By Jeffrey T. Donner, Esq.

There is a particular type of prospective commercial litigation client that experienced trial lawyers eventually learn to recognize.

He is usually sophisticated. He may own businesses. He may invest money. He may loan large sums to friends or business associates. He may speculate in stocks, real estate, private ventures, or other deals that involve real risk.

He understands risk when he wants to take it.

But when he needs a lawyer, something strange happens.

He stops thinking like a businessperson and starts thinking like a man offering the lawyer an opportunity.

The language varies, but the idea is usually the same:

“Will you take my case?”

“I am willing to give you the case.”

“You can have skin in the game.”

“You will get paid when we recover.”

That sounds reasonable to some clients. It sounds fair. It sounds entrepreneurial. It sounds like the lawyer and client are becoming business partners.

But that is usually not what is happening.

In many commercial litigation cases, especially cases involving disputed liability, uncertain damages, collection problems, or bankruptcy issues, the client is not offering the lawyer a business opportunity.

He is asking the lawyer to finance the client’s lawsuit.

Commercial Litigation Is Not Personal Injury Litigation

A major source of confusion is the personal injury advertising model.

People see billboards, television commercials, radio ads, and internet ads saying things like:

“No fee unless we win.”

“Free consultation.”

“We don’t get paid unless you get paid.”

Those statements have shaped how many people think lawyers work. Even sophisticated business people sometimes assume that lawyers routinely accept lawsuits with no money up front because that is what they have absorbed from personal injury advertising.

But commercial litigation is not personal injury litigation.

The personal injury model works in specific circumstances. The typical successful personal injury case has one or more features that make contingency representation economically rational:

There is insurance.

There is a claims-adjustment system.

There is a defendant or carrier with the ability to pay.

Liability may be reasonably clear.

Damages may be supported by medical bills, records, lost wages, or permanent injury evidence.

The plaintiff’s lawyer can evaluate a large volume of potential cases and accept only the ones that make economic sense.

Even the personal injury “free consultation” model is widely misunderstood. In most large personal injury firms, a lawyer is not personally spending an hour on the phone with every person who calls from a billboard. There is an intake system. Non-lawyer staff screen calls. Many cases are rejected before a lawyer ever looks at them. The firm is not providing unlimited free legal analysis to every caller.

That is the business model.

Commercial litigation is different.

In commercial litigation, there may be no insurance. The defendant may be insolvent. The defendant may file bankruptcy. Liability may be hotly disputed. Damages may depend on documents, expert analysis, valuation, causation, securities issues, contract interpretation, fraud theories, fiduciary duties, or proof of collectability.

Winning the case may only be the first battle. Collecting the judgment may be the second. Bankruptcy may be the third.

That is not the billboard model.

“Skin in the Game” Is Not a Magic Phrase

Clients sometimes say they want the lawyer to have “skin in the game.”

That phrase sounds fair until one looks closely at what it really means.

In a serious commercial litigation matter, the lawyer may be asked to do 50, 100, 150, or 200 hours of work. Sometimes more.

That work includes reviewing documents, analyzing claims, evaluating defenses, researching law, preparing pleadings, attending hearings, drafting discovery, responding to discovery, preparing witnesses, attending depositions, dealing with opposing counsel, attending mediation, preparing for trial, and then actually trying the case if it does not settle.

If bankruptcy is involved, the lawyer may also need to analyze the automatic stay, file or monitor proofs of claim, participate in creditor proceedings, evaluate dischargeability, review proposed plans, object when necessary, and protect the client’s rights in a separate federal court proceeding.

That is real work.

It is not theoretical work. It is not passive work. It is not “we will see what happens” work.

It is labor.

The client’s role is different. The client may need to provide documents, answer questions, assist with discovery, appear for deposition, attend mediation, and appear at trial if necessary. Those obligations matter. A good client must cooperate. But the actual professional labor of moving the case forward is overwhelmingly performed by the lawyer.

So when a client says, “I want you to have skin in the game,” the more accurate translation is often:

“I want you to perform the legal work, carry the risk, finance the case with your time, absorb the opportunity cost, and maybe get paid later if the case succeeds and if money is actually collected.”

That is not a 50/50 sharing of risk.

In many cases, it is closer to the lawyer taking 90% or 100% of the practical risk.

The Lawyer Is Not Merely Risking Time

Some clients think the lawyer is only risking time.

That is wrong.

The lawyer is risking far more than time.

The lawyer is risking opportunity cost. Every hour spent on a speculative case is an hour not spent on a funded client matter, business development, family, health, or simply living life.

The lawyer is also assuming professional responsibility. Once the lawyer appears in the case, the lawyer owns deadlines, strategy, communications, filings, hearings, and the consequences of litigation decisions.

The lawyer also assumes reputational risk. If the client becomes unhappy, the lawyer may face accusations, fee disputes, bar complaints, malpractice threats, or reputational harm, even when the lawyer did nothing wrong.

