A dispute has emerged between a 3D printing technology company and its former legal representative, Lee & Hayes PC, over a compensation structure related to intellectual property gains. The company has petitioned a Washington federal court to dismiss a breach of contract lawsuit initiated by Lee & Hayes. At the center of the contention is whether services were agreed upon as a flat fee or a contingency fee prior to the settlement of a patent case.
Lee & Hayes contends that their agreement initially included a contingency fee structure, which they allegedly waived based on claimed deceptive representations by their former client. They argue that these misrepresentations led them to relinquish the originally agreed payment plan in favor of a flat fee, which they now contest. More details on this unfolding legal battle can be found here.
This case sheds light on a broader issue confronting law firms and their clients concerning the choice of compensation methodologies. Flat fees offer predictability but might not fully capture the potential value of a successful outcome, especially in settlements involving intellectual property where the financial stakes can be unpredictable. In contrast, contingency fees align a firm’s revenues with the success of a case but might incentivize different strategic choices during litigation.
Choosing between these compensation strategies involves careful consideration of potential risks and rewards. As litigation experts point out, firms and clients often negotiate terms that reflect their specific risk tolerance, case complexity, and expected outcomes. The dispute between the 3D printing company and Lee & Hayes serves as a reminder of the critical need for clear and transparent communication during initial contract negotiations to avoid similar conflicts.