybe, you may do better for your client and yourself to make a referral to a firm better suited to determining the viability of the case who won't be bankrupted by taking it on. A classic example of contingency case is personal injury; firms taking these cases have a very good idea of the probability of a win going in. They only take cases they think they have a good chance of winning because it's on a contingency basis.

On the flipside, it's possible to get referrals from other attorneys and a case too small for a firm of any size to bother taking on could be perfect for that firm to refer to you.