HYBRID FEE AGREEMENT

(Reduced Hourly Rate Plus Contingency Fee)

IMPORTANT NOTICE: This is a contingency fee agreement. You are not required to sign this agreement. You have the right to consult with other attorneys and compare fee arrangements before signing.

This Agreement is entered into as of [__/__/____] ("Effective Date")

BETWEEN:

ATTORNEY/LAW FIRM:
Name: [________________________________]
Bar Number: [________________________________]
Firm Name: [________________________________]
Address: [________________________________]
City, State, ZIP: [________________________________]
Telephone: [________________________________]
Email: [________________________________]

AND

CLIENT:
Name: [________________________________]
Address: [________________________________]
City, State, ZIP: [________________________________]
Telephone: [________________________________]
Email: [________________________________]

ARTICLE 1: NATURE OF HYBRID FEE ARRANGEMENT

1.1 Explanation of Hybrid Fee Structure

Under this hybrid fee arrangement, Client will pay a reduced hourly rate for Attorney's services PLUS a contingency fee based on the recovery obtained. This structure combines elements of both hourly and contingent fee arrangements.

1.2 Comparison to Standard Fee Arrangements

1.3 Rationale for Hybrid Structure

☐ Client has limited ability to pay full hourly rates upfront
☐ Attorney is sharing risk of litigation outcome
☐ Aligns interests of Attorney and Client in achieving favorable outcome
☐ Provides Attorney predictable income while preserving upside potential
☐ Other: [________________________________]

ARTICLE 2: SCOPE OF REPRESENTATION

2.1 Legal Matter

Attorney agrees to represent Client in the following matter:

Type of Matter:
☐ Personal injury
☐ Employment dispute
☐ Commercial litigation
☐ Business dispute
☐ Real estate litigation
☐ Other: [________________________________]

Description of Matter: [________________________________]

Adverse Party (if known): [________________________________]

Court/Tribunal (if applicable): [________________________________]

2.2 Services Included

The hybrid fee arrangement covers:

☐ Investigation and case evaluation
☐ Demand letters and pre-litigation negotiations
☐ Preparation and filing of complaint/petition
☐ All discovery (written and depositions)
☐ Motion practice
☐ Mediation and settlement negotiations
☐ Trial preparation and trial
☐ Post-trial motions
☐ Other: [________________________________]

2.3 Services NOT Included (Billed Separately or Excluded)

☐ Appeals (requires separate agreement)
☐ Enforcement of judgment
☐ Related but separate claims
☐ Criminal defense related to same incident
☐ Other: [________________________________]

ARTICLE 3: HYBRID FEE STRUCTURE

3.1 Reduced Hourly Rate Component

Billing Personnel and Rates:

3.2 Payment of Hourly Component

☐ Retainer Required: Client shall pay an initial retainer of $[________], to be held in trust and applied to hourly fees as incurred.

☐ Monthly Billing: Client shall pay hourly fees monthly within [____] days of invoice.

☐ Hybrid Payment: Client shall pay $[________] retainer plus monthly invoices exceeding retainer.

☐ Deferred Payment: Hourly fees will accrue and be deducted from any recovery before calculating contingency.

3.3 Contingency Fee Component

Contingency Percentage Based on Stage of Resolution:

3.4 Calculation of Total Fee

IMPORTANT: The total fee under this Agreement shall be calculated as follows:

Total Fee = (Hourly Fees Incurred at Reduced Rate) + (Contingency Percentage × Gross Recovery)

OR

☐ Alternative Structure - Credit Against Contingency:
Total Fee = Contingency Percentage × Gross Recovery, with hourly fees credited against contingency (no double payment).

Minimum Fee: $[________] (the greater of hourly fees incurred or this minimum)

3.5 Prohibition on Excessive Fees

Client and Attorney agree that the combined hybrid fee shall not exceed what would be a reasonable fee under ABA Model Rule 1.5 and applicable state rules. If the combined fee would be unreasonable, the fee shall be reduced to a reasonable amount.

3.6 Fee Cap (if applicable)

☐ Total fees (hourly + contingency) shall not exceed [____]% of the gross recovery.
☐ Total fees shall not exceed $[________].
☐ No cap applies; reasonableness standard governs.

