Why Defamation Cases Are Not Taken on Contingency Featured Image

Why Defamation Cases Are Not Taken on Contingency

One of the most frequently asked questions we receive is, “Do lawyers take defamation cases on contingency?” The straightforward answer to the question is no. Defamation cases are typically not handled on contingency. Contingency fee arrangements are most commonly associated with personal injury cases where the damages, often in the form of medical expenses or lost wages, are more readily quantifiable, and insurance coverage and other readily identifiable collectible defendants (like medical institutions) on damages claims make collection easy.

Defamation cases, on the other hand, present many unique challenges. The damages in defamation lawsuits, which pertain to harm to reputation, are inherently difficult to quantify. Establishing a direct link between the defamatory statement and the financial losses incurred can be intricate, making it less predictable for attorneys to gauge potential compensation. Likewise, even when damages amounts are clear, it’s equally rare to have clarity that a liable defendant can pay an adequate settlement or judgment if one is obtained. This unpredictability and complexity make it infeasible for many firms to accept defamation cases on a contingency basis.

Our firm has extensive experience litigating defamation cases in the U.S. and around the globe. We have also authored over 22 state-specific defamation law guides. Beyond our litigation accomplishments, we pride ourselves on the transparency we offer regarding billing and payments. We make this information readily accessible to reflect our commitment to demystifying the complexities of legal fees.

In this article, we delve deeper into why defamation cases are typically not handled on a contingency basis and the factors that influence payment structures at our firm.

What is a Contingency Fee?

Many individuals have heard of the term “contingency fee” but do not exactly understand what it means and when it is typically utilized. Simply put, a contingency fee is a form of payment where an attorney’s fee depends on the financial compensation obtained in a case. If the attorney wins the case, the client will pay the attorney a percentage of the money received.

Definition of Contingency Fee

A contingency fee is distinctly different from standard payment methods utilized by law firms. While most legal fees are set as fixed hourly rates or a predetermined sum, a contingency fee arrangement stands apart. This model allows clients to engage an attorney without needing to pay the initial costs to enable an attorney to get started on the matter. Instead of paying upfront, the attorney’s compensation is taken from the financial settlement or judgment they secure for their client.

Under this arrangement, the attorney’s fee is a percentage of the monetary recovery, dependent upon a successful outcome. This structure ensures that the attorney is only compensated when they successfully represent their client. The amount paid to the attorney hinges not only on the result they achieve but often on the stage of litigation when the dispute settles.

While the standard percentage for these fees typically hovers around 33%, it may vary. Some arrangements may feature a sliding scale, such as 50% of the first $15,000 recovered, 33% of the next $35,000, and 20% of any amount exceeding $50,000. This flexibility makes contingency fees an accessible option for those who might not possess the immediate financial means to address legal challenges.

Types of Matters That Typically Use a Contingency Fee Arrangement

Contingency fee arrangements are primarily utilized for legal matters where clear monetary damages may be discerned and where there is a reasonably high likelihood of a favorable outcome for the client. This payment structure is especially prevalent in:

  • Personal Injury Cases: Given the nature of personal injury lawsuits, the potential recovery is often apparent. Depending on the jurisdiction and the specifics of the case, a successful attorney might be awarded anywhere between 20% to 50% of the recovery amount.
  • Medical Malpractice and Wrongful Death: Like personal injury matters, these cases often involve identifiable financial losses, such as medical bills or lost wages.
  • Collections: Contingency fees can be prevalent in collection matters when there is a significant possibility of recovering the debt.
  • Auto Damages: When vehicles incur damages due to accidents or other external factors, and there is a clear liable party, attorneys might take these cases on a contingency basis.

However, not all legal scenarios are suitable for contingency fees. In fact, some are explicitly prohibited. Model Rule 1.5(d) of the Model Rules of Professional Conduct forbids the use of contingency fees in domestic relations matters like divorce proceedings. Similarly, representing a defendant in a criminal case on a contingency basis is not allowed. Most states have incorporated these prohibitions into their legal standards.

