Legal Commentary

What Were The Firm's Incentives Under This Fee Agreement?

By Patrick J. Lamb

Not every alternative fee creates the same incentives.  Check this one out, as reported in the AmLaw Daily:

Drinker took on a patent case for a company called AgriZap and signed an agreement under which the firm would be paid its full fees over an 18-month period if AgriZap lost at trial. But if Drinker were to win the case for AgriZap, the agreement called for the company to pay the firm triple its hourly fees (plus costs)--and to pay it immediately.

This creates a strong incentive to win the trial.  But is there any incentive to control the cost of doing so?  It appears not.

Check out the outcome:

When AgriZap did win, Drinker submitted a bill for about $5 million---about double the $2.7 million the jury awarded AgriZap in the patent case.

Drinker won the ensuing lawsuit, so it was good for the firm, but I think it is safe to say that this is not an alternative fee arrangement that should be emulated.

Full post as published by In Search of Perfect Client Service on January 22, 2010 (boomark / email).