Tuesday, September 6, 2011

Contingent Fee Copyright Lawyers: In Defense of Alternative Billing

Unlike most lawyers, we take the majority of our cases on a contingent-fee basis. To be fair, we are not alone and lots of lawyers work on contingency, although not that many in intellectual property infringement cases. We are frequently attacked as ambulance chasers and worse. But the reality is that the contingent-fee lawyer is the only lawyer who really has your best interests in mind. Invariably, the arguments against contingent-fee lawyers come from hourly-billing lawyers who are perfectly willing to fight your case to your last dime, regardless of how unlikely you are to win.

I'd like to take this opportunity to debunk several myths about contingent fee copyright lawyers that keep getting persisted.
Myth 1: Contingent Fee Lawyers File Frivolous Lawsuits
Reality: Say an employer came to you and said: I'll give you a job selling my product, and your compensation will be tied to how well my product sells. Would you take that job without even considering how well the product will sell? Or would your desire to take the job turn mostly on whether you think the product will sell? Contingent fee lawyers don't make any money unless they win. It makes no sense for a contingent fee lawyer to take a case that has no merit. Contrast that reality with hourly-based lawyers who get paid regardless of whether their client's case has any merit.
Myth 2: Contingent Fee Lawyers Are All Ambulance Chasers
Reality: Contingent fee lawyers do not need to chase cases. Believe it or not, there are quite a lot of people with legal disputes who want a lawyer who doesn't charge by the hour. You should also not be surprised that most lawyers are unwilling to invest upwards of a million dollars (sometimes even more) of their time with the possibility of never getting paid. It's simple supply and demand. There are way more contingent fee cases than there are lawyers to take them.  So contingent fee lawyers can typically be very selective with the cases they take. Why take a dog case when there are ten more people begging you for "free" legal representation?
Myth 3: You Have To Fight Contingent Fee Lawyers Or They Swarm Like Piranhas
This one is my favorite. This is the one that counsel for big companies like to tell their clients.  If your big company gets sued, your in-house counsel will invariably get an immediate notice from outside counsel offering to take on the case right away.  If the lawyers who brought the suit are contingent fee lawyers, that notice will invariably come with the "you have to fight these trolls" mantra.  Note that I didn't mention any actual substantive analysis in that notice.  There is never any substantive analysis in that first notice.  That's because the big firm has to strike quickly; they must offer to take the case immediately before some other big firm beats them to it.  There's just no time to analyze the actual case, only to attack the plaintiff's lawyers. 

After outside counsel gets assigned, the next battle cry is that if you settle this case, your company will just keep getting sued; you will be better off fighting this case so that these contingent fee lawyers will think twice about suing your company again.  Sounds reasonable on its face.  The problem is go back to Myth No. 1 and Myth No. 2.  Contingent fee lawyers rarely file cases they can't win.  Why would they? Suing your company again has nothing to do with whether your company fights back; it has everything to do with whether your company loses when it does. And I can assure you, companies that fight cases they should settle end up losing way more than they should. Just consider this shoe company that refused to settle an infringement case over 9 pictures of shoes, and ended up with a $1.3 Million judgment against them.

Test this theory.  If you work in a big company, and your company gets sued, and your outside counsel says "we have to fight these darn contingent fee lawyers" do this:  Demand that your own lawyer represent you based on the outcome.  In other words, make your lawyer agree to represent you for free if they don't win the case.  See how quickly they take that deal.