Termination of Contingency Fee Agreement

Termination of Contingency Fee Agreement

Termination of Contingency Fee Agreement: What You Need to Know

A contingency fee agreement is an arrangement between a lawyer and client where the lawyer only receives payment if the client wins a settlement or judgment in their case. However, there are times when the relationship between a lawyer and client deteriorates, and the contingency fee agreement needs to be terminated. In this article, we will explore the circumstances that may lead to the termination of a contingency fee agreement and what you need to know about the process.

When Can a Contingency Fee Agreement be Terminated?

A contingency fee agreement can be terminated by either the lawyer or client, but only for a valid reason. Here are some common reasons why a contingency fee agreement may be terminated:

1. Non-payment of Expenses: A contingency fee agreement typically requires that the lawyer advances the expenses incurred in the case, such as filing fees, expert witness fees, and court costs. If the client does not reimburse the lawyer for these expenses, the lawyer may terminate the agreement.

2. Loss of Trust: If a client lies to their lawyer, refuses to cooperate with them, or misleads them, it can lead to a breakdown of trust between the two parties. This loss of trust may make it difficult or impossible for the lawyer to continue representing the client, and the agreement may be terminated.

3. Client Dissatisfaction: If a client is dissatisfied with their lawyer`s performance or communication, they may choose to terminate the contingency fee agreement. However, it is important to note that dissatisfaction alone is not a valid reason for termination. The client must have a legitimate complaint about the lawyer`s conduct, such as a failure to keep them informed about their case.

4. Conflicts of Interest: A lawyer may have to terminate a contingency fee agreement if a conflict of interest arises. For example, if the lawyer realizes that they have a personal or business relationship with a party on the other side of the case, they may have to step down from representing the client.

What are the Procedures for Terminating a Contingency Fee Agreement?

Both the lawyer and client have responsibilities when it comes to terminating a contingency fee agreement. Here are the general steps that need to be followed:

1. Notice: The terminating party must provide written notice to the other party. The notice should include the reason for the termination and the effective date.

2. Fees and Expenses: If the client terminates the agreement, they may be responsible for paying the lawyer`s fees and expenses up to the date of termination. If the lawyer terminates the agreement, they may have to refund any unearned portion of the contingency fee that they received.

3. Document Retention: The lawyer must retain any documents related to the case and provide them to the client upon request. The client must retain any documents related to the case and provide them to the lawyer if requested.

4. Court Approval: If the case is pending in court, the lawyer must seek the court`s approval before terminating the contingency fee agreement. The court may require the client to obtain new representation before allowing the agreement to be terminated.

Conclusion

Terminating a contingency fee agreement is never easy, but sometimes it is necessary. Whether you are a lawyer or client, it is important to follow the proper procedures to ensure a smooth transition. If you are unsure about the termination process, it is best to seek legal advice from an experienced attorney.