ARTICLE 4: DEFINITION OF RECOVERY

4.1 Gross Recovery Defined

"Gross Recovery" means the total of all amounts received by or on behalf of Client, including:

☐ Cash settlements
☐ Judgments and awards
☐ Structured settlement present value
☐ Non-monetary consideration (valued at fair market value)
☐ Counterclaims dismissed or reduced
☐ Other benefits obtained: [________________________________]

4.2 Recovery Does NOT Include

☐ Statutory attorney's fees awarded by court (addressed in Article 5)
☐ Costs and expenses recovered from opposing party
☐ Punitive damages (subject to separate treatment below)
☐ Other: [________________________________]

4.3 Special Treatment of Punitive Damages

☐ Punitive damages included in gross recovery at same percentage
☐ Punitive damages subject to reduced contingency of [____]%
☐ Punitive damages excluded from contingency calculation
☐ Other: [________________________________]

ARTICLE 5: STATUTORY ATTORNEY'S FEES

5.1 When Court Awards Attorney's Fees

If the court awards statutory attorney's fees:

☐ Option A: Court-awarded fees belong to Attorney in addition to hybrid fee
☐ Option B: Court-awarded fees offset/reduce Client's obligation for hourly component
☐ Option C: Court-awarded fees offset both hourly and contingency components
☐ Option D: Other arrangement: [________________________________]

5.2 Prevailing Party Provisions

Client understands that if Client does not prevail, Client may be liable for opposing party's attorney's fees and costs in certain circumstances (e.g., [________________________________]).

ARTICLE 6: COSTS AND EXPENSES

6.1 Costs Are Separate From Fees

Client is responsible for all costs and expenses, which are separate from attorney's fees. These include:

Estimated Total Costs: $[________]

6.2 Payment of Costs

☐ Client Advances: Client shall pay costs as incurred or provide cost advance of $[________].
☐ Attorney Advances: Attorney will advance costs, to be reimbursed from any recovery before fee calculation.
☐ Hybrid: Client advances costs up to $[________]; Attorney advances amounts exceeding this.

6.3 Costs if No Recovery

If there is no recovery:
☐ Client remains responsible for all costs advanced
☐ Attorney absorbs costs advanced (specify which: [________________________________])
☐ Client responsible for: [________________________________]

ARTICLE 7: EXAMPLES OF FEE CALCULATION

7.1 Example 1: Settlement Before Trial

Assumptions:
- Gross Recovery: $500,000
- Hourly fees incurred: $25,000 (at reduced rate)
- Costs advanced: $15,000
- Stage: Post-discovery settlement
- Contingency rate: 25%

Calculation (Hourly + Contingency Method):
- Contingency: $500,000 × 25% = $125,000
- Hourly fees: $25,000
- Total Fee: $150,000
- Costs reimbursed: $15,000
- Client receives: $335,000

7.2 Example 2: Verdict After Trial

Assumptions:
- Gross Recovery: $1,000,000
- Hourly fees incurred: $75,000 (at reduced rate)
- Costs advanced: $50,000
- Stage: After trial
- Contingency rate: 30%

Calculation:
- Contingency: $1,000,000 × 30% = $300,000
- Hourly fees: $75,000
- Total Fee: $375,000
- Costs reimbursed: $50,000
- Client receives: $575,000

7.3 Example 3: No Recovery

Assumptions:
- Gross Recovery: $0
- Hourly fees incurred: $40,000
- Costs advanced: $20,000

Calculation:
- Contingency: $0 × [____]% = $0
- Hourly fees: $40,000 (Client owes this amount)
- Costs: [Client owes / Attorney absorbs per Article 6.3]

ARTICLE 8: SETTLEMENT AUTHORITY

8.1 Client's Sole Authority

Client retains sole authority to accept or reject any settlement offer. Attorney will provide professional advice on all offers but the decision belongs exclusively to Client.

8.2 Attorney's Obligation

Attorney shall promptly communicate all settlement offers to Client and provide written analysis of each offer's strengths and weaknesses.

8.3 Unreasonable Rejection of Settlement

Client understands that rejecting a reasonable settlement offer and proceeding to trial involves risk of a less favorable outcome, including the possibility of no recovery.

ARTICLE 9: TERMINATION

9.1 Client's Right to Terminate

Client may terminate this Agreement at any time by written notice. Upon termination:
- Client owes hourly fees for all work performed at the reduced rate
- If Client subsequently recovers through another attorney, Client owes the contingency fee calculated on recovery, reduced by reasonable credit for new attorney's contribution
- Attorney has lien on any recovery for fees and costs owed

9.2 Attorney's Right to Withdraw

Attorney may withdraw for:
- Non-payment of hourly fees or cost advances
- Client's failure to cooperate
- Irreconcilable differences regarding case strategy
- Discovery that case lacks merit
- Other good cause

Upon withdrawal, Attorney retains lien for hourly fees incurred and costs advanced.

