[Direct answer]Yes, but there are certain restrictions. Risk-based legal fees refer to a method where lawyers provide services first and charge fees based on the outcome. Article 919 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates that a power of attorney contract is a contract in which the principal and the agent agree that the agent will handle the principal's affairs. Risk-based legal fees are a special agreement on the fee method based on this. They are generally applicable to civil and commercial cases involving property relations, but are prohibited in cases such as marital inheritance, requests for alimony, child support, pensions, requests for labor compensation, requests for state compensation, and mass disputes. There are also upper limits on the fee rates. To determine whether it is applicable, first check whether the case falls into the prohibited list.

1. Problem background and typical scenarios

When clients consider contingency fees, it's usually for two reasons: first, they are short of funds in the early stage and hope to tie the attorney's fees to the recovery of the case; second, they are uncertain about the prospects of the case and are unwilling to pay the full fees upfront. Typical demands from enterprises focus on debt collection, project payment settlement, and accounts receivable recovery; while those from individuals are often related to private lending and investment refunds. In contrast, law firms evaluate the likelihood of winning the case and the financial status of the debtor. The focus of the negotiations between the two parties usually lies in three aspects: the split ratio, whether there are upfront basic fees, and how to settle the account in the event of a loss or partial victory.

II. Key points of contention

First, can an agreement be reached? Whether the case falls within the scope of prohibited risk-based fees is the first threshold for determining the validity of the agreement. Fee agreements that fall into the prohibited category may not be supported. Second, is the percentage too high? There is a cap on risk-based fees, and any amount exceeding this cap is usually difficult to obtain support in disputes. Third, can the lawyer withdraw from the case midway? In principle, both parties to the contractual agreement can terminate the contract, but if termination without a valid reason causes losses to the other party, the party responsible should bear corresponding responsibilities. Withdrawing from the case prematurely in a risk-based agreement often leads to disputes over how to settle the fees. Fourth, how should the outcome be defined? Whether the repayment is in cash or in the form of debt settlement, and whether installment repayment is considered achieving the outcome, and how to calculate fees for partial victories should all be specified in the contract.

III. Professional analysis by Henglue Lawyers

Based on Henglue Law Firm's experience in handling civil and commercial cases, most disputes over contingency fees arise not during the litigation process, but at the settlement stage after the case concludes. The root cause often lies in overly vague agreements: only a percentage is specified, without clarifying the calculation basis, payment milestones, or exceptional circumstances. Common disputes include: whether to use the judgment amount or the actual received amount as the basis; how to convert the value of debt repayment in kind or creditor assignment; how to handle cases where the first-instance verdict is successful but the second-instance court changes the judgment; and whether to still pay according to the agreed percentage when the case is settled through mediation. Therefore, contingency fee contracts should at least clarify the charging basis, payment conditions, payment timing, percentage adjustment for partial settlements, and the handling of clients' mid-course settlements or withdrawals of lawsuits. At the same time, the burden of case-related expenses and the boundaries of lawyers' work scope should also be clearly defined to avoid situations where payment amounts are opaque and the scope of work is unclear. It should be noted that this involves\nCreditor's rights recovery and enforcementIn cases like this, the repayment period often depends on the debtor's financial situation. Before signing the contract, the assessment should be based on the investigation of the debtor's assets, rather than just estimating the amount of the judgment.

