ClaimHour

Blog · Published April 30, 2026 · 12-minute read

The contingency-fee solo's leak: when winning is the only billing event

This is the third post in the practice-economics trilogy — after the hourly leak and the flat-fee leak. The most common pushback we got on the first two was the same line, almost word-for-word: "I do contingency work — I bill nothing or everything, depending on the outcome. There's no such thing as unbilled time for me." That argument is wrong in three different ways, and the cumulative dollar figure of those three wrong-ways is, in our reading, larger than either of the prior two leaks. This post is why, with the arithmetic.

TL;DR

Contingency-fee solos — personal injury, plaintiff-side employment, civil rights, FCRA/FDCPA consumer, ERISA, products liability — do not leak revenue through unbilled hours, and they do not leak it through mispriced engagement letters. They leak it through four other holes: (1) portfolio mispricing, where two or three case archetypes consume disproportionate effort relative to the contingent share they produce, hidden inside a book that nominally hits its win rate, (2) lost lodestar fee awards on statutory fee-shifting cases, where the absence of contemporaneous time records is discounted 30–60% at the fee petition under Hensley v. Eckerhart, (3) settlements accepted below cumulative cost-basis, where capital lockup, senior-lawyer time, and hard-cost advances were never aggregated to compute the floor, and (4) discovery scope creep driven by opposing-counsel attrition tactics that the practice absorbs because nothing forces the math. Across the contingency-heavy solo books we have studied, leak runs $40,000–$120,000 a year — concentrated in three or four cases per year that settled or were dropped at or below cost-basis, plus the fee petitions where the lodestar was reduced for thin records. The lever is the same as in the prior two posts — passive metadata-only capture of actual time-per-case — but the downstream output is different again. Hourly solos use the data to bill more accurately; flat-fee solos use it to price more accurately; contingency solos use it to screen and price the portfolio and to defend the lodestar at fee-petition. Same instrument, third downstream artifact. This post is the arithmetic, by practice area.

Why the third post had to be its own post

Contingency work is a smaller share of US solo practice than the public assumes — somewhere around 18–24% of total solo matter volume by ABA TechReport and Clio Legal Trends counts — but it is a much larger share of the population we actually encounter on r/Lawyertalk and in plaintiff-side practice areas. Personal-injury solos are the largest single segment; plaintiff-side employment and civil-rights firms are the second; the long tail includes ERISA benefits, FCRA/FDCPA consumer, products liability, qui tam, and a small but vocal group of contingent-fee construction-defect and securities-litigation practitioners.

The pushback on the prior two posts was reasonable and worth answering on its merits. The hourly leak post described a measurement-to-billing problem — hours worked but never invoiced. The flat-fee leak post described a measurement-to-pricing problem — engagement letters priced from gut feel rather than measured cost. Neither framing maps cleanly onto a contingency book, where the practice does not invoice hourly and does not set a per-matter price. The leak shape is genuinely different, and pretending the prior two posts already covered it would have been bad practice. So this post covers it directly. The lever is still measurement; the arithmetic is the longest of the three.

Five shapes of the contingency-fee leak

1. The case that settles below cumulative cost-basis

This is the largest leak shape and the one most contingent practices are least equipped to detect. A representative US solo PI practice carries 25–40 active cases at any given time. Each case accrues, week-by-week, three kinds of cost: senior-lawyer time (the principal billing the case), hard-cost advances (filing fees, expert depositions, court reporters, medical-record subpoenas, mediator fees), and capital lockup (the time-value of the money tied up over a 18- to 30-month case lifecycle). The cumulative cost-basis on a case that settles at month 24 with $4,000 of hard-cost advances and 110 hours of senior-lawyer time at a $325/hour implicit rate is roughly $4,000 + $35,750 + carry — a floor north of $40,000 before profit. A practice that does not aggregate this number on demand can and routinely does accept settlements below it, because settlement decisions are made under client pressure and time pressure with no internal cost basis to point at.

This is not the same as accepting a low settlement on a difficult case — the difficult case is exactly when the math is most necessary. The leak is in the cases the practice could have walked away from, or pushed harder, or refused to mediate, if anyone had computed the cumulative cost. We have read fee-allocation reports across a dozen contingent practices that did add up the math at year-end and were genuinely surprised; the standard pattern is one or two settlements per book per year that closed at or below cost-basis, representing $30,000–$80,000 of swallowed margin per case.

