Certified Legal Professional (CLP) Practice Exam

What happens when an attorney advances litigation costs under a contingency fee agreement?

1. The attorney loses the right to reclaim those expenses

2. The client only repays costs if the case is won

3. The client must pay back any costs advanced regardless of case outcome

4. The attorney is obligated to waive all expenses

The correct answer is: The client only repays costs if the case is won

Under a contingency fee agreement, the attorney typically advances litigation costs with the understanding that these costs will be repaid, but only if the case is won. This structure aligns the interests of the attorney and the client, providing access to legal representation without upfront costs for the client. In this scenario, if the attorney successfully obtains a favorable verdict or settlement, the costs advanced will be reimbursed to the attorney from the recovery. However, if the case is unsuccessful, the client is generally not required to repay those advanced litigation costs. This arrangement incentivizes the attorney to work diligently on the case while also putting the financial risk on the attorney, as they only recover their costs if the outcome is favorable. The other options do not accurately reflect the standard practice under contingency fee agreements. The attorney does retain the right to recover expenses if the case is won, clients are not required to repay costs if the case is lost, and attorneys are not obligated to waive expenses altogether, since these are generally recoverable if the case results in a successful outcome.