What is No Win No Fee Compensation?

Ken Black
Ken Black
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No win no fee compensation, also known as a contingency fee, is a compensation plan some attorneys offer where they agree to not charge unless they have a successful outcome to a case. Typically, this type of payment system is reserved for civil cases where there is a good chance of payout. If considering a no win no fee compensation arrangement, there are a number of things to weigh, including if it is the best deal for the client, and what the definition of victory may be.

The first thing to consider when looking at no win no fee compensation is whether the client can find an attorney to take the case. Generally, this type of law firm will be reluctant to accept cases where there is very little likelihood of a positive outcome. Therefore, if an attorney is unwilling to accept the case, that could be an indication there is not a good chance of success, or not a substantial amount of money involved.

If a client does find an attorney willing to take a case, that presents a whole new set of issues, including whether it is the best choice. An attorney operating under a contingency compensation model often must take a bigger cut than a traditional fee attorney. Therefore, if the client has enough money to pay a retainer, and any up-front money required, he or she may be better off going with a traditional payment model. Doing this could require finding a different firm.

Also, one of the other considerations is what the attorney may define as a victory. An attorney could have a strong motivation to settle the case out of court, if operating under a contingency model. If settling out of court, at least the attorney would be guaranteed of getting something out of the case, instead of taking a chance with a judge or jury. This could put the attorney and client at odds with strategy in some situations.

If deciding to go with this kind of attorney, the client should make sure to fully understand what the contract for services states. In most cases, this will include the attorney's percentage, but may also include a minimum that must be paid no matter what the actual percentage is. For example, an attorney may reserve the first $10,000 US Dollars of a judgment. After that, the rest of the judgment may be split, according to the percentage agreed upon. Thus, it is essential that the client understand what he or she is agreeing to.

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