Is Paying Hourly To An Attorney In A Wrongful Termination Case A Good Idea?

hourly fee attorneyThe most common way for attorneys to be compensated when representing a claimant in a wrongful termination case is a combination of a small retainer (around $2000 – $2,500) and the rest of the compensation is on contingency of around 35% – 40% of any settlement or award in the case.  Many claims brought against employers in California have an attorneys fees provision, where a claimant’s attorney can file a motion for attorneys for after winning a trial and be compensated for every hour worked on the case. Even though few cases go to trial, the risk of having to pay attorneys fees to the winning Plaintiff is a significant factor in litigation and in settlement negotiations, and it’s a claimant attorney’s job to leverage that risk in order to maximize compensation in any settlement negotiations.

An alternative arrangement is paying an attorney hourly for representing you. This type of arrangement has at least three potential issues:

(a) It influences your settlement expectations in a way that’s not supported by law and may be counterproductive to settling your case. This means that at some point in a case, when settlement discussions begin, instead of determining the value of the case and the potential risks of proving a case in court v losing it, one of the primary considerations of a claimant is to recoup the fees paid and settle for at least somewhat more than what has been spent on the case, even if the case turns out to be rather weak.

(b) It creates incentive for an attorney to to do more work than necessary just to bill. Even though this applies mostly to less than ethical attorneys, it’s a real issue that has to be taken into account. When an attorney is paid by the hour for the work performed, and the outcome of a case is far from clear, there is an interest in billing for more hours.

(c) The outcome of most employment cases is speculative, and if an attorney is not willing to work on contingency, this begs the question whether he believes you have a case worth pursuing. There is a real risk of recovering less in your case than what you believe you are entitled to or not recovering anything at all. If an attorney believes you have a strong case, he should offer to take your case on contingency (with or without a small retainer as mentioned above), as he would believe with reasonably certainty that he can win or successfully settle your case. When an attorney is only willing to represent for an hourly fee, this very likely means that your attorney doesn’t believe that your case is nearly as strong as it should be in order to make it worth pursuing.

One situation where paying hourly for representation in a wrongful termination case is legitimate is where your attorney openly advises you that your case is very difficult and it can only be taken on an hourly fee basis, and where you have the financial ability to take the risk of paying hourly and ending up losing a case, and where you have a strong interest in pursuing a case regardless of an outcome.

The other situation where paying hourly could make sense is where you haven’t been actually terminated yet. However, without a termination claim, your case will necessarily have a very limited monetary value, unless there is evidence of the most egregious discrimination and harassment that goes far beyond the typical. Absence of termination and corresponding absence of significant wage loss is the main reason that an attorney would often require an hourly fee arrangement when representing a claimant who is still employed with the potential defendant. That attorney knows that unless you are eventually terminated for an unlawful reason, the value of your case will be inherently limited.