Contingent fee arrangements occur when a law firm provides services to a client in exchange for a percentage of future recovery in the matter. Because the law firm doesn’t collect a fee unless the client receives a recovery, and because the fee collected is a percentage of the total recovery, law firms generally do not send out monthly invoices to contingent fee clients.
Even though the firm doesn’t need to send out monthly invoices to contingent fee clients, there are several reasons why law firms may want to have the attorneys track their time anyway:
- In many contingent fee cases, the law firm’s client has a right to seek attorney’s fees from the opposing party. Courts require counsel to prove the reasonableness of the contingent fee. One way to support the reasonableness of the fee is to submit invoices showing the actual time and costs. If your law firm cannot provide adequate records, the court may not award the client as much as it could if it had the documentation needed to justify the reasonableness of the requested fees.
- If a client leaves your firm and goes to another firm during the course of the case, before the recovery, your firm will still be able to recover the reasonable fees for the services you provided for the client, but you won’t be able to obtain those fees unless you can show how much time you spent on the matter.
- If a client sues for malpractice, claiming that your firm did little to no work on the case, you have your attorney timesheets to show exactly what work the attorneys actually did on the case.
- Sending timesheets or invoices to your clients which show the time your firm spent on the matter is a good way to update clients about the status of their case
- Reviewing invoices is a good way to refresh your memory about what happened in a case if you ever need to do so.
For all of these reasons, although a law firm may not want to spend administrative resources on tracking attorney time on a contingent fee matter, it may still make sense for the firm to do so.