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Critical Thomisim

Critical Thomisim

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Published by enemesio

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Published by: enemesio on Oct 18, 2011
Copyright:Attribution Non-commercial


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  • Chapter 1
  • Chapter 2
  • Chapter 3
  • Chapter 4
  • Chapter 5
  • Chapter 6
  • Chapter 7
  • Chapter 8
  • Chapter 9
  • Chapter 10
  • Chapter 11
  • Chapter 12
  • Chapter 13
  • Chapter 14
  • Chapter 15
  • Chapter 16
  • Chapter 17
  • Chapter 18
  • Chapter 19
  • Chapter 20
  • Chapter 21
  • Chapter 22
  • Chapter 24
  • Chapter 25
  • Chapter 26
  • Chapter 27
  • Chapter 28
  • Chapter 29
  • Chapter 30
  • Chapter 31
  • Chapter 32
  • Chapter 33
  • Chapter 34
  • Chapter 35
  • Chapter 36
  • Chapter 37
  • Chapter 38
  • Chapter 39
  • Chapter 40
  • Chapter 41
  • Chapter 42
  • Chapter 43
  • Chapter 44
  • Chapter 45
  • Chapter 46
  • Chapter 48
  • Chapter 49
  • Chapter 50
  • Chapter 51
  • Chapter 52
  • Chapter 53
  • Chapter 54
  • Chapter 55
  • Chapter 56
  • Chapter 57
  • Chapter 58
  • Chapter 59
  • Chapter 60
  • Chapter 61
  • Chapter 62
  • Chapter 63
  • Chapter 64
  • Chapter 65
  • Chapter 66
  • Chapter 67
  • Chapter 68

The Contingent Loan for Attorney’s Fees and Expenses


Anthony J. Fejfar, B.A., J.D., Esq., Coif

© Copyright 2007 by Anthony J. Fejfar

In Europe, Contingent Fees are thought to be immoral, while in the United States, Contingent

Fees to Attorney’s in Plaintiff’s civil cases are fairly common. The typical contingent fee agreement

provides that the attorney will receive a percentage of any recovery that the client receives from the

opposing party in litigation. Traditionally, the lawyer receives 25% of any recovery which takes place

before trial, 33% of any recovery which takes place during or as a result of trial, and 40% of any

recovery which takes place on appeal or as a result of an appeal.

In lawsuits where a large amount of damages are alleged, if the case is won, and the money

recovered on behalf of the client, it is possible that a lawyer will recover hundreds of thousands of

dollars in a given case. Contingent Fee lawyers argue that this system is just because they don’t always

win every case. In order to make up for the loss in a losing case, the lawyer gets what appears to be a

large windfall in a winning case. The idea is that it all evens out.

The problem is, however, that some contingent fee lawyers are very good at what they do, and

very successful too. They only take “winning” cases and when they win they get paid handsomely.

Some argue too much.

Another way of financing a case in litigation is for the client to barrow money. Traditional

financing is difficult to come by for the ordinary client, and, the ethics rules prohibit a lawyer from

loaning money to a client on the theory that this creates a conflict of interest. Given, this situation, is

there anything that we could come up with which would take the best of the contingent fee and the

litigation loan and form a new vehicle for financing litigation? I argue that the Contingent Loan for

Attorney’s Fees and Expenses will help solve the problem.

A Contingent Loan for Attorney’s Fees and Expenses is a loan made by an investor, a bank or a

law firm, or another person, where repayment of the loan is contingent upon the client recovering

money in a lawsuit. This is like a contingent fee because the obligation to repay is contingent upon the

client’s recovery of money in a lawsuit. But the amount of the contingent loan is based upon the actual

attorney’s fees charged and expenses incurred.

So, in a typical case, Attorney’s Firm loans Client $15,000 as a Contingent Loan for

Attorney’s Fees and Expenses. This money then goes into the Lawyer Trust Fund account for the

Client’s benefit, against which the lawyer will bill his fee of $150 per hour. Expenses are also

reimbursed from the Client’s Lawyer Trust Fund Account. Because of the risk involved, the bank or

Law Firm get a premium interest rate of 25% on the principal amount per annum. The only way the

Client is ever personally liable for the amount loaned is if the Client fires the Lawyer prior to the

conclusion of the case. Additionally, in a case where no money is recovered for the Client in the

lawsuit, the lender bank or Law Firm will be entitled to a $15,000 business loss on its income tax

return. I argue that this new litigation financing vehicle is ethical and legal. There really is no more

conflict of interest for a lawyer than there would be with an ordinary contingent fee. I also argue that

this way of financing civil litigation would be economically efficient. Successful civil lawsuits end

illegal freeloading by persons who break the law.

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