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An example of a discount and success-based bonus in litigation

The US law firm now called Howrey a few years ago agreed to defend Chinese cellphone battery maker BYD Co. in a patent infringement suit. The law firm agreed to discount its hours in return for a bonus if a good verdict or settlement was reached. When the case settled in 2005 before going to trial, for “less than the value of one day’s production” at the defendant’s battery plant, Howrey was awarded its bonus.

According to the Nat. L.J., Vol. 29, July 16, 2007 at 10, the bonus included a “celebratory trip to China” and a million dollars, “which bumped the firm’s revenue from the case 50% higher than it would’ve been with plain old billable hours.”

This is a fine example of a performance-based incentive award. I couldn’t help but wonder, however, why the example is over two years old and Howrey can’t boast of more recent successes.