Invoke the Power of the Contingency Fee

By: Frank H. Bailey, Attorney, Co-Founder & Partner

Small Business


There is an emerging area of law that should interest every owner of small- and medium-sized businesses. It’s called commercial contingency fee litigation.

No doubt about it, litigation is expensive. No one particularly enjoys the litigation process, especially the cost associated with it. Even the largest, most well-funded companies have budget constraints for litigation. But no matter the size of your company, you deserve and must have skilled, experienced, and motivated legal counsel. Commercial contingency fee litigation may be the answer. Contingency fee law practices are nothing new. Perhaps, they are most associated with personal injury cases. The same principles that apply to personal injury fees also apply to commercial litigation. Instead of clients paying large fees based on hours worked, they pay a predetermined percentage of any financial recovery. Simply put, the attorney doesn’t get paid unless they win your case. They now have “skin in the game.”

A large number of law firms specializing in corporate law do not have the desire to take on the financial risk associated with contingency fee matters. But others have the resources that allow them to share the litigation risk with clients. This joint effort by the client and firm helps keep expenses to a minimum, move toward a prompt resolution and achieve the maximum recovery possible in the shortest amount of time.

Performance-based compensation is nothing new for small businesses, or any business for that matter. It creates an outcome-oriented focus rather than a process-oriented focus. Unlike larger firms whose primary motivation is to develop a consistent revenue stream based on hourly billing, contingency law firms assess each case based on the prospects of winning it.

There are several instances when this arrangement might be in the best interest of business owners. The most common is when a small business has been harmed by a larger organization but doesn’t have the financial resources to fight back. If the larger business sees that a contingency firm thinks it can win a case, they likely become more motivated to settle and cut its potential losses.
Here’s an analogy we can all understand: A bully on the school playground may think twice about trying to steal the skinny kid’s milk money if he’s backed up by a big kid.

Scenarios where commercial contingency might be utilized include the recovery of damages caused by a breach of contract, by failure to deliver goods and/or services in a timely manner and by misappropriation of company trade secrets. Commercial contingency fee litigation is also appropriate when pursuing insurance benefits or economic damages caused when a company’s intellectual property is misused.

One of the great American principles is that everyone deserves legal representation, regardless of whether they are wealthy or poor, influential or obscure. Small businesses should have access to the same skilled and
experienced attorneys as any large businesses. Commercial contingency fee litigation provides such access. 

Frank Bailey is the founder and managing partner of The Bailey and Oliver Law Firm in Rogers. He can be reached at 479-202-5200. 

PUBLISHED WITH THE PERMISSION OF THE NORTHWEST ARKANSAS BUSINESS JOURNAL