Contingency Fees: What It Means to Pay Only If the Case Succeeds

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

The success-fee model lets a client pay attorney’s fees only when the outcome is favorable, which broadens access to justice but requires a clear contract and respect for the ethical limits of the legal profession to avoid disputes over percentages and the calculation base.

What defines a success-fee arrangement

A success fee, also known as a results-based fee or contingency fee, is an arrangement in which the lawyer receives most or all of his or her compensation only if the case succeeds. Instead of charging fixed amounts throughout the proceedings, the lawyer makes payment depend on a concrete result, such as receiving a benefit, winning a lawsuit, or reaching a favorable settlement.

This arrangement differs from flat fees, which are paid regardless of the outcome, and from honorários de sucumbência (fees awarded by the court, owed by the losing party to the winning party’s lawyer). With a success fee, the economic risk of the case is shared. If the client loses, he or she pays little or nothing in contractual fees. If the client wins, a percentage agreed in advance on the benefit obtained goes to the lawyer.

The practice is common in social security, labor, tax, and damages cases, where clients often lack the funds to pay for legal representation from the start. An insured person seeking a retirement benefit that was denied, or a worker claiming severance pay, rarely has the means to advance fees and cover day-to-day expenses at the same time.

Even so, the model is not free of guardrails. Ignoring its rules tends to cause conflict at the end of the case, when the amount to be withheld by the lawyer becomes real and the client realizes, too late, that the math is different from what he or she expected. Preventing that friction starts long before the judgment, at the moment the contract is signed.

The ethical limits a lawyer must respect

The Statute of the Legal Profession, Law 8.906 of 1994, and the Code of Ethics and Discipline of the Brazilian Bar Association (Ordem dos Advogados do Brasil) govern how fees may be agreed. The central rule is moderation. A success fee is legitimate, but it cannot turn the relationship into a disproportionate capture of a result that belongs, first and foremost, to the client.

In the arrangement known as quota litis, in which the lawyer receives a share of the economic benefit, the settled understanding is that the contracted fees, added to the court-awarded fees, should not exceed the advantage the party actually obtains. The goal is to prevent the rights holder from ending the case with less than the professional who represented him or her.

Another ethical concern is transparency. The percentage and the base on which it applies must be clearly disclosed before the client hires the lawyer, with no obscure clauses and no promises of victory. A lawyer cannot guarantee a result, only commit his or her technical diligence, which is why the contract should state objectively what counts as success at each stage of the case.

The profession’s ethics also prohibit its commercialization. Ads that promise a certain win, aggressive solicitation of clients, and messaging that reduces the practice of law to a guaranteed-return business all violate professional ethics. A success fee pays for technical effort in the face of real risk, not for selling an expectation that no one can honestly assure.

Access to justice for those who cannot pay up front

The model’s main virtue is that it democratizes access to the courts. Many people have legitimate rights but give up on pursuing them because they cannot afford initial fees, court costs, and litigation expenses. By tying compensation to the result, the lawyer takes on part of the risk and makes possible claims that would otherwise never reach a courtroom.

This sharing of risk also aligns interests. Because the lawyer is well paid only if the client benefits, there is a natural incentive for the work to be diligent and aimed at the best possible outcome. The relationship stops being merely contractual and becomes a partnership built around a common goal.

Because it does not require payment up front, the success-fee model puts the law within reach of people who could once only watch it from a distance.

When pay depends on the result, the lawyer stops being an upfront cost and becomes a partner in the risk.

On the other hand, clients should understand that litigation expenses, court costs, expert fees, and any travel are not always included in the success-fee agreement. These amounts are usually the party’s responsibility unless the contract expressly says otherwise, and a lack of clarity on this point is one of the biggest sources of misunderstanding between client and law firm.

Keep in mind that a success fee does not eliminate the client’s obligations while the case is pending. Attending expert examinations, providing documents, keeping contact information up to date, and cooperating with the gathering of evidence remain the party’s duties. A lack of cooperation can jeopardize the result and, with it, the agreed fee, which reinforces the cooperative nature of this arrangement.

How to put percentages in writing and define the calculation base

Formalization begins with a written fee agreement, signed before the work starts. The document should identify the parties, describe the case, set the success percentage, and, above all, define precisely the calculation base to which that percentage will apply. This is exactly where most disputes arise.

The calculation base may be the gross amount obtained, the net amount after legal deductions, only the past-due installments, or both past-due and future installments. In social security cases, it is common to debate whether the percentage applies only to the back payments received in a lump sum or also to the future payments of the benefit. Each choice produces a very different financial result.

The contract should state expressly what is and is not part of the base. Taxes withheld at the source, court-awarded fees when they go solely to the lawyer, and third-party amounts that merely pass through the client’s account are usually left out. The direct economic benefit of the case, such as the main award and its additions, tends to make up the base unless otherwise agreed.

To reduce the risk of a dispute, the percentage should be set out in writing, in both numerals and words, and the client should confirm that he or she understands the calculation. A simple simulation, showing how much would go to the lawyer and how much would remain with the client in a hypothetical winning scenario, clears up many doubts before they turn into friction.

It is also prudent to provide for what happens in situations outside the normal course. A settlement before judgment, dismissal of the case without a ruling on the merits, the lawyer’s withdrawal from the case, and the client’s revocation of the contract are scenarios that need specific treatment. When the contract is silent on them, a later charge tends to be seen as abusive, even if the work was in fact performed.

Frequently Asked Questions

Does Brazilian law allow success fees?

Yes. Charging fees that depend on the outcome is lawful and widely used, as long as it respects the limits of the Statute of the Legal Profession and the Code of Ethics and Discipline. The central requirement is that the arrangement be transparent and set out in a written contract, and that the total fees not consume the advantage the client obtains at the end of the case.

Does the client pay anything if the case is lost?

Under a pure success-fee model, the client does not pay contractual fees in case of defeat, because compensation depends on a favorable result. Even so, court costs, expert fees, and litigation expenses may be the party’s responsibility, depending on what the contract provides. That is why it is essential to read the clause on these expenses carefully before signing.

On what amount does the success percentage apply?

It depends on what was agreed. The percentage may apply to the gross amount, the net amount, only the past-due installments, or the future installments as well. To avoid conflict, the contract should clearly define the calculation base and list what is excluded, such as taxes and third-party amounts. When in doubt, the client should ask for a simulation of the calculation before signing the agreement.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.