NY Debt Collection Lawyers and Contingency Fees

White desk with clock, smartphone and notebook.Prospective clients regularly ask if we work on contingency fee arrangements in NY debt collection cases. In a contingency fee arrangement, the lawyer agrees to accept a fixed percentage, often one-third of the recovery amount, the amount finally paid to the client.

Especially in debt collection cases, a lawyer considers several factors before agreeing.

If a client cannot pay the legal fees, the lawyer may consider the option of a mixed fee arrangement. This combines a lower contingency fee percentage with a lower hourly rate. A client might want a contingency fee arrangement to keep from throwing good money after bad.

At FFGN we also offer a flat fee for certain types of work. A client derives benefit from a flat fee if they have no interest in giving up a portion of the recovery. And they also know how much it will cost to pursue the matter.

Most collection attorneys will use a contingency fee model for demand and for suit cases. If they handle a larger volume of cases, they may offer a more favorable fee arrangement.

No matter what the fee arrangement, working for free is clearly not ideal for either party – it makes it tough to stay in business. And with contingency fee cases, free legal work could very well result without serious initial considerations on the attorney’s part.

How Does a Contingency Fee Arrangement Work?

The lawyer agrees to accept a fixed percentage, often one-third of the amount awarded the client. The lawyer receives a fee only if there is a successful outcome for the client.

A successful outcome is not just winning the case but also collecting the award. We may win a case for a client, but success means the client collects money. And the attorney receives the contingency fee based upon successful collection and not just winning.

If you win the case, the lawyer’s fee comes out of the money awarded to you. If you lose, neither you nor the lawyer gets any money. While you have no requirement to pay your attorney for work done on a lost case, win or lose, expect to pay court filing fees, the costs related to deposing witnesses, and other similar charges.

What is a Typical Contingency Fee?

Contingency fees can range from 15% to 33 1/3%. The percentage depends on the volume of claims, the size of the claim(s), the debtor’s location, and more. Lawyers often base these percentage arrangements on the amount of money that the client could potentially win, the strength of the case, and other factors. It is not unheard of for contingency fees to go as high as 50% for small cases and 15% for very large cases.

The Basis for Deciding on a Case’s Merit to Consider a Contingency Fee Arrangement

In general, most lawyers prefer not to work on a contingency fee because:

  • the risk that the firm will receive no money
  • there is a risk the firm will receive too much money – which the client may find annoying, and
  • there is no payment until the losing party parts with the money.

These issues in a case could impact its consideration for contingency fee basis:

  • How large is the debt?
  • How old is the debt?
  • Is the case clean?
  • Can you recover the debt? In other words, is the case solid and well-documented, and does the debtor have the ability to pay?

For these reasons, many firms rarely accept contingency fee cases. If you have questions or have a NY debt collection issue, get in touch with us and we can evaluate your case’s merits for collection.