While designed to save money and limit costs, the cost of arbitration can be substantial. While a few businesses may not mind paying legal fees which equal or exceed the amount recovered to vindicate a principle, most seek a net recovery. The typical legal fee agreement provides no guarantee of that and typically makes the client responsible for unexpected costs, delays, contentious parties and their counsel, new factual or legal issues, lengthy discovery, and other factors. 

Since the typical hourly fee agreement places these risks upon the client, a lawyer’s willingness to accept or defend a claim on an hourly basis tells relatively little about his assessment of its ultimate merits.  In comparison, contingency representation requires the lawyer to accept risks and undertake a careful assessment on the onset.   

Before taking any new case on a contingency fee basis, the attorney must complete extensive due diligence concerning the likelihood of success (however the client defines it). A business lawsuit can last three years or more. During that time, the attorney will face many risky patches. These include legal risks, such as dispositive motions, loss at trial, or loss on appeal. They also include client-related risks, such as the revelation during discovery of critical and outcome-changing information, or a client’s change in goals. In light of these risks, it is important that the attorney be realistic about the potential outcome and structure the fee accordingly. As Justice Corrigan wrote in a recent concurring opinion, “Contingency fee percentages express an attorney’s expectations of the case and the risks involved. Contingency Fees for Business Disputes, 35 Michigan Bar Journal November, 2011.

 Here are some guides to improving your chances of having a lawyer take your arbitration claim on a contingency basis.

 1. Simple explanation of case

A simple case is easier to litigate and explain to a jury or judge. Provide a clear  and concise explanation of your claim, with further detail only if requested. Consider giving a short summary and longer documented explanation.

2. Evidence of the claim 

Provide the lawyer with evidence to support your claim and explain your calculation of damages. A claim based upon the plaintiff’s own testimony is more difficult to provide given his incentive to portray events in a manner that favors his claim. Likewise, a claim based upon speculative profits, is worse than one for costs incurred or expected in the near future. For the lawyer, hourly representation not only insures payment regardless of the result, but gives the client the incentive to candidly describe his claim.  Be prepared to explain how your claim is independently verified.

3. Explain facts but not law

Knowledge of the law is the attorney’s job.  The client’s task is to explain and provide the factual support for the claim. You generally do not need to tell the lawyer about other favorable cases or large verdicts. Typically newspaper reports features the plaintiff’s wins or large settlements, and may be unrepresentative. A lawyer will want a client who will assist with the claim but does not have unrealistic expectations.  

4. Show damages

Explain how you have suffered financial loss, such as lost wages.    

5. Don’t expect a cheerleader and expect tough questions about your case and potential defenses

The hourly lawyer is paid regardless of result and has the luxury of accepting his client’s version of events. Since the contingent lawyer is paid only upon success, he needs to conduct a searching inquiry, and even question his own client’s version of events to assure that it will survive scrutiny.

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