2. The lodestar fee petition that loses 30–60% on the discount

This is the most under-discussed leak in plaintiff-side employment and civil-rights practice and the largest in pure-fee-shifting books. Statutory fee-shifting provisions exist in dozens of federal and state schemes — Title VII (employment), 42 U.S.C. § 1988 (civil rights including § 1983), the Americans with Disabilities Act, the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), the Family and Medical Leave Act (FMLA), the Equal Pay Act, ERISA § 502(g), the Truth in Lending Act, and most state civil-rights and consumer-protection statutes. In all of these, the prevailing plaintiff is entitled to "reasonable attorney's fees" on top of the underlying damages.

The dollar figures involved are routinely larger than the underlying damages. A successful FCRA case might generate $5,000 of statutory damages and $50,000 of attorney's fees. A successful Title VII case at the small-business level might generate $40,000 of back pay and $180,000 of fees. A § 1983 civil-rights case can produce a fee award an order of magnitude above the damages. The fees are calculated on the lodestar — reasonable hourly rate × reasonable hours expended — and Hensley v. Eckerhart, 461 U.S. 424 (1983), and its decades of progeny require contemporaneous time records to support the hours figure. Reconstructed records — entries created after the verdict from memory, calendar review, or file review — are routinely discounted 25–60% in the cited reasoning that they are inherently unreliable.

The leak is in the size of the discount and the frequency of fee-shifting work in the practice. A solo plaintiff-side employment lawyer running 6–10 fee-shifting cases through to favorable resolution per year, with average claimed fees of $90,000 per case and a 35% records-quality discount applied to two or three of those, leaks $60,000–$95,000 a year directly to the discount. The records existed; they were just not contemporaneous in the form Hensley requires. The fix is mechanical and free in marginal cost: track time as it happens, in the form a fee-petition affidavit can quote verbatim.

3. Discovery scope creep absorbed because nothing forces the math

Defense-side civil litigation is, in significant part, an attrition strategy. Discovery is propounded in waves. Depositions multiply. Motion-to-compel and motion-for-protective-order practice consumes weeks. The plaintiff's-side contingency lawyer absorbs the cost because there is no client to bill it to and no contemporaneous mechanism to flag that the case has crossed into uneconomic territory. The case becomes profitable only if the eventual recovery exceeds the cumulative cost; the cumulative cost is the thing the practice cannot compute in real time.

This shape compounds with the first two. Discovery scope creep is the largest contributor to settling below cost-basis and to needing a fee petition that exceeds the underlying damages. Contemporaneous time records do not stop opposing counsel from running the attrition strategy — they simply make the strategy visible to the practice. Visibility is enough to change behavior: counsel runs a different cost-benefit on accepting the third deposition request, on resisting the motion-for-leave-to-amend, on agreeing to a two-month discovery extension. The decisions are made on data instead of intuition and time-pressure.

4. The bad-archetype case that consumes 200+ uncompensated hours

Every contingent practice has a long tail. The PI case that turns on a novel comparative-negligence theory and consumes 240 hours of senior-lawyer time before being dropped at summary judgment. The wage-and-hour collective action that fragments at the conditional-certification stage after 180 hours of pre-cert investigation. The FCRA case where the credit reporter's records are hopelessly muddled and the 110 hours of subpoena practice produces no usable evidence. The flat-fee post had a parallel shape — the bad-fit client — but the contingent version is materially worse, because the dollar exposure on a bad-archetype contingent case is the entire opportunity cost of the senior-lawyer time, not a flat-fee margin gap.

The lever is intake screening, and intake screening improves only with contemporaneous data on the cases that worked and the cases that did not. The practice that records hours-per-case across two or three years and runs a structured retrospective on the cases that lost or were dropped develops a much sharper intake screen — the kind of "I'm not taking this one" instinct that experienced plaintiff lawyers describe but cannot teach junior associates because the underlying pattern is not made explicit. Records make the pattern explicit.

5. The portfolio that is mispriced because the archetypes are not separated

This is the most subtle shape, and it appears only in practices large enough to have multiple case archetypes — a PI book that runs MVAs, premises liability, and dog-bite cases in parallel; an employment book running discrimination, wage-and-hour, and retaliation cases; a consumer book running FCRA, FDCPA, and TCPA cases. The contingent fee schedule is typically uniform — 33⅓% pre-suit, 40% post-suit — but the hours-per-case profile is wildly different across archetypes. An MVA case with clear liability and policy-limits exposure might consume 35 hours from intake to settlement; a premises-liability case with disputed causation might consume 130. The contingent share on each is calculated against the recovery, not the effort, so the practice that does not separate archetypes prices the easy ones below cost and overcharges the hard ones relative to their actual difficulty.