That is part of practicing law. Lawyers accept that risk when the engagement makes sense. But it is not free.

A speculative commercial case is not a lottery ticket handed to the lawyer. It is a bundle of labor, responsibility, risk, and stress.

A $15,000 Retainer Is Not a Windfall

Some prospective clients hear “$15,000 retainer” and act as if the lawyer has asked for something outrageous.

In many commercial litigation matters, $15,000 is modest.

At a $500 hourly rate, $15,000 represents 30 hours of attorney time. At $550 per hour, it represents a little over 27 hours. Many serious commercial disputes can consume that much time very quickly.

A single emergency motion can consume a substantial part of that. A meaningful document review can consume that. Preparing for and attending one important hearing can consume that. Discovery disputes, deposition preparation, mediation preparation, bankruptcy analysis, or trial preparation can consume far more.

Now consider a hybrid arrangement where the lawyer receives a $15,000 minimum fee plus a success component. If the case ultimately requires 100 hours of work, that $15,000 does not come close to compensating the lawyer at the lawyer’s normal hourly rate. It may not even compensate the lawyer at a rate many tradespeople charge today for skilled labor.

The success fee exists because the lawyer is taking risk. It is the economic reason the lawyer may agree to accept less up front than the matter would cost on a straight hourly basis.

If the client then tries to reduce the success fee, redefine the recovery, change “gross” recovery to “net” recovery, or preserve the ability to discharge the lawyer immediately before collection without protecting the lawyer’s fee, the client is not making small edits.

He is trying to keep the upside while shifting the downside to the lawyer.

That is not a partnership.

That is not alignment.

That is a warning sign.

Gross Recovery Means Gross Recovery

In contingency and hybrid-fee structures, the difference between gross recovery and net recovery matters.

A fee based on gross recovery is straightforward. If money is recovered, the agreed percentage is calculated before deductions for costs, offsets, expenses, or later arguments about accounting.

A fee based on net recovery invites disputes. What costs are deducted? What offsets count? What if money is recovered through settlement, bankruptcy distributions, payment plans, asset sales, related claims, or collection activity? What if the client claims the recovery came from someone else’s efforts after the lawyer did the work that created the leverage?

In a risky commercial case, “net recovery” can become a post hoc argument designed to reduce the lawyer’s compensation after the risk has already been taken.

That is why experienced lawyers define recovery carefully.

That is also why clients who aggressively rewrite those provisions before the representation even begins often reveal exactly what the relationship will become.

Bankruptcy Is Not Contingency Work

When one of the opposing parties has already filed bankruptcy, or when bankruptcy is likely, the economics become even clearer.

Creditor representation in bankruptcy is not the same thing as pursuing a personal injury claim against an insured defendant.

Bankruptcy is a federal court process. It has its own rules, deadlines, procedures, and strategic risks. A creditor may need to monitor the case, protect claims, respond to plan treatment, seek relief, object when necessary, evaluate dischargeability issues, and coordinate bankruptcy strategy with state court litigation.

Sometimes the objective is not even immediate recovery. Sometimes the objective is preserving rights, avoiding discharge, preventing prejudice, or keeping pressure on the debtor within the limits of the Bankruptcy Code.

That work does not magically become contingent-fee work because the creditor wants it to be.

A lawyer representing a creditor in bankruptcy is performing legal services in an active court proceeding. That is hourly or flat-fee work unless the lawyer affirmatively decides otherwise.

And if the debtor is already in bankruptcy, the client’s case is not becoming less risky. It is becoming more risky.

More risk requires more funding, not less.

The Client’s Case Is Not a Gift

This is the point some prospective clients miss.

A speculative commercial litigation case is not a gift to the lawyer.

It is not a favor.

It is not an opportunity the lawyer should be grateful to receive.

If a client has a strong case with clear liability, strong damages, no bankruptcy risk, insurance coverage, and a solvent defendant, then perhaps many lawyers will want the case. But that is not the usual difficult commercial case.

The usual difficult commercial case is different.

The facts are disputed.

The documents are incomplete.

The defendant denies liability.

The damages may require proof.

The defendant may be insolvent.

The defendant may already be in bankruptcy.

The client may be angry, impatient, and convinced the case is obvious.

But the case is not obvious simply because the client feels wronged.

A lawyer has to prove it.

And after proving it, the lawyer may still have to collect it.

That is why serious commercial litigation requires serious funding.

Sophisticated Clients Often Spend Money Everywhere Except on Legal Protection

One of the strange realities of litigation practice is that sophisticated people often spend large sums of money on speculative ventures but resist spending money on legal protection.

A person may invest hundreds of thousands of dollars in risky stock positions. He may loan money to a friend. He may buy vehicles, fund business ventures, make private investments, or spend large amounts of money on personal or business expenses.

But when a legal problem threatens real money, the same person may resist paying a lawyer a retainer.

