In a contingent fee arrangement, instead of billing the client on an hourly basis, the contingent fee intellectual property litigation attorney is entitled to a percentage of the settlement or trial award, usually one-third to one-half of the recovery. If the plaintiff does not receive compensation for damages, then the attorney also receives nothing. The contingent fee payment to the attorney is not the same thing as out-of-pocket expenses, which ordinarily remain an obligation of the client, although in very rare cases, we may agree to advance expenses during the time the case is pending and then deduct the expenses from the total recovery before calculating the client’s share of any recovery at the conclusion of the case.
In particular, patent infringement litigation has become so expensive that individual inventors, small businesses, colleges and Universities cannot realistically afford to enforce their patent rights. However, we will review your case for FREE and if we think that your case is a good fit with our firm, we will take your case on a contingent fee basis.
Although there are a myriad of arrangements for compensation between a lawyer and his client, there are three basic compensation models offered at Carey, Danis & Lowe for Intellectual Property litigation:
- Hourly Rate – you pay our attorneys’ fees at the hourly rate incurred, along with all expenses. Expenses include hiring experts, court fees, deposition transcript fees and travel costs. A good example of handling a matter on a straight hourly basis might be if you want to enjoin a defendant from infringing your patent, trademark or copyright, but no damages are involved. In this situation, we would need to be compensated at an hourly rate.
- Straight Contingency Rate – Any recovery, whether by settlement, judgment or arbitration award, is split according to a percentage, usually 40%-50% to the firm and 50%-60% to you.
- Hybrid or Blended Rate – a typical hybrid scheme blends the hourly model with the contingency model. For example, you may pay all of the expenses, and a portion of the attorneys’ fees, and in exchange, we would recover a lower percentage. Alternatively, you may pay the costs, and at certain milestones, the percentage of recovery increases (reflecting that more time and work has been done by us and compensating us for the same).
If we agree to represent you, we will first discuss your goals and expectations for the litigation, i.e., do you hope for a quick settlement with lower profit, or do you wish to maximize the award, even if it means going through a trial. Savvy patent litigators understand that the more a patent is litigated, the higher the odds are that a defendant will find better prior art to invalidate the patent, prevail on an invalidity defense or concoct a non-infringement defense. Some clients prefer to hit singles and recover money quickly rather than swing for the fence, which predictably results in a defendant that “lawyers up” and may result in a lot of time and effort with no recovery. Clients who try to hit “singles” usually offer to license their patents at a lower royalty rate that makes settlement feasible and predictable, and avoids litigation.
Carey, Danis & Lowe handles all types of Intellectual Property Litigation, including but not limited to the following kinds of intellectual property cases:
- Contingent Fee Patent Litigation (including theft of patentable ideas)
- Contingent Fee Copyright Litigation
- Contingent Fee Trademark Litigation
- Contingent Fee Trade Secret Litigation
- Contingent Fee Licensing
- Contingent Fee Antitrust Litigation
- Contingent Fee Malpractice Litigation
Before entering into a contingent fee agreement with you on any intellectual property matter, we will analyze the strength of your case. For example, in a typical patent infringement case, before agreeing to represent you, we will analyze the information available to us to determine:
- whether the patent is valid;
- whether the potential defendant(s) will petition for inter partes review (a proceeding in the U.S. Patent Office that reexamines the validity of the patent and would not be part of the contingent fee litigation);
- whether the defendant infringes the patent;
- whether there are sufficient damages from the infringement to provide sufficient recovery to make the litigation economically feasible;
- whether the damages are collectible; and
- the amount of attorney time and costs involved if the matter is taken through trial and possibly appeal.
Obviously, we would not take a case unless we believe the potential for success and recovery are great enough to offset the risk of no recovery and the possible payout of substantial costs. Patent cases in particular can be very expensive to litigate. In its 2011 survey, AIPLA claimed the average cost of patent infringement litigation was $2,769,000 if the damages were between one and twenty five million, and was $6,018,000 if the damages were greater than twenty five million. AIPLA REPORT OF THE ECONOMIC SURVEY I-153–54 (2011). Understandably, our due diligence prior to accepting your case may take anywhere from 40 to 200 hours, or even more.
Does your competition take cases on a contingency?
In our experience, you may find it difficult to hire IP lawyers on a contingency fee basis. Why? IP lawyers tend to be risk averse, and they want to be paid for their work. IP cases can be complicated and time-consuming. Further, patent law has been very fluid in the last ten years, making it difficult to predict with certainty what the outcome of the case is. Most lawyers are risk-averse, so the typical IP firm will demand a retainer, bill you by the hour, and have you pay all of the costs.
Is a contingent fee the best billing arrangement for me?
It depends. If you lack the resources to pay hundreds of thousands, or even millions, of dollars of legal fees to prosecute an IP case, then paying a contingency fee could be your only option. Most trial lawyers agree that there is no such thing as a “slam-dunk” IP case, which is why they want to be paid on an hourly basis. Also, you may need to conserve your resources to grow your company, or you may have cash flow problems. One thing is certain: a lawyer hired on a contingent fee basis is motivated to get you money, whether by judgment, settlement or arbitration award. There is no motivation to waste time or engage in unnecessary work.
- If you’re unable or uncomfortable paying an attorney’s hourly rate even though the result may potentially be undesirable, hiring a contingency fee lawyer might be your best option.
- Depending on the situation, you might end up paying more or less money for your lawyer in the end, but in a contingent fee arrangement, you definitely pay less money upfront.
- Should we enter into a contingent fee arrangement with you, we encourage you to seek an independent counsel to review the fee agreement to make sure it’s sensible and fair.
What Types of Clients do You Represent?
At Carey, Danis & Lowe, there is no “typical client”. Certainly, if you are an individual or a small corporation who is unable to pay legal bills on an hourly basis, and our due diligence suggests that your case is meritorious, we would definitely consider representing you. In fact, we consider the individual inventor with a strong patent as an ideal client because the public has long known that individual inventors provide the foundation for innovation in America. However, you may be a company with a patent that is infringed by many defendants, and simply do not want to pay the hourly rates involved in suing many defendants simultaneously or seriatim. These cases can be appealing because obtaining settlements from the initial defendants funds the later litigation and also bolsters the strength of the patent. Some companies do not wish to assert patents against their competitors, for fear of a retaliatory suit. We can help you sell your patents to a patent holding entity who can bring suit without fear of a counterclaim, since the holding entity does not make or sell any products. Universities often have large portfolios of patents but lack the legal budgets to bring suit. No matter who you are, we may be able to help.
You may have heard of the term “patent troll”, but not really understood what a patent troll is. A patent troll is NOT someone who hires an IP lawyer on a contingent fee basis. A patent troll is a pejorative term given to institutional investors that have adopted a business model where they purchase the rights to one or more patents, not to develop goods and services for market, but instead, to assert the patents against successful companies in an effort to unjustifiably obtain a settlement fee or royalties from them. We do not bring suit unless we believe the cause is meritorious and we do not even threaten to bring suit unless we believe that we would prevail if suit is filed.
Contact our offices today for a free case evaluation to see if you have a suit.
 James Bessen & Michael J. Meurer, Lessons for Patent Policy from Empirical Research on Patent Litigation, 9 LEWIS & CLARK L. REV. 1, 2 (2005).