The fix is the same as it is in the flat-fee post — measure time-per-case by archetype, then run the implicit-hourly-rate math separately for each — but the action is different. In flat-fee practice the action is repricing the engagement letter; in contingency practice the action is portfolio mix. The practice that discovers its dog-bite cases run at a $475/hour implicit rate and its premises-liability cases at $112 takes more dog-bite cases and refers premises-liability out, or works to develop a different intake screen on the latter. The portfolio drifts toward higher-margin archetypes; the practice grows without growing the case count.

The arithmetic, in solo personal-injury practice

Take a representative US solo PI practice running 30 active cases, settling 18–22 a year, with a 65% pre-suit / 30% post-suit / 5% trial split. Average gross recovery per settled case is $52,000. Contingent fee net of expenses runs about $14,500 per case. The implicit hourly rate on the practice as a whole is about $290 if no archetype-level math is run. Here is what a year looks like with measurement applied across the four leak shapes:

Line itemWithout measurementWith measurementAnnual delta
Settlements at or below cost-basis~2 per year (undetected)2 per year (detected — 1 walked, 1 pushed harder)+$45,000
Bad-archetype cases dropped~3 per year (~720 wasted hours)2 per year (~480 hours; 1 caught at intake)+$25,000 (recovered capacity)
Discovery scope-creep absorbed~140 hrs/yr (invisible)~80 hrs/yr (resisted at flag)+$18,000 (recovered capacity)
Portfolio archetype repricingNone (uniform)Premises-liability referred out; dog-bite intake widened+$22,000 (mix shift)
Lodestar fee-shifting petitions~$0 (PI is rarely fee-shift)~$0 (still rarely fee-shift)$0
First-year net revenue impact——≈ +$110,000

The dollar figure is larger than either the hourly or flat-fee post because contingency exposes the practice to whole-case losses, not per-hour losses. The first two rows of the table are the bulk of the recoverable margin — a single avoided sub-cost-basis settlement, plus one bad-archetype case caught at intake instead of at month nine, recovers the cost of a part-time paralegal hire in year one. The third and fourth rows compound across years: better discovery resistance and a more profitable portfolio mix become permanent features of the practice rather than one-time recoveries. Pure PI is generally not a fee-shifting practice, so the lodestar shape does not contribute meaningfully here — that is reserved for the next section.

The arithmetic, in plaintiff-side employment + civil rights

The arithmetic flips meaningfully on the fee-shifting side. A representative solo plaintiff's employment practice runs 12–18 active cases, with 6–10 reaching favorable resolution per year — a settlement, a consent decree, a verdict, or a Rule 68 offer of judgment that triggers fee-shifting. Average underlying recovery is modest ($35,000–$80,000 of back pay or compensatory damages per resolved case); average claimed lodestar fee is $90,000–$180,000 per case, depending on whether the matter went to trial.

The lodestar discount is the dominant variable. A practice with strong contemporaneous records — entries created in the moment, with sufficient detail to support task-level review — typically takes a 5–10% discount at fee-petition for "billing judgment" reasons that are unavoidable. A practice with reconstructed records typically takes a 25–60% discount, and the reduction is applied not just to the disputed entries but, in the worst cases, to the entire fee application as a credibility matter. On a 6-petition year with average claimed fees of $120,000, the difference between a 7% discount and a 35% discount is roughly $200,000 of fee revenue per year.

Add in the four shapes already covered for the PI practice — sub-cost-basis cases, bad-archetype cases, discovery scope creep, and portfolio repricing — and the cumulative leak in a fee-shifting solo practice routinely runs north of the leak in a comparable PI practice, even though the case count is lower. This is the empirical case for measurement that contingency lawyers most often have not heard: the lodestar fee petition is the largest single receivable in your year, and it depends entirely on records you may not be keeping.

Why metadata-only capture serves contingency solos differently

This is where the post diverges from both prior versions. In an hourly practice, the captured metadata becomes invoice line items the client sees. In a flat-fee practice, it becomes pricing intelligence the client never sees. In a contingency practice it becomes three different artifacts:

None of this requires changing the contingency-fee structure clients see. None of it requires the client to know that time is being measured at all — the metadata is firm-side intelligence and post-resolution evidence, never an item on a client invoice. The privilege architecture is the same as in the prior two cases: no audio, no email bodies, no document content, only the metadata fields the lawyer would write into a paper time-tracking notebook anyway. The data lives on the lawyer's machine; the practice owns it; the fee petition cites it; the settlement floor is computed from it.

