Most regular people can’t afford to pay a lawyer’s hourly rate for the duration of a litigation, but if you win 20 million dollars you might be willing to pay them five million dollars, and that covers their expenses on all the other cases.
It’s really the same question as how drug companies can afford to develop products when 999 out of a thousand never make it to market. The trick is to make enough money on the one that does
The risk to the attorney is they put in a lot of work only to make no money, or not enough for the time spent. But attorneys can choose what cases they take on, so they are in control of the risk—they screen the potential clients and take on the cases they think will probably be worth it. There is some unpredictability, but over a large number of clients this will average out to what is the usual thing.
For really big cases, there is a market for what is called litigation financing; lenders effectively invest in the outcome of the case by sustaining the law firm on credit while they work on the big case. This costs the firm money of course but is a way they can offload some of that risk which would otherwise be disproportionate.
It’s also important to keep in mind that many cases have no realistic alternative. If your client is seriously injured by a big business, say, your client has no money but the business does. Your client cannot pay the fees to take the case to trial, even though you might prefer that. So an attorney that wants to take those kinds of cases must deal with that reality—the ones that don’t want the risk don’t practice in that field.
Comments
They only take cases they are confident they can get a settlement on. And they take a large percentage.
Because they are just going to settle the case.
Most regular people can’t afford to pay a lawyer’s hourly rate for the duration of a litigation, but if you win 20 million dollars you might be willing to pay them five million dollars, and that covers their expenses on all the other cases.
It’s really the same question as how drug companies can afford to develop products when 999 out of a thousand never make it to market. The trick is to make enough money on the one that does
There’s three important points here.
There’s no garauntee they’ll take on your case in the first place, they’ll only take on cases they know they can win.
They’re probably going to settle out of court
There contract will state that their fees are a percentage of your settlement, so a bigger settlement means they get paid more.
The risk to the attorney is they put in a lot of work only to make no money, or not enough for the time spent. But attorneys can choose what cases they take on, so they are in control of the risk—they screen the potential clients and take on the cases they think will probably be worth it. There is some unpredictability, but over a large number of clients this will average out to what is the usual thing.
For really big cases, there is a market for what is called litigation financing; lenders effectively invest in the outcome of the case by sustaining the law firm on credit while they work on the big case. This costs the firm money of course but is a way they can offload some of that risk which would otherwise be disproportionate.
It’s also important to keep in mind that many cases have no realistic alternative. If your client is seriously injured by a big business, say, your client has no money but the business does. Your client cannot pay the fees to take the case to trial, even though you might prefer that. So an attorney that wants to take those kinds of cases must deal with that reality—the ones that don’t want the risk don’t practice in that field.