The last example was one of the earliest and probably best-performing contingency cost agreements concluded by the authors` company, one in which the company`s interest depended on several issues – but especially on the speed of the resolution of the case. The parties agreed that the customer would pay a monthly flat fee in return for the business with a conditional interest rate. However, the company`s interest rates have been reduced monthly by the amount of lump sum fees paid by the customer. The longer it took the company to resolve the matter, the less money it could earn as a contingency fee. This creative fee agreement was consistent with the client`s primary objective of expediting liquidation, the company`s objective of obtaining a conditional royalty when the matter was resolved. Creative fee agreements deviate from typical all-hour or all-contingent models. In the first case, the client generally bears the financial risk of litigation since the payment of legal fees is not related to the final outcome of the case. In the latter case, the economic risk is largely transferred to the lawyer, as the payment of the fees depends entirely on a successful outcome for the client. Creative fee agreements mix aspects of hourly and conditional models to reallocate litigation risk based on the client`s needs and objectives and the lawyer`s risk tolerance. Faced with these advantages, most companies would probably want to put creative pricing agreements on the national territory, but for one, most lawyers seem to be genetically programmed to avoid risks.
The analysis of legal costs, the risks of success or failure and the time frame for achieving the objectives requires not only experience, but also the willingness of the company to take risks. Many companies are at risk when they put their own skin on the line because they do not have the experience to accurately assess the costs, risks and duration of completion of complex goals and cases. As practitioners can overcome their risk aversion and take steps to mitigate them through in-depth analysis and preparation, a world of work that is currently out of reach may become available. To be successful, an AFA must benefit both the client and the law firm. Some clients like AFs because such agreements can help clients better manage their budgets and financial risks by sharing the risks and benefits of legal action with their lawyers. Ogborn Mihm loves AFA because by taking some of the risks and betting on our skills and experience as trial lawyers, we have the opportunity to earn more money than we could charge the client on time.