What the digest looks like for a contingency solo

The end-of-day digest in a contingency practice categorizes by case rather than by client-billable status. A typical Tuesday for a solo plaintiff's employment lawyer might read:

The cumulative-hours number on each line is the lodestar working figure. The cost-basis number is the settlement floor. The archetype-median flag on the Garcia matter is the discovery-scope-creep early warning. The Anderson intake entry is the portfolio screening data. None of this gets sent to a client; all of it is firm-side intelligence the practice runs against. End-of-quarter and year-end views surface the archetype-level implicit-rate math, the bad-archetype patterns from cases that lost or were dropped, and the running fee-petition record on every fee-shifting matter.

Portfolio thinking, briefly

Contingent practice is structurally a portfolio of options. Every case is a long-dated option with non-zero strike (the cumulative cost-basis), uncertain expiration (settlement or verdict timing), and uncertain payoff (the contingent share of recovery). Practices that run options portfolios for a living — hedge funds, market makers, commodities traders — do not make decisions on individual options; they manage the portfolio as a whole. Solo contingency practices have not, historically, been able to run their books that way because the underlying data — hours-per-case, implicit-rate-per-archetype, settlement-distribution-per-counter-party — has been too expensive to collect.

The expense was the labor of manual time entry, which contingent lawyers correctly diagnosed as out of proportion to the marginal value of the data. Passive metadata-only capture removes that expense. The data becomes free in marginal cost; the portfolio analytics become possible; the practice becomes a managed book rather than a sequence of individually-evaluated cases. This is not a small upgrade. The largest single advantage held by mid-size plaintiff-side firms over solos is the ability to run portfolio decisions on data; closing that gap is a meaningful competitive shift for the solo who runs it well.

When this is not your problem

Three contingency profiles for whom the arithmetic in this post does not apply cleanly.

The high-volume settlement-mill PI practice. A practice that runs 200+ MVA cases a year on policy-limits demands, with a settlement-to-trial ratio above 95%, a uniform case-archetype, and a fee-shifting exposure of essentially zero, has effectively engineered the leak out of the model already. Each case spends so few senior-lawyer hours that the cumulative cost-basis math is dominated by hard-cost advances rather than time, and the portfolio mix is so uniform that archetype-level analytics produce no decision. The practice is closer to a logistics business than a litigation practice. Measurement still adds value at the bookkeeping margin but is not transformative.

Court-appointed and panel-counsel practices. A criminal-defense or family-law practice running primarily on court-appointed CJA, state-panel, or Family Court Act §18-B vouchers is closer to flat-fee structure than to contingency, even when the fee math is filed via voucher rather than a contingency agreement. The vertical landings on criminal defense time tracking and on family-law work address voucher-system specifics; this post does not.

Pure qui tam and class-action lead-counsel practices. A solo running pure qui tam cases under the False Claims Act or serving as lead counsel on a putative class action is operating in a procedural framework where time records are already mandatory, fee-petition practice is highly structured, and the firm is typically already running aggressive lodestar discipline. The leak shape this post describes is not the dominant leak; the dominant leak is co-counsel allocation and lead-counsel-application practice. Worth a future post.

The hybrid case, briefly

Hybrid contingency-plus-hourly arrangements are the most common structure in plaintiff-side employment, civil rights, and complex commercial litigation. The client pays an hourly retainer at a discounted rate up front, and the firm takes a contingent share at the end. The arrangement has the strongest case for measurement of any contingency profile because it carries every leak shape this trilogy has covered: under-recording on the hourly portion, mispricing on the implicit retainer rate, portfolio blindness on the contingent portion, and lodestar exposure on any fee-shifting recovery. A hybrid practice running without measurement is running a four-way revenue leak at the same time. The conversion math on adopting a passive-capture tool is among the strongest in the bar.

