Would a lawyer ever agree to guarantee legal services? Why and what is it worth? Most lawyers already provide a guarantee of many of their legal services. Does that surprise you? How the guarantee works depends on the issue involved and the fee structure.
You see it in ads every day, “No fee if no recovery in your personal injury case!” That qualifies as a fee guarantee, (not a results guarantee) and is based on the outcome of the client’s personal injury case. In exchange for the guarantee and the free consultation the value of the fee is fixed based on the outcome of the case. A fair deal for all in almost all cases.
No lawyer can (or should) guarantee the outcome of a case, there are too many variables. No “fee guarantee” or contingency fee is permitted in a criminal case, such as “no fee if you are convicted” or “money back if you go to jail”, that is an impermissible contingency fee in Indiana and most states. Likewise, a lawyer in Indiana cannot have a fee based on the success of a dissolution of marriage action. The court nearly always grants the dissolution sooner or later.
But what about other legal matters that are not prohibited? Would it make sense to have a fee based guarantee on the success of a business purchase agreement? One fee for the negotiation and a second fee based on the price or speed of closing or whatever is of importance to the client makes some sense. It could be based on the negotiation skills the lawyer brings to the table. It is permissible and is subject to the client’s understanding of the terms and agreement to the fee. If the fee is somehow contingent the rules require that the agreement be in a writing confirmed by the client.
Why did I say that most lawyers do provide a guarantee? Most lawyers will fix the mistakes they make, and they usually do it for no additional fee. That is one essence of a fee guarantee. And, naturally, a good lawyers make fewer mistakes in their work. The smarter lawyers realize that a small amount (relative to the price) of the fee is set aside for the guarantee. That amount is there. in exchange for the value of the guarantee, to cover those mistakes that do get made. These lawyers know that nobody will be perfect, and they may have to occasionally correct a mistake they, a staff member, or a third party makes, and for which the lawyer usually gets the blame. If the lawyer calculates right, she can achieve a premium result from having to correct fewer mistakes than expected over a period.
If a lawyer always corrects mistakes, but makes no promise to the clients of a fee guarantee, the premium opportunity will be gone, since clients will agree to pay more for a product with a stated guarantee. If you give the guarantee, you should tell the client about the extra value that you offer and that they get, and that you charge the client proportionately. If the client wants to bargain for a reduction of the fee, the fee guarantee is something of value that you can negotiate away – before beginning the representation. See if the client wants to give up the guarantee to save a few percentage points on the fee!