9.3 Quantum Meruit

If termination occurs and subsequent recovery is obtained, Attorney's fee shall be determined on quantum meruit basis, considering:
- Hourly fees at reduced rate actually incurred
- Proportionate share of contingency based on contribution to recovery
- Total reasonable fee under the circumstances

ARTICLE 10: ATTORNEY'S LIEN

10.1 Retaining Lien

Attorney shall have a retaining lien on Client's documents and property in Attorney's possession for unpaid fees and costs.

10.2 Charging Lien

Attorney shall have a charging lien on any recovery in this matter for all fees and costs due under this Agreement.

10.3 Notice of Lien

Attorney may file notice of lien with the court and/or serve notice on opposing parties.

ARTICLE 11: DISPUTE RESOLUTION

11.1 Fee Disputes

Any dispute regarding fees shall be resolved through:
☐ State bar fee arbitration program
☐ Mediation, then binding arbitration
☐ Litigation in courts of [________________________________]
☐ Other: [________________________________]

ARTICLE 12: DISCLOSURES AND ACKNOWLEDGMENTS

12.1 Required Contingency Fee Disclosures

As required by [State] Rules of Professional Conduct:

☐ Client has been informed that fees are negotiable
☐ Client has been provided an explanation of all fee options
☐ Client understands the difference between hourly, contingency, and hybrid fees
☐ Client has been informed of any court-imposed fee limitations
☐ Client has received information about potential liability for opponent's fees

12.2 Client Acknowledgments

Client acknowledges and understands:

☐ This is a legally binding contract
☐ Client may consult with another attorney before signing
☐ No outcome is promised or guaranteed
☐ Client may owe hourly fees even if there is no recovery
☐ The hybrid structure may result in higher total fees than straight contingency
☐ The hybrid structure may result in lower total fees than straight hourly
☐ Client retains settlement authority
☐ Client has received a copy of this signed Agreement

12.3 Attorney Acknowledgments

Attorney acknowledges:

☐ This fee arrangement complies with applicable ethics rules
☐ The combined fee will not be excessive
☐ All contingency fee requirements have been followed
☐ Client has been fully informed of fee options

ARTICLE 13: GENERAL PROVISIONS

13.1 Entire Agreement

This Agreement constitutes the entire agreement between the parties.

13.2 Modifications

Modifications must be in writing and signed by both parties.

13.3 Governing Law

This Agreement is governed by the laws of the State of [________________________________].

13.4 Severability

Invalid provisions shall be severed without affecting remaining provisions.

13.5 Assignment

This Agreement may not be assigned without written consent of both parties.

SIGNATURES

READ THIS AGREEMENT CAREFULLY BEFORE SIGNING. THIS IS A BINDING CONTRACT.

CLIENT:

I have read this Agreement, understand its terms, and agree to be bound by them.

Signature: ________________________________
Printed Name: [________________________________]
Date: [__/__/____]

CO-CLIENT (if applicable):

Signature: ________________________________
Printed Name: [________________________________]
Date: [__/__/____]

ATTORNEY:

Signature: ________________________________
Printed Name: [________________________________]
Bar Number: [________________________________]
Date: [__/__/____]

STATE-SPECIFIC ADDENDA

California Requirements

In California, this hybrid agreement is considered a contingency fee agreement and must comply with California Business and Professions Code Section 6147, including:
- Statement that fee is negotiable
- How disbursements affect recovery
- Statement of client's right to be informed of important developments

New York Requirements

In New York, this agreement must comply with Appellate Division fee schedules and Rule 1.5(c) requirements including written agreement signed by client.

Florida Requirements

Florida Rule 4-1.5 imposes specific requirements for contingent fees including schedule of percentages and statement of costs.

SOURCES AND REFERENCES

• New York Legal Ethics: Hybrid Fee Agreements
• Arizona Ethics Opinion 03-06: Hybrid Fee Agreements
• California Bar: Conversion Clauses in Contingency Fee Agreements
• ABA Model Rule 1.5: Fees

This template should be reviewed by a licensed attorney and modified to comply with the specific requirements of the jurisdiction where it will be used. Many states have mandatory contingency fee disclosure requirements and/or fee caps that must be incorporated.