That is irrational.

Hiring a lawyer for a serious legal matter is a major financial event. It should be treated that way.

People understand that surgery costs money. Vehicles cost money. Roofs cost money. Flood repairs cost money. Business equipment costs money. Expert professionals cost money.

A major legal dispute is no different.

If someone needs back surgery, the surgeon is not expected to operate for free and accept payment only if the patient feels better later. If someone needs an MRI, the imaging facility does not say, “Pay us only if the diagnosis helps you.” If someone needs a roof replaced, the roofer does not finance the job for years and hope the homeowner’s lawsuit eventually produces money.

Yet lawyers are often expected to do exactly that.

Legal Analysis Is the Lawyer’s MRI

A serious consultation is not “just a phone call.”

A meaningful legal consultation requires analysis.

The lawyer must review documents, identify claims and defenses, assess procedural posture, evaluate deadlines, consider collectability, and determine whether the case makes economic sense.

That is not a casual conversation. It is professional work.

In medicine, the diagnostic process has value. A patient may pay for imaging, testing, specialist review, and follow-up appointments. The doctor’s time has value even if the answer is not what the patient wanted to hear.

Legal analysis works the same way.

When a client sends documents and asks a lawyer to evaluate a case, that is the legal equivalent of diagnostic work. The documents are the MRI. The consultation is the specialist appointment. The legal strategy is the treatment plan.

No serious professional system works if the professional is expected to perform the diagnostic work for free and then compete for the privilege of doing more unpaid work.

The Free Consultation Myth

The “free consultation” myth has done damage to the public’s understanding of legal services.

In many areas of law, a free consultation is not a substantive legal analysis. It is an intake screen.

That is especially true in high-volume personal injury practices. A caller may speak first with intake staff. The purpose is to determine whether the case fits the firm’s business model. Many potential cases are declined quickly. The firm is not giving every caller a full legal opinion.

That is not a criticism of those firms. It is simply how that business model works.

But that model does not translate to complex commercial litigation.

A commercial litigation consultation may require the lawyer to understand contracts, emails, payment history, corporate structure, fraud allegations, bankruptcy status, security interests, UCC issues, prior court orders, discovery posture, trial settings, and collection risk.

That cannot be responsibly evaluated in a casual free call.

A lawyer who charges for that analysis is not being difficult.

He is being honest about the work required.

A Lawyer Is Not a Bank

When a client asks a lawyer to take a commercial case on contingency, the client is often asking the lawyer to become a bank.

The lawyer is asked to extend professional credit in the form of unpaid labor.

The lawyer is asked to carry the case.

The lawyer is asked to absorb the risk that there may be no recovery.

The lawyer is asked to wait.

The lawyer is asked to trust that the client will cooperate, stay reasonable, and honor the fee arrangement if money is eventually recovered.

That is a significant ask.

Sometimes it makes sense. Most of the time, in hard commercial cases, it does not.

Lawyers are not banks. Lawyers are not litigation lenders. Lawyers are not silent investors in every business dispute that walks in the door.

A lawyer may choose to share risk in the right case with the right client under the right agreement. But the starting point is not that the lawyer owes the client financing.

The Right Clients Understand This

Good clients understand that serious legal work requires serious commitment.

They do not treat the lawyer’s time as free.

They do not treat a retainer as an insult.

They do not assume that their lawsuit is a gift.

They understand that the lawyer is a professional, not a gambler.

They understand that a funded engagement gives the lawyer the ability to move quickly, think clearly, and act decisively.

They understand that litigation is expensive because it is labor-intensive, adversarial, uncertain, and consequential.

Those are the clients lawyers want.

Those are the clients who usually receive the best representation because the relationship begins with mutual respect and aligned expectations.

The Wrong Clients Reveal Themselves Early

The wrong clients also reveal themselves early.

They want urgency without funding.

They want strategy without commitment.

They want immediate attention but resist paying for it.

They ask for discounts before the relationship begins.

They try to rewrite the economic terms after the lawyer has already explained the risk.

They believe their case is obvious because they are angry.

They think the lawyer should be grateful for the “opportunity.”

They say they want a partner, but what they really want is someone else to finance the fight.

That is not a good foundation for representation.

A lawyer who declines that engagement is not turning away a good case.

He is avoiding a bad relationship.

The Bottom Line

Commercial litigation is not free.

Bankruptcy creditor work is not free.

Legal analysis is not free.

A speculative lawsuit is not a gift to the lawyer.

If a client wants a serious lawyer to take a serious case seriously, the client must fund the work seriously.

That does not mean every case requires a blank check. It does not mean every lawyer must charge the same way. It does not mean hybrid arrangements never make sense.

But it does mean this: the client has to put real money behind his own case before expecting the lawyer to put real time, risk, and professional responsibility behind it.

A lawyer who requires that is not being unreasonable.

He is telling the truth.