Texas Appellate Lawyer & Attorney : D. Todd Smith Law Firm : Appeals, Sanctions, Summary Judgment : Austin, Texas

I have been surprised at the variety of ways in which contingent-fee agreements address what will happen if the case goes up on appeal.  Some don't deal with it at all, other than to say that the trial attorney is not obligated to pursue or defend an appeal should one be taken.  At the other end of the spectrum, agreements that encompass any appeal sometimes kick the lawyer's cut of any recovery up by 5 or 10 percent.

Like most other attorney-client issues, this one is probably best spelled out up front.  Selfishly, I like the "10 percenters" because the trial lawyer is usually willing if not eager to part with the increase to have a specialist handle the appeal, especially if 10 percent is all it takes.  But some don't like a 10 percent kicker because that arrangement leaves the client with less than half the recovery after costs are taken off the top.

Depending on the case, the trial lawyer might assign the differential plus some part of his or her original share, sometimes blended with a flat-fee portion to offset the risk.  Another alternative is to take some portion of the trial lawyer's contingency, as well as some other portion of the gross recovery directly from the client.

There really is no right or wrong way to do it, but in my view, contingent-fee agreements should always spell out what happens in the event of an appeal.

• Print
• Comments
• Trackbacks (1)

In this post from last summer, I mentioned reverse contingent fees as a potential means of compensating appellate counsel.  Spurred by a question I asked in response to one of his recent posts, Blawgletter (a/k/a Susman Godfrey's Barry Barnett) expounded on how his firm approaches reverse contingent fees in business litigation matters.  The methodology would depend on the case, its procedural posture, and the client's financial well being/creditworthiness, but the basic idea is to assign a dollar value to the client's exposure and base the fee on the "savings" obtained by the result.  With reports of $1,000 hourly rates and in-house counsel under increasing pressure to rein in outside lawyer fees, we may see more of this approach in the future, especially from solos and small firms who have the flexibility to implement it.

• Print
• Comments (1)
• Trackbacks

A recent post from Susan Cartier Liebel over at Build a Solo Practice, LLC (entitled The Cockroach of the Legal Profession—The Billable Hour) has spurred me to comment on the continuing viability of the billable hour as it relates to appellate practice.

In my previous life as a big-firm lawyer, the billable hour was ingrained in the very fabric of my being.  Every aspect of my days (and sometimes my nights) was measured in 6-minute increments.  Since opening my own shop last year, I have come to believe that appellate law is particularly well suited to alternative fee structures and have offered some different fee alternatives to my clients.

Certain features of appellate practice make breaking away from the billable hour possible, depending on the point at which the appellate lawyer becomes involved.  In a pure appeal situation—when the trial court has signed an appealable interlocutory order or final judgment—the universe of facts and information is limited by a finite record, sharply restricting the number of curve balls your opponent can legitimately throw your way.  In this situation, based on the length of the trial, the volume of the underlying pleadings, and the issues involved, it is possible to estimate the time that will be required to handle the appeal and come up with a flat fee proposal that makes sense for both the lawyer and the client.

In the right situation, a contingent fee may be a possibility.  This alternative makes the most sense when a client has obtained a significant judgment and the other side is taking an appeal.  However, a reverse contingent fee may be suitable when appealing a large monetary judgment.  In that instance, appellate counsel would be paid based on the savings obtained from the original judgment amount.

The billable hour is often criticized for encouraging lawyers to generate revenue by churning files and for providing little or no direct reward for good performance.  Yet, we seem to have difficulty parting with the billable hour as the standard for measuring our worth.  By offering other options (including hybrid billable-alternative structures), appellate counsel can assure clients that they are adding value to the case while (hopefully) increasing their own bottom line.

• Print
• Comments (3)
• Trackbacks