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A business owner walks in with a thick file. A vendor breached a long-term supply agreement, costing the business a significant amount of money. A former partner walked off with proprietary information in violation of a non-compete. A professional services firm delivered work that did not meet contract specifications and refused to make it right. The contract is signed, the breach is real, and the damages feel obvious. The owner asks the same question every prospective contingent commercial plaintiff asks: will you take this case on contingency. The team at Warner & Scheuerman, which evaluates contingent commercial matters as part of the firm’s litigation practice, runs the same multi-element analysis on every intake and accepts only those matters that pass each element decisively. The case the owner thinks is obviously strong sometimes is, and sometimes presents structural problems that the contingent fee structure cannot absorb.
Understanding the framework lets sophisticated commercial plaintiffs and referring attorneys evaluate their own matters before walking into the intake meeting.
Liability Strength as the First Filter
The first question is whether the contract can actually be enforced as the plaintiff understands it.
The starting point is the contract itself. A written, fully executed agreement with clear terms and unambiguous performance obligations is in a fundamentally different position from an oral agreement, a handshake deal supplemented by emails, or a course-of-dealing arrangement that the parties never formalized. New York’s statute of frauds (codified primarily in General Obligations Law § 5-701) bars enforcement of certain oral agreements regardless of their substance, and the parol evidence rule limits what extrinsic communications can be used to interpret a written agreement.
Assuming the contract exists and is enforceable, the next question is the breach. Stronger cases involve breach that is undisputed, documented, or so plainly outside the contract’s terms that no reasonable factfinder could conclude otherwise. A vendor who simply stopped delivering, a counterparty who repudiated, a service provider whose deliverable bears no resemblance to the specification – these are clean breach fact patterns. Weaker cases involve disputed performance, course-of-dealing arguments cutting against the plaintiff, contractual conditions precedent that arguably were not satisfied, and prior material breaches by the plaintiff that the defendant will use to excuse its own performance.
The defenses available also affect liability strength. Limitation of liability clauses, integration clauses, force majeure provisions, mandatory arbitration clauses, choice-of-law and forum-selection clauses, and statutes of limitations under CPLR 213(2) (six years for contract claims, generally) all factor into the case’s substantive viability. A contingent fee firm evaluates each of these affirmatively rather than discovering them after the engagement is signed.
The implied covenant of good faith and fair dealing under New York law adds a layer of analysis that sometimes saves cases that look weak under literal contract construction and sometimes creates exposure that strict contract reading would not predict.
Damages Quantifiability and the Kenford Problem
The second filter is whether the damages can actually be proved at trial.
New York’s controlling authority on contract damages is Kenford Co. v. County of Erie, 67 N.Y.2d 257 (1986), and its companion decision Kenford II, 73 N.Y.2d 312 (1989). The Court of Appeals set out the three-part test that has governed lost profits and consequential damages in New York commercial litigation for nearly forty years. The damages must have been caused by the breach. The damages must be capable of proof with reasonable certainty, “not be merely speculative, possible or imaginary.” The damages must have been within the contemplation of the parties at the time the contract was made.
The third element – contemplation of the parties – is the foreseeability rule that limits consequential damages to risks the defendant assumed when the agreement was made. The Court of Appeals in Ashland Management v. Janien, 82 N.Y.2d 395 (1993), and the line of cases applying Kenford have consistently held that consequential damages outside the parties’ contemplation at the time of contracting are not recoverable regardless of how directly the breach caused them.
The reasonable certainty requirement is where most contingent commercial cases live or die. Out-of-pocket losses with documentary proof (paid invoices, bank records, executed cover transactions) typically satisfy the standard easily. Lost profits from an established business with a track record of similar transactions are recoverable but require expert quantification. Lost profits from a new business venture face the Kenford “stricter standard”: the Court of Appeals held that “if it is a new business seeking to recover for loss of future profits, a stricter standard is imposed for the obvious reason that there does not exist a reasonable basis of experience upon which to estimate lost profits with the requisite degree of reasonable certainty.”
Cases built primarily on new-venture lost profits, hard-to-quantify reputational damage, or speculative downstream consequences run into Kenford problems regardless of how clear the underlying breach is. The contingent fee structure does not absorb damages risk well, and a firm evaluating the matter discounts heavily for damages that will require speculative expert reconstruction.