Advantages & Disadvantages of Contingency Fees

Contingency fees are a unique approach to legal representation, distinct from traditional hourly structures. While they can provide accessibility for many clients, they also come with their own set of advantages and challenges. As with any financial agreement, it is essential to weigh the benefits against the potential drawbacks before entering into a contingency fee arrangement.

Advantages of a Contingency Fee

Contingency fees present a range of advantages that have made them an attractive choice for many clients and attorneys. Advocates of this payment model highlight several key benefits:

  • Accessibility: Contingency fee arrangements make legal representation more widely accessible. They empower individuals, irrespective of their financial standing, to pursue justice without the burden of upfront legal fees.
  • Reduced Risk: Legal battles are fraught with uncertainties and can be emotionally taxing. Contingency fee agreements reduce the financial burden and risk, ensuring clients do not bear the weight of hefty legal bills if the case does not end in their favor.
  • Expertise: Contingency agreements often indicate an attorney’s confidence in their proficiency and the case’s merit.
  • Incentive: With contingency fees, the attorney’s financial interest aligns with the client’s objective of obtaining the highest possible compensation. As the attorney’s fee is proportionate to the client’s recovery, they are naturally incentivized to secure the best possible outcome.

Disadvantages of a Contingency Fee

While contingency fees provide some advantages, they also come with certain drawbacks, including:

  • Greater Scrutiny: Given the inherent financial risks of taking a case on contingency, attorneys tend to scrutinize cases thoroughly before accepting them. This selectivity can inadvertently exclude cases with legitimate claims but less apparent evidence, denying some victims the opportunity for representation.
  • Less Control: Contingency agreements may influence attorneys to lean toward swift settlements, which may not always align with the client’s objectives, such as getting defamatory content removed.
  • Limited Scope: Attorneys working under contingency arrangements may target financial compensation, potentially neglecting other facets of a defamation claim, like restoring a tarnished reputation or obtaining retractions.
  • Proportionality: In scenarios with a large monetary outcome, contingency fees could translate into a substantial sum for the attorney. Such scenarios could raise ethical and practical questions about the proportionality and fairness of the attorney’s fee in relation to the client’s recovery.

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Key Reasons Why Defamation Cases Are Not Taken on Contingency

Unlike legal matters where someone is physically injured and there is a tangible, documented injury, defamation may cause damage in ways that are hard to prove. To succeed in a defamation lawsuit, a plaintiff and their attorney must prove that what was said was verifiably untrue and also prove the harm it caused. This means closely analyzing the facts and circumstances of the defamation’s publication, what was implied by the statements, and the negative effects they caused.

Several key uncertainties associated with defamation cases, which are driving factors behind why contingency fees are not typically taken on contingency, include:

  1. Proving defamation and damages,
  2. Lack of expertise,
  3. Case viability,
  4. Defamation is an intentional tort,
  5. Obtaining damages, and
  6. Non-financial objectives.

Proving Defamation Damages

Defamation cases are difficult because they deal with things you cannot always see or touch. This damage caused by defamation is not always easy to quantify in monetary terms. It is different from a personal injury case, where you can show medical bills to prove damages. Instead, the harm is typically non-economic, such as damages to someone’s feelings, personal relationships, or reputation.

To prove this kind of harm, attorneys have to dig deep. They need to gather information carefully, get expert opinions, and understand how things spread on the internet. It takes a lot of work and knowledge to make a strong case.

Further, because the harm from defamation can be so different in each case, there is no definitive way to determine what a judge or jury will rule a plaintiff’s non-economic damages are before obtaining the verdict – meaning a defamation lawsuit is far from a sure thing and there is no “guaranteed payment” for an attorney.

Lack of Expertise in Defamation

Most types of lawyers that take cases on contingency, such as personal injury and employment lawyers, have no expertise in the area of defamation law (especially internet defamation). There are unending nuances associated with internet defamation and what is required to successfully advance and “win” a case. Because of their lack of expertise in online defamation, most attorneys who are comfortable with contingencies fees that are presented with these types of cases will not take them on.

