What happens when alternative fees benefit the law firm?

This  story, Kasowitz Sues Duane Reade for $7 Million ‘Success Fee http://tiny.cc/PzBML in today’s New York Law Journal raises questions about what can happen when alternative fees end up benefiting a law firm beyond what they otherwise would have earned in fees under the traditional hourly fee arrangement.

The Journal writes that “Kasowitz, Benson, Torres & Friedman has sued longtime client Duane Reade for a $7 million “success fee” it claims it is owed as part of an alternative fee arrangement. The law firm represented the drugstore chain in a contract dispute that the company settled for an estimated $39.5 million without Kasowitz’s knowledge. Kasowitz claims the settlement included terms the firm negotiated during the course of the litigation. The suit comes as clients are increasingly pushing law firms to enter into non-hourly fee arrangements.”

How is your firm adapting and preparing for alternative fee arrangement requests and equally important, how are you preparing to collect these fees when they are unpaid?  Unlike traditional contingency cases, where the defendant frequently pays you and then you disburse to your client (think personal injury settlements), these alternative fee arrangements may not have settlement amounts going through the firm or may involve no settlement at all (think defense verdicts or dismissals).

It’s critical to think of these eventualities when you consider alternative fee arrangements.

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