The recap

Contingency-fee solos do not leak revenue through unbilled hours, and they do not leak it through mispriced engagement letters. They leak it through five other holes: settlements accepted below cumulative cost-basis, lodestar fee-petition awards reduced for thin records, discovery scope creep absorbed without flagging, bad-archetype cases that consume 200+ uncompensated hours before being dropped, and portfolio mispricing where high-implicit-rate archetypes are mixed indistinguishably with low-implicit-rate archetypes. The cumulative leak runs $40,000–$120,000 a year for a typical solo PI book and frequently north of that for a fee-shifting employment or civil-rights book. The lever is the same as in the prior two posts — passive metadata-only capture of actual time-per-case — but the downstream artifact is different: cumulative cost-basis on every active case, lodestar-defensible records for every fee-shifting matter, and archetype-level portfolio analytics across the year. None of it requires the client to see a billable entry; none of it requires the contingency structure to change. The only thing it requires is knowing how long each case actually takes, which contingency lawyers have historically refused to track because the manual cost was out of proportion to the value of the data. That tradeoff is the one passive capture changes.

Join the waitlist Read the hourly leak post Read the flat-fee leak post

Frequently asked

I bill on contingency. There's no such thing as "unbilled" time for me — I bill nothing or everything. What's the leak?

The leak is not in the bill the client sees; the leak is in the portfolio model the practice runs. Contingency solos who do not measure time-per-case discover, often after years, that two or three case archetypes consume disproportionate effort relative to the contingent share of recovery they produce — meaning the implicit hourly rate on those archetypes is sometimes a quarter of what the practice assumes. The leak shows up as portfolio-mix decisions made on instinct rather than data, settlements accepted below cost-basis because no one ran the floor, and statutory fee petitions filed without the contemporaneous record necessary to justify the lodestar.

What does the typical contingency-fee leak actually cost in dollar terms?

On a representative US solo PI book of 25–40 active cases, leak runs $40,000–$120,000 a year — concentrated in three places: (1) cases that settled at or below cumulative cost-basis (carrying capital + senior-lawyer time + hard-cost advances) without that math ever being computed; (2) statutory fee-shifting awards reduced 30–60% at fee-petition because contemporaneous time records were missing or thin; and (3) the long-tail bad-archetype case that consumed 200+ uncompensated hours before being dropped or lost. The leak is invisible to settlement-day accounting because the bookkeeping is done case-by-case rather than across the portfolio.

Why do statutory fee-shifting cases require contemporaneous time records to win the fee award?

Hensley v. Eckerhart, 461 U.S. 424 (1983), and its progeny require fee applicants to produce contemporaneous time records establishing the hours reasonably expended on the prevailing claims. Reconstructed records — entries created after the fact from memory, calendar review, or file review — are routinely discounted 25–60% on the cited theory that they are inherently unreliable. In civil rights, Title VII employment, FCRA, FDCPA, ADA, ERISA, FMLA, and Equal Pay Act cases the attorney's fees are often a multiple of the underlying damages, so the discount applied at fee-petition is the largest single dollar figure in the case. Records kept in real time avoid the discount entirely.

Should I keep time records on cases I'm almost certain I'll lose or have to drop?

Yes, and especially. The bad-archetype case is exactly the case that, three years from now, will explain why the practice was unprofitable in 2026. Without contemporaneous records you cannot identify the pattern of who the bad-fit referrals are, what early case-screening signals you missed, or which intake source is generating disproportionate losses. The single most informative dataset a contingency practice can maintain is the cumulative hours-per-case on cases that ultimately produced no fee. That dataset improves intake screening more than any other analytical artifact in the practice.

How is this different from the hourly leak post and the flat-fee leak post?

The hourly leak is a measurement-to-billing problem (hours worked but not invoiced). The flat-fee leak is a measurement-to-pricing problem (engagement letters priced from gut feel rather than measured cost). The contingency leak is a measurement-to-portfolio problem (case-archetype profitability hidden inside a book that wins or loses by archetype, not by individual case). Same instrument — passive metadata-only capture — different downstream artifact: invoice line items in the hourly case, engagement-letter repricing in the flat-fee case, intake-screening intelligence and lodestar-defensible records in the contingency case.

What about hybrid contingency-plus-hourly arrangements where I take an hourly retainer up front and a contingent share at the end?

Hybrid is the most common arrangement in plaintiff-side employment and civil-rights work, and it has the strongest case for measurement of any contingency profile. The hourly portion needs the contemporaneous records the hourly leak post described; the contingent portion needs the portfolio records this post describes; the cumulative cost-basis on each case needs to be computable on demand to support settlement-vs-trial decisions. Practices running hybrid arrangements without time records are running a three-way revenue leak — hourly under-invoicing, contingent portfolio blindness, and statutory fee-petition exposure — at the same time.

Further reading