For example, dealing with defamation cases where the defamer is unknown can be tricky. Some people use tools like a VPN or throwaway email to hide their identity online. This makes it difficult to determine who made the defamatory statements and requires a certain level of expertise and experience to efficiently and effectively unmask them. If an attorney does not have the requisite expertise to identify who the defendant is, they may not want to take the case without getting paid upfront.

Case Viability & Worth

Before an attorney decides to take on a case, especially if they are doing so without receiving payment upfront, they may analyze the merits and viability of the case very carefully. They will inevitably ask themselves some pressing questions like, “What are the chances they will win the case?” If they think it is not likely, they may not choose to pursue the case.

Next, they will assess how much money may be awarded if they win. If it is not enough to cover all of their work, they will likely decline the case. They also look at whether the defendant can actually pay. If that person does not have savings, assets, or any way to pay, an attorney may not want to spend time on a case they will never get paid for.

With defamation, determining if a case is strong is even harder and cases may be easily tossed out if a plaintiff does not have a strong case. Many defamation cases come down to “he said, she said” types of claims, where you rarely see early victories on the plaintiffs’ side.

Further, defamation is an extremely defense-friendly claim. We love free speech and the First Amendment in this country. Our laws are intentionally biased to make defamation claims more difficult than other types of claims to pursue, prosecute, and win. For example, there are dozens and dozens of unique and general defenses to claims with opinion, truth, fair reporting, and others. Further, unlike typical personal injury cases, defamation claims are more risky. Defamation plaintiffs can sometimes be held liable to pay the other side’s attorneys’ fees if they lose (even in a close case or because of procedural reasons), such as in cases when Anti-SLAPP defenses are available. These numerous defenses make “winning” a defamation case unpredictable and difficult.

As mentioned above, defamation cases also involve proving things, such as harm, that are often hidden (and sometimes intangible), and attorneys have to sift through a lot of information to assess how the case might turn out. Sometimes, even if there is strong evidence, the outcome is still uncertain.

So, before they say yes, attorneys will weigh everything and think about the risks.

Defamation is an Intentional Tort and Typically Not Covered by Insurance

Defamation is an intentional tort, meaning that, generally, there is no insurance coverage for defendants who publish false statements of fact about another intentionally (i.e., with malice). At its heart, it is against public policy to reimburse and cover expenses for someone who intentionally harms another.

Defamation cases that typically lead to the largest sum of awarded damages for plaintiffs – punitive damages – involve defendants who publish defamatory statements with actual malice or act in an exceptionally egregious manner. Due to the severity of the conduct by the defendant, these types of cases will never have insurance coverage.

Even in cases where the conduct of the defendant is not malicious or especially egregious and is merely negligent, where this exception wouldn’t apply to negate insurance coverage, most people simply do not have an insurance policy that covers defamation. While some homeowner’s policies, renters’ insurance policies, umbrella policies, and business policies cover defamation, it is rare for a defamation defendant to have coverage.

Simply put, in the majority of defamation cases, there is no insurance coverage. Further, even when there is an insurer and coverage, the case/claims may not be viable due to the conduct of the defendant or other factors, rendering the coverage obsolete.

Obtaining Damages

Defamation cases come with their unique challenges when it comes to collecting damages. Most defamation defendants are not collectible as they do not typically have enough money to pay a significant judgment and make a contingency worth it for an attorney. Think about it this way: a court saying someone owes you $1 million does not mean much if they cannot actually pay you that money.

High-value defamation settlements and monetary verdicts typically require years of work by the attorney or firm and almost never settle early. A large percentage require going to trial. Because of all the issues listed above, such as no insurance coverage, ambiguous damages, and numerous defenses, taking a defamation case on contingency is uncommon. Adding in risk or inability to collect if you do win tacks on another reason that makes a case impractical to pursue from a business standpoint.