Defendant Solvency and the Collectibility Question
The third filter is whether the defendant can actually pay a judgment.
A winning verdict against a judgment-proof defendant is worth nothing. The collectibility analysis runs alongside the liability and damages analyses, not after them, because all three have to support the engagement before the case is taken.
Strong collectibility indicators include public-company defendants with disclosed financials, operating businesses with documented cash flow and asset bases, defendants with substantial real property holdings in New York or other accessible jurisdictions, applicable insurance coverage (E&O, D&O, general liability, contractual indemnification), personal guarantors with means, and defendants who have previously paid significant judgments. Concerning indicators include single-purpose entities formed for the transaction at issue, foreign defendants whose assets sit outside accessible enforcement jurisdictions, defendants in financial distress or recent bankruptcy, asset-stripped entities, heavily leveraged businesses operating on tight margins, and defendants who have demonstrated willingness to evade prior judgments.
The firm’s parallel judgment-collection practice gives the collectibility analysis a sharper edge than most commercial litigators bring to it. Evaluating defendants the way an enforcement attorney would – looking at asset disclosures, restraining-notice fact patterns, historical judgment-evasion behavior, voidable-transaction risk under New York’s UVTA – produces more accurate collectibility forecasts than the typical pre-litigation due diligence does.
A meritorious case against a defendant who cannot pay a judgment is a teaching example, not a contingent commercial engagement.
Timeline, Counterclaims, and Practical Risk Tolerance
The fourth filter is the practical shape of the litigation itself.
Most contingent commercial matters need to resolve within two to four years for the firm’s economics to work. Cases that could realistically run longer (matters involving extensive cross-border discovery, multi-defendant disputes with internal indemnification battles, or claims requiring extensive expert development) require either modified fee arrangements, litigation funding partnerships, or capital reserves that not every firm has.
Counterclaim exposure changes the analysis materially. A breach of contract case where the defendant has a credible counterclaim that could net to a defense verdict shifts the risk profile from “win some, lose some” to “potentially owe money on the counterclaim.” Contingent commercial firms typically decline matters with substantial counterclaim exposure unless the plaintiff is willing to assume hourly responsibility for the counterclaim defense.
Discovery cost is a real constraint. Cases requiring extensive document production, multiple expert witnesses, foreign discovery, or e-discovery vendor work consume capital that the contingent firm advances against the contingent fee. The plaintiff’s willingness to advance some costs (or to tolerate them being deducted from any recovery) factors into the engagement structure.
Pre-judgment remedies are an underused tool that improves contingent commercial economics. Where the facts support attachment under CPLR 6201 (typically requiring proof that the defendant is disposing of assets to defeat enforcement) or injunctive relief under CPLR 6301, securing a pre-judgment lien or restraint can change the negotiating leverage and accelerate resolution.
The plaintiff’s litigation tolerance matters too. Depositions, document production, cross-examination at trial, and the years-long timeline are demanding even for sophisticated parties. Cases where the client is unwilling or unable to participate fully are weaker contingent prospects regardless of substantive merit.
How Warner & Scheuerman Frames the Decision
The firm’s intake on a potential contingent commercial matter combines all four filters into a single threshold decision. Liability strength, damages quantifiability under Kenford, defendant collectibility informed by the firm’s enforcement practice, and the practical shape of the litigation. Cases that fail any element decisively are declined. Cases that pass all four are accepted on terms calibrated to the specific risk profile.
The honest framing matters. A potential plaintiff who walks in with a strong contract claim against an insolvent defendant is in a different position from a plaintiff with a marginal claim against a deep-pocketed defendant, and both are different from the rare matter that passes every element. Communicating which position the matter actually occupies, at intake, serves the client and the firm both.
If you have a meaningful breach of contract matter and you want a structured evaluation of whether the case is suitable for contingent representation, reach out to Warner & Scheuerman to walk through the contract analysis, the Kenford damages framework, the collectibility evaluation, and the practical litigation shape. The right answer is sometimes no, sometimes yes on modified terms, and sometimes yes on full contingency – and getting to the answer requires running the analysis the framework actually demands.
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