Large-scale litigation, whether it takes the form of a class action, a group claim, a multidistrict proceeding, or a high-value commercial dispute, is expensive by nature. These cases can involve dozens of parties, millions of documents, expert evidence, and procedural steps that stretch over years. How the resulting legal fees are calculated, who ends up paying them, and how they are reviewed varies considerably between jurisdictions and between individual engagements. The general mechanics, though, follow a fairly consistent logic.
Everything starts with the retainer
A retainer, sometimes called an engagement letter or fee agreement, is the contract that governs the professional relationship. It normally sets out the scope of work, the basis on which fees will be charged, the hourly rates or percentage that applies, billing frequency, how disbursements are handled, and how the arrangement can be ended. In large matters, the retainer often runs to dozens of pages and may be renegotiated as a case develops.
The retainer matters because it is the baseline against which later disputes are measured. Courts asked to decide what a client actually owes will typically look first at the precise wording of the agreement, the rules in force when it was signed, and the conduct of both sides during the engagement. Where a case is funded by a percentage arrangement, the retainer also has to satisfy specific statutory requirements for the agreement to be enforceable.
The main fee models in large litigation
There is no single way to charge for complex legal work. Most large matters use one of a handful of structures, and some combine more than one.
| Fee model | How it is calculated | Typical use | Who carries the risk |
|---|---|---|---|
| Hourly | Recorded time multiplied by an hourly rate | Commercial and defended claims | Client, as the bill accrues |
| Fixed or capped | An agreed sum or ceiling for defined work | Repeatable or clearly scoped phases | Firm, if the work overruns |
| Conditional fee agreement | Reduced or nil fee if the case is lost, plus a success fee if it succeeds | Claimant-side litigation in England and Wales | Shared between firm and client |
| Damages-based or contingency | A percentage of the sum recovered | Class actions and group claims | Firm, if the claim fails |
Table sources: UK Damages-Based Agreements Regulations 2013 and the UK Parliament research briefing on no win, no fee arrangements (2024).
Hourly billing remains the commercial default
The billable hour is still the most common method in large commercial disputes, in part because it is straightforward to record and because time-based billing is deeply embedded in how larger firms are managed. In practice, the rate is not a single number. Partners, associates, trainees, and paralegals each bill at different levels, and the mix of who does the work strongly influences the total.
Rate levels in the United States give a sense of the scale. According to the Brightflag Q4 2025 Rates Report, which analyses billed rates across the 100 highest-revenue US firms, the blended hourly rate rose by 8.3% in 2025 to about $1,145. The gap between tiers is wide.
| Category (Am Law 100, 2025) | Average billed hourly rate |
|---|---|
| Blended rate across all firms | $1,145 |
| Partners, top 25 firms | $1,635 |
| Litigation partners, top 25 firms | $1,594 |
| Partners, firms ranked 76 to 100 | $845 |
Source: Brightflag Q4 2025 Rates Report, based on billed rates from 1 January to 30 June 2025. Figures are indicative of the US large-firm market, not a global standard.
Those numbers are not typical of every lawyer or every market. Rates vary by geography, practice area, firm ranking, and the seniority of the people doing the work, so they should be read as a benchmark for the largest US firms rather than a universal rate.
Conditional fee agreements
In England and Wales, a conditional fee agreement (CFA) is a form of no win, no fee arrangement. Under a classic CFA, the firm charges nothing or a reduced amount if the client loses, and charges base costs plus an uplift, known as a success fee, if the case succeeds. The success fee is meant to reflect the risk of not being paid and the delay in payment, and in commercial cases it can reach 100% of base costs.
A key change came with the Legal Aid, Sentencing and Punishment of Offenders Act 2012. For CFAs entered into from 1 April 2013, the success fee generally cannot be recovered from the losing party, so the client usually bears it. That reform was designed to stop the additional cost of funding arrangements from falling on opponents.
Damages-based agreements and contingency fees
A damages-based agreement (DBA) pays the lawyer a percentage of what the client recovers. It differs from a CFA in an important way: the fee is tied to the recovery rather than to time spent. In England and Wales, the Damages-Based Agreements Regulations 2013 cap the payment at 25% of damages in personal injury claims (excluding future pecuniary loss), 35% in employment matters, and 50% in most other contentious business. If the case fails, the lawyer receives nothing.
The United States uses the term contingency fee for a similar idea. In class actions and other aggregate litigation, fees are often paid from a common fund created by a settlement or judgment. Courts there generally choose between a percentage-of-recovery method and a lodestar method, which multiplies a reasonable number of hours by a reasonable hourly rate. Many courts apply a percentage and then use a lodestar calculation as a cross-check.
Empirical work summarised in the Federal Judicial Center’s pocket guide for judges has found that fee awards in common fund cases have averaged roughly 22% to 25% of the recovery, with the percentage tending to fall as the size of the recovery rises. Some appellate courts use a 25% benchmark while allowing departures. These figures reflect past cases and are not a fixed rule.
Who actually pays: costs shifting explained
Knowing how a fee is calculated is only half the question. The other half is who bears it when a case ends. Jurisdictions take different starting points.
