Why can't corporate law firms bill by contingency fee?
Anonymous Monkey
(Chimp, 0
Points)
I understand possible cash flow issues, but why can't corporate law firms bill by contingency fees? Especially if they are working on large deals with investment banks, who take lets say 6% of the profit from an IPO, why can't a corporate law firm take a cut too as their pay? Do any firms do this?




It's probably more expensive
It's probably more expensive for a company to give a percentage of the IPO to attorneys so the company wouldn't want to do it. Law firms don't control access to the markets like I-Banks. Firms did start entering into equity deals during the dot com era so they could get in on the upside, but obviously most of those start ups did not end up in an IPO and money was lost.
They have done this. In the
They have done this. In the middle of the tech boom of the 1990s, some law firms took an equity stake in startups in lieu of hourly billings. Some got so caught up in the thrill of the chase that they started to decline representing companies at $350 per hour because they could make so much more as partial stakeholders. Of course they crashed with everything else.
if i remember right from my
if i remember right from my ethics class, firms used to charge flat/percentage rates, until some joker plaintiff lawyer decided to sue them for price fixing and antitrust. that ushered in the billable hour. or at least that's what i was taught.
Watchell Associates
Watchell Associates apparently charge by percentages of deals and or transactions.
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