Contingency Collection Lawyer Guide

I am not a lawyer, I am a judgment referral expert (Judgment Broker). This article is based on my California opinions and observations about retaining a contingency collection lawyer to recover a civil money judgment. Every state has different laws, and this article is not legal advice.

The word contingency means uncertainty, and implies the assumption of a risk. Most lawyers charge by the hour, because that eliminates most of their risk of not being paid for their work, and for any incurred expenses.

A contingency collection lawyer charges some or all of their fees as a percentage of a successful collection. They usually take judgments only when the debtor appears to have assets, and the risks of not being able to recover the judgment appears to be minimal and reasonable.

Enforcing a judgment always involves a financial risk. The time and expenses incurred may not result in any recovered money, and sometimes one can spend more money than one may recover. For this reason, most lawyers will only recover a judgment if they are paid a retainer upfront, and then on an hourly basis.

Of course, almost everyone wants their judgment recovered on a pure contingency basis, meaning the lawyer will advance their time and expenses, and not charge anything until the judgment is recovered. In a pure contingency retainer agreement, the lawyer gets their expenses repaid to them first, before splitting the recovered money with their judgment creditor client.

The smaller (and riskier) the available judgment debtor’s assets appear to be, the less likely a lawyer will recovery a judgment on a pure contingency basis.

Many things are negotiable, and depends on the details of the situation. Some judgments might be strong enough that a contingency collection lawyer might recover the judgment on a pure contingency retainer agreement. On other judgments, the lawyer may require their client to pay some or all of the expenses, and the lawyer’s time is usually reimbursed on a contingency basis.

Some (most) judgments do not have enough available debtor assets for the judgment collection attempt to be performed on any kind of contingency basis. In this case, one must pay a retainer, and by the hour, and pay all expenses – or find a regular (non-lawyer) contingency judgment enforcer.

Another option is to try to sell your judgment for cash upfront, however if lawyers will not recover a judgment on a contingency basis, the judgment is probably worth very little cash up-front.

Contingency rates also vary, depending on the strength of the debtor’s assets. A large judgment against a rich debtor might have a contingency rate of 30% for the lawyer and 70% to the judgment creditor. A riskier-looking judgment might be 70% to the lawyer and 30% to the judgment creditor.

On the same judgment, one lawyer might absorb all expenses, and charge 50% on a contingency basis, while another might charge only 25%, and require their client to pay a retainer upfront, and some or all expenses as they are incurred.

There are some that believe that an attorney cannot advance any expenses on behalf of their clients. I am not a lawyer, but based upon my friendship with hundreds of contingency collection lawyers, I believe that is not correct. Anything a lawyer and their client agrees to in the lawyer’s retainer agreement goes.

If an attorney was not able to advance fees, a personal injury attorney could not do business. Nevada’s rules of professional conduct, Rule 1.8 covers this, and other states probably have a similar rules.

Lawyers usually cannot provide financial assistance to their clients, but there is a specific exception for an attorney advancing court costs and other expenses of litigation when the payment of legal fees are contingent on the outcome of the case or recovery of a money judgment. Again, I am not a lawyer.

Recovering a judgment always depends on the debtor. If there are no current or future (or discoverable assets) of the debtor, not even the best contingency lawyer (or most anyone else) could ever recover money from your debtor.

Leave a Reply