As an attorney or law firm approaching the practice of law as a business, there are typically two types of cases that a firm would readily find acceptable to take on contingency:

  1. Difficult cases that may take a lot of work but pay off big – in the millions and enough to make years of effort and work worth the time spent, and
  2. Smaller value cases (in the tens or hundreds of thousands), but if they do not require much work and/or can be settled quickly to make the undertaking worth it.

Otherwise, from a business model and operations standpoint, it’s generally not worth it for most attorneys.

You also have to ask yourself what winning in court means to you. For some people, winning might mean getting the person to retract what they said publicly or even a public apology. Others might want the harmful content removed from the internet. This takes us to our next reason: most defamation plaintiffs’ primary objective behind filing suit is not financial.

Non-Financial Objectives

In many legal battles, the primary goal is to get compensation for the harm done. But in defamation cases, this is often not the case. Money is still important, but many times, the primary or most important goal of a defamation case is not about obtaining financial awards but about repairing someone’s reputation. In fact, some attorneys argue that they should not take defamation cases on contingency because it can turn the focus to money rather than non-monetary solutions that can lead to better outcomes for all parties involved.

In our experience, most plaintiffs want harmful content removed from the internet more than anything else. This is also referred to as “injunctive relief,” and it is when the court issues an order to do something specific rather than paying money. Some examples of injunctive relief in defamation cases are:

  • Orders to take down certain content,
  • Orders that prevent someone from saying or writing harmful things in the future, and
  • Nondisparagement agreements.

For many people, the main goal is to stop the harmful statements and get them removed. However, if someone wants to obtain significant financial damages in a defamation case, things may be more complicated. It takes more time, money, and effort to prove damages and counter any defenses the other side might bring up. So, while getting harmful content removed might be the primary goal, seeking a large amount of money can be a more challenging and costly process.

Payment Structures Typically Used in Defamation Cases

Defamation cases often come with uncertainties and a handful of moving parts. For clients, having a predictable and clear payment structure helps in navigating these complexities. One method that offers this predictability is a fixed fee agreement. That way, clients know the cost of legal services upfront. This helps in avoiding unexpected expenses and allows for better budgeting.

Additionally, with this transparency in fees, clients can freely communicate with their attorneys. This open dialogue ensures both parties are on the same page and working together toward a common goal.

Most commonly, in defamation cases, attorneys use retainer fee agreements. Firms like Minc Law primarily adopt this approach for hourly and litigation tasks. Simply put, a retainer fee is an initial payment made by a client. This payment is for reserving the attorney’s time and services. The exact amount is determined based on the specific services needed and the overall scope of work agreed upon. By using a retainer, clients and attorneys can set clear expectations from the beginning, ensuring a smoother legal process.

Standard Retainer Fee Agreement

Defamation cases are complicated, often demanding detailed research, careful planning, and a deep understanding of the nuances involved. Given this complexity, hourly billing is typically the most appropriate choice.

The primary reason why a standard retainer fee agreement is used is because it offers a true reflection of the effort an attorney puts into a case. Rather than a flat fee or a contingency, an hourly rate captures the time and energy expended by an attorney.

By choosing this payment structure, clients can be assured of the attorney’s commitment and focus. Every hour billed corresponds to work done specifically for their case, whether that is research, strategizing, or courtroom representation. This model fosters accountability and transparency. It ensures the attorney’s attention is wholly dedicated to the client’s cause, providing comprehensive representation tailored to each case’s unique needs.

We often use standard retainer fees for online content removal, cease and desist actions, investigation into anonymous parties, and defamation litigation.

Evergreen Retainer Fee Agreement

Basically, an evergreen retainer is like a refillable payment system. Think of it like a prepaid card. When the balance gets low, you add more money. So, when an evergreen retainer balance hits a specific predetermined amount, the client will have to add more money to the retainer.

Defamation cases can sometimes have unexpected costs; however, an evergreen retainer means attorneys always have some payment available. This ensures they can keep working smoothly on the case without worrying about money.

For clients, the system is straightforward. They know they need to keep the payment at a certain level and will not get any surprise bills. This is especially helpful in cases that take a long time or require a lot of legal action.

