Alternative Fee Contracts for Small Businesses

I have represented small businesses (less than $20,000,000 in annual sales) many times on a basis other than on an hourly rate. Let's face it, small businesses often have meritorious claims against other businesses but cannot afford to pay the big firm hourly rates which multiply quickly in litigation. Many businesses do not pursue these claims because they believe they cannot afford a qualified legal team for the matter. That is where alternative fee contracts come into play.

An alternative fee contract can be a straight contingency fee with the lawyer paying the litigation expenses. If there is no recovery the business client does not pay my firm anything with this type of contract. Of course, since all of the risk is on the law firm, these contracts have a higher percentage contingency than other types of arrangements.

Another alternative is for the business client to pay all litigation expenses as they are incurred, but pay my firm's fees on a contingency basis. Again, no fees are paid unless there is a recovery, but the percentage is less than in the first alternative since my firm does not have the litigation expenses at risk.

The third alternative is a combination of an hourly fee and a contingency fee. Under this arrangement the business client pays a lower hourly rate and pays a lower contingency rate if there is a recovery.

The usual hourly contracts businesses are accustomed to for legal representation is a one size fits all approach. Just as one size shoe doesn't fit all, neither does the hourly contract approach. That is why we work with our business clients to find the approach that fits their business model.

Lloyd Gathings, Gathings Law

-- Lloyd W. Gathings Gathings Law 2204 Lakeshore Drive, Suite 406 Birmingham, Alabama 35209 T 205.322.1201 F 205.322.1202 lgathings@gathingslaw.com www.gathingslaw.com