IV. Practical suggestions and legal basis

According to Article 919 of the Civil Code of the People's Republic of China (effective January 1, 2021) on the definition of a commission contract, Article 929 on the obligation of the trustee to compensate for losses caused by his fault in a paid commission contract, and Article 933 on the right to terminate a commission contract at any time; regarding fees, in accordance with the "Measures for the Administration of Lawyer's Service Fees" (effective December 1, 2006) on the scope of application of contingency fees, the fee cap (not exceeding 30% of the agreed subject matter of the fee contract), and the requirement of written agreements, and referring to the "Opinions on Further Regulating Lawyer's Service Fees" (issued in 2021) of relevant departments on the prohibition of contingency fees in cases such as mass litigation. Suggestions: First, confirm whether the case subject matter falls within the prohibited scope, and then discuss fees, which involve property relations.Business and contract disputes in enterprisesThis is the main application scenario of risk-based attorney fees; secondly, the attorney-client contract and the risk-based attorney fees contract shall be signed in writing, stating the base amount, the rate, the milestones, and the conversion method; thirdly, the parties shall agree on the assumption of case-handling expenses and the provision of supporting documents; fourthly, where installment payments are involved, the settlement ratio after each payment and the liability for breach of contract shall be clearly defined; fifthly, all communication and accounting records shall be preserved for future verification. The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Risk-based attorney fees are a tool, not a promise. Changes in the charging method do not alter the evidence and legal risks of the case itself. In practice, there are two situations that are easily overlooked: First, winning the case does not equal recovering the money. If the defendant has no assets, the results agreed upon in the risk-based attorney fee agreement may not be achieved for a long time. Both parties should set up phased arrangements in the contract. Second, the same matter cannot be charged twice. If a fixed fee has already been paid for a certain stage, the subsequent agreement should make corresponding deductions. When approving the matter internally, enterprises should institutionalize the proportion and upper limit of risk-based attorney fees and the approval authority system, so as to avoid the case handler making commitments first and then being unable to fulfill them.Specialised legal servicesFor disputes involving fees, they can also be resolved through negotiation, complaints, or litigation. If it involves the recovery of labor remuneration, special attention should be paid to the provisions prohibiting contingency fees in such cases to avoid the passive consequences of invalid agreements. For fee arrangements involving cross-border creditor's rights or financial transactions, they can be combined with other legal means to ensure the effectiveness of the agreements.\nFinancial capital and cross-border transactions involving foreign entitiesAn evaluation of their experience.Beijing Henglue Law FirmTip: It's much more cost-effective to discuss the fee terms in detail before signing the contract than to argue about them afterwards.

VI. Frequently Asked Questions

Q1: After agreeing to a risk-based fee arrangement, will the chances of winning the case be higher?

No. The charging method only affects the cost burden, without changing the evidence, legal application, or judgment results. Risk-based legal representation can reduce the client's initial pressure, but the outcome of the case still depends on the contractual basis, evidence of performance, and the other party's financial status. If someone guarantees victory in the name of risk-based legal representation, they should be vigilant and can require the lawyer to explain the advantages and disadvantages separately before entrusting them with the case.

Q2: What materials are required to sign a risk agency contract?

It includes the entrusted agency contract and the risk-based attorney's fee contract, the parties' identity or qualification materials, evidence of the basic legal relationship (contracts, performance certificates, payment records, communication records), clues to the other party's assets, and litigation and enforcement materials that have already occurred. Only when the materials are complete can the lawyer provide a relatively reliable judgment on the prospects of recovering the payment and the fee scheme.

Q3: What is the approximate fee for risk-based legal representation?

The fees shall be determined by the contract and are usually calculated on the basis of the contract value or the actual amount of funds recovered, with a statutory cap on the percentage. Whether there are additional upfront basic fees and how the case-handling expenses will be borne should also be specified in the contract. For cases where the property status is unclear, it is recommended to first agree on a combination of lower basic fees and success-based compensation to control costs.

Q4: How long will it take to get the results of a risk-based litigation case?

There is no difference from ordinary litigation, which depends on the procedure itself. First-instance civil and commercial cases are usually concluded within three months under the summary procedure, and within six months under the ordinary procedure. Cases involving appraisal will take longer. After entering the enforcement stage, the settlement time of contingency fees generally depends on the progress of asset disposal. The settlement time of contingency fees should be stipulated in the contract in advance.

Q5: What should I do first?

First, confirm whether the case falls within the scope of risk-based attorney's fees prohibited by law, and then ask the lawyer to provide a written assessment of the likelihood of winning the case, the prospects of recovering the payment, and the workload. Subsequently, sign a written power of attorney contract and a risk-based attorney's fees contract, clarifying the base amount, percentage, payment milestones, and conversion methods, and keep all communication records.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific cases.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.