The dollars at stake in an activity as a possible basis for fees paid the law firm

Payment to a law firm based on the value of what is at stake makes sense at times. An article in Law Practice, Nov./Dec. 2010 at 34, gives several examples of “price as a percentage of a dependent variable, such as an employment agreement, an acquisition or a real estate transaction.” Investment bankers have long worked on percentage fees.

Even if legal services in support of quantifiable activities or transactions – issuance of stock, repurchase of bonds, construction of a building, purchase or sale of goods could be other possibilities – did not have a specific monetary value, it would be fairly easy to create three or four broad categories of values. All severance agreements where the employee made less than $100,000 would be one price; all severance agreements where the employee made more than $100,000 but less than $300,000 would be another price.

A parting point: these arrangements need to anticipate what will be paid if the transaction does not complete.

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