A success fee pays a bonus tied to results such as dismissal, a verdict below a threshold, or resolution within a target range. It typically accompanies a discounted base rate that the firm accepts in exchange for the upside.
Defining the qualifying outcome precisely is essential.
Alternative Names:
Contingent Bonus, Performance Fee
Why it Matters?
Outcome definition is where these arrangements succeed or fail, because a success fee tied to resolution below a stated figure creates an incentive to settle at that figure rather than to litigate a case that should be tried. Structures rewarding outcome quality relative to the initial evaluation align better than absolute thresholds. Defense-side success fees remain uncommon compared to the plaintiff contingency model.
Frequently Confused with
Related terms
Frequently asked questions
What is the risk in success fee design?
Are defense success fees common?
