Conclusion and summary of benefits of hybrid fee agreements between lawyer and client

Hybrid fee agreements are not suitable for all cases. Notably, they are not feasible when the client is simply unable to pay any hourly rate fees as the case proceeds, even where calculated using a base rate substantially below the lawyer’s normal hourly rate.

 

However, where the client is able to afford an acceptable base hourly rate, hybrid fee agreements offer a number of benefits over other types of fee arrangements:

  1. The client obtains the benefit of having a lawyer to prosecute a claim that the lawyer may not have been willing to take on a pure contingency fee basis.
  2. Because the overall financial risk to the lawyer is reduced (as compared to what it would be in a pure contingency fee situation) the lawyer will not deserve as much compensation if the claim is successful, which means that the plaintiff will not lose as much of the amount recovered to legal fees in the event the claim is successful.
  3. Because the lawyer is paid the base hourly rate for proceeding through the latter stages of litigation, particularly trial, the financial incentive for the lawyer to have the claim settled early even if at less than fair value (see discussion in contingency fee agreement section above) is reduced.
  4. Because the client is paying ongoing amounts on account of legal fees as the claim proceeds, the situation that sometimes arises in pure contingency fee situations of the client stubbornly and irrationally insisting on proceeding to trial is less likely.

 

At one end of the spectrum, hourly rate fee agreements typically put most of the risk of the claim failing on the client and little, if any, financial risk of the claim failing on the lawyer. At the other end of the spectrum, pure contingency fee agreements put a significant financial risk of the claim failing on the lawyer. Hybrid fee agreements may allow a more equitable sharing of risk between the lawyer and the client and eliminate some of the undesirable financial incentives that can exist under pure hourly rate or contingency fee agreements see discussion in contingency fee agreement section above).

 

 

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