Does It Ever Pay To Work On Contingency?

Tuesday February 12, 2008

Ever been tempted to work now and get paid later, provided you really deliver results? Lawyers seem to do it - at least when there's potential for a big cash payoff or a lot of publicity from a high-profile case. But ask most consultants about the possibility of working on a contingency fee and they shake their heads and run away.

The problem, or so it is often said, is that you are basing payment of work upon a guarantee of achieving specific results and those results can be somewhat out of your control. In other words, sometimes a client's internal operations or team members have too much influence over the outcome of a specific goal, and that can inhibit results. You may do everything you promised and agreed to with the client, but if he's not fully holding up his end of the bargain it could sway the final outcome.

Does it ever make sense to work on contingency? Absolutely! Here are a couple of scenarios to consider:

Base-plus agreement: The best case is to establish a base fee or total amount that is paid to cover essential project objectives, combined with a contingency fee for reaching specific objectives beyond the fundamentals. This pay-for-performance model combined with a traditional consulting agreement can be lucrative for everyone. (For example, a PR consultant would work on a flat fee to establish a PR plan for a client but would receive a contingency fee for getting articles about the client published in target media outlets.)

Controlled introduction: Working on contingency can be a good way to introduce your services to a new client or help expand services to an existing client. For this to be effective, the work should be based on short-term objectives that are primarily within your control. The idea is to show a client what you can do and demonstrate the value of your services with the end goal of obtaining more work.

Again, most consultants agree that contingency fees are not the favorite, but in a pinch, you can make them work for you. Have you ever worked on contingency? Leave a comment and let us know what you think.

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