For further reading, please see our comprehensive guides explaining the different types of retainer fees we utilize at Minc Law and what the likelihood is that your retainer fee will be exhausted.

Ways to Fund Your Retainer Fee

If you cannot afford a retainer fee and cannot find an attorney to handle your defamation case without upfront costs, there are other options to consider. Some people choose to represent themselves in court (known as “pro se”), while others might seek help through legal aid, pro bono attorneys, or even crowdfunding.

Pro Se

The term “pro se” comes from Latin and means “for oneself.” When someone represents themselves in court without an attorney, they are known as a pro se litigant.

Some of the advantages of representing yourself are:

  • Cost Savings: Not hiring an attorney can save on costs, although it might have other financial implications later on.
  • Direct Control: Being pro se allows someone to have complete control over their case strategy, though they must still follow court rules.
  • Familiarity with the Case: Some feel that their personal connection to the facts makes them the best person to present their side.

Some of the disadvantages of representing yourself are:

  • Personal Bias: Representing oneself can lead to a one-sided view, making it hard to see the case from an opposing perspective. Attorneys are trained to see all angles, which helps with strategy.
  • Presentation Challenges: Even with some legal knowledge, it can be tough to make persuasive legal arguments without proper training.
  • Lack of Legal Training: Many who represent themselves do not have a background in law, which can leave them unprepared for the complexities of the legal system.
  • Delays: Unfamiliarity with court procedures can slow things down. It might also result in penalties for not following court rules.

Choosing to represent oneself is a significant decision. While there are certain advantages, the challenges can be daunting. It is typically wise to have an expert in your corner, guiding you through the legal process.

Legal Aid

Legal aid provides free legal assistance to those who might not be able to afford it. Unlike criminal cases, where the state often appoints an attorney if someone cannot afford one, civil cases do not come with that guarantee. That is where legal aid comes into play. It is designed to help people, especially those with low income, navigate the non-criminal parts of the legal system.

If you are facing a civil legal issue like defamation and you cannot afford an attorney, legal aid might be your answer. It is meant for folks who are near or below the poverty line, ensuring that everyone has a fair chance in court, no matter their financial situation.

To find legal aid in your area, check out Legal Service Corporation’s directory or LawHelp.org.

Pro Bono

Pro bono comes from the Latin phrase “pro bono publico,” meaning “for the public good.” In short, if you cannot afford an attorney and you have a valid legal claim, some attorneys may take on your case without charging you, or they may offer a substantial discount. This is not just charity; many attorneys believe in giving back and ensuring everyone gets a fair shot in court.

If you think pro bono could be right for you, here is a list of pro bono legal service providers by state to help you find the assistance you need.

Crowdfunding

Crowdfunding is not just for business ideas or personal projects. You can also use platforms like GoFundMe or Kickstarter to raise money for legal battles. This approach, called litigation crowdfunding, is becoming more common.

By sharing your story online, you can rally public support and get the funds you need. Plus, it is not just about the money. Crowdfunding can also spread awareness about your situation or a bigger issue, pushing for social justice. So, if you are strapped for cash but believe in your case, consider giving crowdfunding a shot. It might be the boost you need to get justice.

Explore Your Legal Options to Tackle Defamation Head-On

We understand how confusing and overwhelming it can be trying to navigate the costs and billing processes associated with internet defamation matters. That is why we strive to be as transparent as possible about how we bill for defamation matters (and other online harassment and privacy matters). Our goal is to ensure that all clients fully understand their legal engagement before entering into it.

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“I highly recommend the Minc Law firm. Not only were they knowledgeable, professional and timely in resolving my matter, but they were a pleasure to work with. Dan, Darcy and Melanie thank you for everything! My only regret was not engaging the firm earlier.”

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October 4, 2021

If you feel that you are a great fit for Minc Law’s internet defamation services and want to explore your legal options, reach out to schedule your no-obligation, consultation by calling us at (216) 373-7706, speaking with a Chat representative, or filling out our online contact form.

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