This is Part II of a three part series on business or commercial contingency fee cases.
You may have a claim for damages that you may not be able to afford to pursue. Damages run the gamut from personal injury to lost profits, lost income, or loss of business opportunities. A contingency fee can be a good option to pursue your claim. In this second installment on contingency fees, I discuss what an attorney needs from you to effectively evaluate your potential claim. In Part I, I discussed the benefits of pursuing your case on a contingency fee basis.
HOW AN ATTORNEY EVALUATES YOUR COMMERCIAL CONTINGENCY FEE CLAIM
Where the rubber meets the road for an attorney is an evaluation of a number of factors which are, in order of importance:
- Damages (amount and collectability)
- Jury appeal
- Potential defenses, counterclaims, and unsettled points of law
Information is king in this process to get an attorney to agree to take your business or commercial contingency fee case. Provide documents, names of witnesses
Liability is the legal basis for your claim.
Liability is often the most critical area of inquiry. Depending on the claim or ’cause of action,’ the liability analysis is typically an evaluation of duty, breach, and causation (damages is addressed below). Duty can arise from a number of sources: contract, judge-made law (i.e., uncodified common law), statutes, and course of dealing between parties.
Here is a list of the most common types of claims that work well with a contingency fee arrangement:
- Breach of contract
- Breach of the covenant of good faith and fair dealing
- Bad faith: insurance claims
- Business torts: interference with contract, breach of fiduciary duty, partnership liability, join venture liability, privacy, cybersecurity
- Intellectual property: trademark, patent, copyright
- Professional liability: legal, accounting, medical, etc.
- Product liability: strict, negligence, and warranty
- Premises liability
- False statements: defamation, slander, and libel
- Misrepresentation: fraudulent and negligent
- Employment: ADA, FMLA, FLSA, wage claim, whistleblower, wrongful termination, privacy
- Civil rights: Section 1983, state and federal laws
- Personal torts: death, personal injury, emotional distress, battery
- Miscellaneous: will contests, malicious prosecution, false arrest, abuse of process
Some claims, however, do not work well in a contingency fee arrangement. Typically, such claims are where money is not the result sought. Some such situations include guardianship, criminal and domestic relations (divorce/alimony) cases (it is illegal), regulatory matters, non-litigation matters, and restraining orders.
When you meet with your attorney, tell them everything. Remember, your conversation is confidential and protected. It is critical that the facts that will ultimately be revealed in discovery be revealed to the attorney up front. An attorney cannot evaluate and strategize for facts s/he does not know. I have had clients try to hide or down-play facts in the hope that they can settle the case before the facts are revealed. This seldom works. Moreover, the facts clients are most worried about are often not the facts that are most critical to the case. The best way to deal with worrisome facts is to tell the attorney so that the facts, if truly damaging, can be dealt with appropriately. Otherwise, the facts may come out at the most disadvantageous time or in the worst possible light.
Duty and Breach
A duty is what you are required to do (by contract, law, etc.) and breach is the failure to meet that duty. The causes of action above all require the person or business causing the harm to meet a duty of some sort. For example, every driver on the road is expected to follow the law. Likewise, every party to a contract is expected to do what they promise to do. When a driver fails to follow the law or a contracting party fails to keep their promise, they have breached their duty.
Causation ties a breach to a harm.
Causation is often a non-factor when causation is obvious such as a car accident: Car A and Car B collide and the cars were damaged. The issue is not what caused the damage (cars colliding) but who caused the cars to collide (breach of duty). Causation can get particularly complex in terms of lost profits due to harm to a business or lost wages. There are complex market factors that influence lost profits and numerous factors to evaluate. Such a calculation nearly always requires expert testimony from an economist specializing in the business at issue.
Damages and Collectability
It is hard to underestimate damages. This issue is a very close second to liability in terms of importance. If there is no pot at the end of the rainbow or if the pot is empty or missing, there is no reason to chase the rainbow. An attorney will only agree to fund a contingency fee case if the outcome has some way of paying for the attorney’s investment of time, money, and resources. The larger the potential outcome and collectible source (insurance, or solvent company), the more interested an attorney will be to take a risk– even if your case has warts.
Does your case have some sexy facts that will interest a jury? Or, is the value of your case so high that a jury will have to sit up and take notice? For instance, does your case involve blatant (i.e., easily proved) fraud or misrepresentation or abuse of position? If your facts make a compelling story at a cocktail party, it probably has some jury appeal. It’s not necessary, but it helps.
Potential Defenses, Counterclaims, and Unsettled Points of Law
Your attorney needs to know the limitations and risks of your claim. In business disputes in particular, there are often counterclaims that can be filed against you and defenses to your claims. You may or may not be able to identify the potential counterclaims and defenses, making it vital that your attorney has all information possible when evaluating your case. Your attorney will also evaluate whether gaps in the law create risks to your claim.
For more information about your potential contingency fee case and for a free consultation, please contact Utah attorney Ken Reich directly. Mr. Reich routinely represents both companies and individuals in business matters and disputes involving a contingency fee arrangement. Using his many years of experience and backed by a firm of legal specialists in nearly every legal field, Mr. Reich can help you evaluate your claim and help you make smart decisions about your business and your life that will best fit your circumstances.