In legal review — not indexed
These definitions are drafted and readable, and stay out of search until an attorney has cleared each one.
Contingency fee
Contingency fee — A contingency fee is a fee payable to the collections firm as an agreed percentage of amounts actually collected, earned only on recovery rather than billed for time.
Where the firm's client is the creditor, the arrangement is governed by the state analogue of Model Rule 1.5(c), which requires a writing signed by the client stating "the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated." On conclusion the lawyer must provide a written statement of outcome and, if there is a recovery, the remittance and method of its determination. Collections schedules are typically tiered — a lower rate on pre-legal recovery, higher on post-suit or post-judgment, sometimes higher again on forwarded or secondary placements — and any fee charged to the consumer rather than the client raises a separate FDCPA § 1692f(1) authorization question.
Primary sources
See also
- Net-backNet-back is the amount a creditor actually retains from a placement after the firm's contingency fee, court costs, and other recoverable expenses are deducted from gross collections.
- RemittanceRemittance is the scheduled transfer of collected funds from the firm's trust account to the creditor client, net of the firm's earned fee and any agreed costs, accompanied by an account-level accounting.
- PlacementA placement is the assignment of an account or a batch of accounts by a creditor or debt owner to a collections firm or agency for collection, under terms set by a placement agreement, without transferring ownership.
This is an informational reference, not legal advice, and using it creates no attorney-client relationship. Limitations periods turn on facts this page cannot know — which state's law governs, the contract type, when the claim accrued, and whether anything tolled or revived it. Confirm against the primary source and your own counsel before acting.