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The Contingency Fee Allows Justice for All

Nearly every legal publication is doing its year-end review of how the economy has affected the law firms that earn revenue through the billable hour. The economy has slowed the ordinary rate increase that law firms normally implemented from year to year. For example, The National Law Journal’s annual survey of billing rates showed that “this year’s national average firm-wide billing rate, a combination of partner and associate rates, grew by 2.5% during 2009 to $372.” This is relatively small increase considering that in 2008 firms reported a 4.3% increase in billable rates. In 2007, firms reported a 7.7% rate increase. The economy and the clients that hire firms based on the billable hour drove the decrease in rate growth.

Firms such as Abraham, Watkins, Nichols, Agosto, Aziz & Stogner often represent injured victims and businesses through an alternative approach. Rather than bill the client $372 an hour, Abraham Watkins usually represents its clients through a contingency agreement. This contract for legal services allows a client to receive legal representation without having to pay a large retainer or satisfy invoices for legal work performed. Rather, the contingency fee only allows the attorney to be financially compensated if he or she is able to obtain a recovery for the client. The attorney fee is based on a percentage of the total recovery. Obviously, if the attorney is unable to reach a settlement or verdict for the client, the attorney is not compensated. This type of fee and expense agreement aligns the attorney’s interest with that of the client, which is to obtain the best recovery possible. The more that the attorney is able to get for the client, the more the attorney is compensated.

This type of agreement not only aligns the parties’ interests, it also allows clients, which do not have the financial resources available to pay $372 an hour, access and avenues to justice. Indeed, without the contingency agreement, many clients would be unable to afford to hire an attorney through the life-cycle of litigation, which can, and often does, take well over a year to reach completion. In essence, the contingency fee allows justice for all.

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