Considerations for plaintiffs paying hourly fees

From a plaintiff’s perspective an hourly rate fee may be ideal if the case is a sure winner for a large amount of money and will require relatively little legal work. Indeed, in such case it would be unfair for the lawyer to take a percentage fee (e.g. 30% of $1 million dollars = $300,000) for a relatively small amount of easy work. Therefore, if the case is a sure winner for a large amount of money and relatively little legal work the plaintiff should do everything possible to come up with the money to pay the lawyer on an hourly basis. As discussed in more detail below, if the case is risky, and might involve a large amount of legal work with an uncertain outcome, the plaintiff may prefer a contingency fee agreement, or perhaps a hybrid agreement with a capped hourly rate.

 

In cases where recovery on the plaintiff’s claim is certain but the plaintiff cannot afford to pay the lawyer by the hour up front, the lawyer and client may agree to a fee based on an hourly rate for time spent being paid on a deferred basis. In this situation the lawyer’s time is tracked as for a normal hourly rate agreement, but there is no payment for time spent until the end of the case when there is recovery on the plaintiff’s claim. This arrangement might be used when the plaintiff is almost certainly entitled to a very large payment and the claim will require relatively little legal work and the deferred payment mechanism is simply a way to deal with the fact that the plaintiff cannot afford to pay the lawyer up front. This type of arrangement is not a contingency fee agreement because payment to the lawyer does not depend on the fact of recovery, or the amount of recovery, in the plaintiff’s case, but is simply an agreement to postpone the time at which the lawyer is paid. To account for delayed payment, and perhaps the small risk of non-payment (assuming the plaintiff is not able to offer security for payment) a higher hourly rate than normally charged by the lawyer may be appropriate.

 

 

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