What is a contingency fee?

A contingency fee is a payment arrangement where the professional receives compensation only if a specific outcome is achieved. The fee is typically a percentage of the value recovered, saved, or gained. If the matter fails, the professional earns nothing. Contingency fees align interests but transfer risk from client to provider.

Where contingency works

Litigation is the classic case. Tax savings sometimes. M&A advisory often includes success fees tied to closing. Cost reduction consulting ties fees to documented savings. Common thread: measurable outcomes where both parties agree on what success means.

Hybrid models that reduce exposure

Pure contingency puts all the risk on you. Hybrid arrangements split it. Reduced hourly rate plus smaller contingency. Monthly retainer plus success bonus. Base fee covering costs plus upside participation. Both parties share risk rather than transferring it entirely.