Percentage fee arrangement: what if nothing is recovered?

In a construction defects claim handled on a percentage basis, what happens if nothing is received?

Agreements to work “on a quota litis”, “success fee” or “percentage” basis are increasingly common in proceedings to claim for construction defects. This means that, so that the injured party is not prevented from exercising their rights because of a lack of funds, the professionals reach an agreement with the client to be paid at the end according to what is recovered. Instead of charging a fixed fee for each step based on the guideline fee scale of their professional association and on the amount at stake in the proceedings, they agree to be paid solely according to the result obtained. This benefits both parties, especially if the outcome of the proceedings is favourable.

But what happens if nothing is recovered?

For this, it is very important to check the engagement letter signed with the lawyers or the various professionals (experts, court representatives, etc.), since freedom of contract between the parties prevails. This situation has very probably been provided for, either by setting a minimum fee or a non-refundable retainer, or by the professionals simply accepting the loss as their own.

In other words, if nothing is said, the normal position is that if the fee is a percentage of whatever is recovered and in the end nothing is recovered, then the professionals are not paid anything either, or very little. After all, 10%, 25% or 50% of 0 is always 0… But you need to check what has been agreed.

After studying the case, our firm can offer to work “on a percentage basis”, without the homeowners’ association affected by widespread construction defects having to pay anything up front, especially if we see that the claim has a high chance of success. We study each case individually and provide a tailored solution for every matter, so that a lack of funds does not prevent significant construction defects from being claimed. If you have any questions, contact us. DPcon Reclamación defectos constructivos.