In England and Wales, the general rule is that the unsuccessful party is ordered to pay the successful party’s costs, although the court has a wide discretion to make a different order. Part 44 of the Civil Procedure Rules sets out that discretion and the factors a court weighs, including conduct, partial success, and settlement offers. Costs are usually assessed on the standard basis, which allows only costs that are proportionate to the issues, with any doubt resolved in favour of the paying party. Indemnity basis is more generous and is generally reserved for cases where conduct justifies it.
Specific regimes can soften the general rule. Qualified one-way costs shifting, for example, means an unsuccessful personal injury claimant is often protected from most adverse costs orders. In the United States, the default is the American rule, under which each side pays its own fees unless a statute, contract, or the common fund doctrine provides otherwise. That is why many US class actions are funded on a contingency basis and paid out of the recovery.
Disbursements, experts, and costs outside the fee
Legal fees are not the only expense. Large cases generate disbursements that can rival the fee itself: expert reports, e-discovery hosting and review, court fees, travel, stenographers, and translation. These are usually paid as they arise, and the retainer determines whether the client funds them directly or whether the firm carries them and recovers them later.
Electronic discovery is often the single largest non-fee cost. Reviewing and producing documents can involve both technology platforms and significant human review time, and proportionality arguments frequently focus on how much of that work is genuinely necessary.
Third-party funding and after-the-event insurance
Not every claimant pays fees from its own resources. Third-party litigation funding allows a commercial funder to finance the costs of a claim in return for a share of any recovery, and after-the-event insurance can cover the risk of an adverse costs order. These tools are particularly relevant in collective and group actions, where individual claimants may not be able to bear the cost or risk alone.
The legal position continues to evolve. In the United Kingdom, the Supreme Court’s 2023 decision in PACCAR held that certain litigation funding agreements that gave funders a share of damages were damages-based agreements, which raised questions about their enforceability. In June 2025, the Civil Justice Council published a review recommending that the effect of that decision be reversed by legislation and that funding be brought under a light-touch statutory regime. Those are recommendations rather than settled law, and the position may change as legislation is considered.
How courts supervise and sometimes reduce the bill
Large litigation is subject to more oversight than ordinary disputes. In England and Wales, multi-track cases may be subject to costs budgeting, in which each side files a budget (usually in the form of Precedent H) and the court approves figures for each phase. The court does not conduct a detailed assessment in advance; it considers whether the budgeted costs fall within a reasonable and proportionate range. Complex high-value commercial cases are sometimes exempted from this process.
In US class actions, the court must approve any settlement and the fees paid to class counsel. Judges are guided to focus on the result actually achieved for class members, and some use sliding scales so that the percentage awarded to counsel decreases as the recovery grows. Settlement notices and claims processes also shape the final cost, because fees are sometimes measured against amounts actually distributed rather than a headline figure.
Clients can challenge their own lawyer’s bill as well. In England and Wales, section 70 of the Solicitors Act 1974 allows a client to apply for assessment of a solicitor’s bill: there is a right to assessment within one month of delivery, and the court may order one for up to twelve months after delivery, subject to conditions. A long-standing rule means that if the bill is reduced by more than one fifth, the solicitor generally pays the costs of the assessment; otherwise the client does. Fee agreements occasionally become the subject of later disagreement, and recent legal sector coverage has looked at how courts approach questions about the interpretation and enforceability of retainer terms.
Frequently asked questions
Is hourly billing more expensive than a fixed fee?
Not necessarily. A fixed fee offers certainty, but firms price in the risk that the work takes longer than expected. Hourly billing can end up cheaper on a straightforward matter and more expensive when scope grows. The right comparison depends on how well the work can be predicted at the outset.
Can a losing party ever avoid paying the winner’s costs?
Yes. In England and Wales, the costs order is discretionary, and a court may reduce or decline it because of conduct, partial success, or a settlement offer that was not beaten. Some categories of case, such as personal injury claims covered by qualified one-way costs shifting, also limit adverse costs.
What is the difference between a CFA and a DBA?
A CFA is based on the firm’s own charges and usually adds a success fee, so the amount depends on the work done. A DBA is calculated as a percentage of what the client recovers, so it depends on the outcome value rather than the hours spent. Each has its own regulatory requirements.
Are contingency fees capped?
In some jurisdictions, yes. The 2013 regulations in England and Wales cap DBAs at 25% for personal injury, 35% for employment, and 50% for most other contentious business. US practice is governed by state rules, court approval in class actions, and professional conduct rules, and percentages in common fund cases have historically clustered in the low-to-mid twenties.
Who pays for expert witnesses and e-discovery?
It depends on the retainer and the case. These disbursements are often funded by the client as they arise, or carried by the firm and recovered later, and a third-party funder may cover them. In some matters, recoverable costs include certain disbursements, but the exact treatment varies by jurisdiction.
What the fee structure ultimately reflects
The fee model in a large case is really a way of allocating uncertainty. Hourly billing places most of the cost risk on the client and most of the volume risk on the firm. A contingency arrangement reverses that, with the firm absorbing the risk of failure in exchange for a share of success. Costs shifting adds a second layer, deciding whether the opponent contributes when the case ends. Courts sit above both, approving budgets, reviewing percentage awards, and assessing disputed bills.
For anyone entering large-scale litigation, the practical point is that no single number describes what the case will cost. The retainer, the fee model, the jurisdiction’s costs rules, the funding arrangement, and the likely recoverable proportion all combine to determine the final bill. Understanding those moving parts early is usually more useful than focusing on a headline rate alone.
