---
title: "Does the Applicant enter into contracts with fees contingent on client outcomes?"
url: https://insuranceposture.com/questions/services-and-contracts/applicant-enter-into-contracts-fees-contingent-client-outcomes
category: "Services and contracts"
canonical_key: q_pro_012
evidence_state: attested
updated: 2026-08-24
---

# Does the Applicant enter into contracts with fees contingent on client outcomes?

URL: https://insuranceposture.com/questions/services-and-contracts/applicant-enter-into-contracts-fees-contingent-client-outcomes
Section: Services and contracts
Evidence state: Attested, not tenant-verifiable

Contingent fees tie your payment to a result, which encourages the client to treat that result as something you promised.

## What the carrier is actually asking

The carrier is asking whether any contracts make fees dependent on achieving client outcomes: performance-based pricing, gainshare arrangements, or success fees.

## Why it is underwritten

Outcome-based pricing shifts the relationship from effort to result. If the outcome does not materialise, the client is more likely to characterise it as a failure to deliver rather than a missed target, and the arrangement itself is evidence that the outcome was central to the bargain.

## Where the answer lives in Microsoft 365, Entra ID, and Azure

This is a commercial arrangement question supported by contract terms.

| Platform | Where the setting lives | What has to be true |
| --- | --- | --- |
| Contracts | Arrangements with outcome-contingent fees | Which engagements, what proportion of revenue, and how outcomes are defined. Attested |
| Definitions | How the outcome is measured and by whom | Objective, measurable criteria rather than subjective satisfaction |
| Dependencies | Client obligations required for the outcome | Documented dependencies, since outcomes usually depend on client actions |
| Liability | Whether missing the outcome triggers liability or only affects fees | Explicit separation, so a missed target reduces fees rather than creating a claim |
| Cap | How the liability cap applies where fees are contingent | A cap based on fees paid becomes small when fees were contingent and unpaid |

**Fee-based caps shrink when fees are contingent**

If your cap is fees paid in the last twelve months and the contingent fees were never earned, the cap is close to zero while the client's claimed loss is not. Contingent arrangements need a cap on a different basis.

## What a defensible yes requires

- Contingent arrangements are identified with their revenue share.
- Outcomes are objectively defined and measurable.
- Client dependencies are documented.
- Missing an outcome affects fees rather than creating liability, stated explicitly.
- The liability cap uses a basis that survives unpaid contingent fees.

## How this answer goes wrong

A gainshare arrangement defines the target and not the client's obligations, so when the outcome is missed because the client did not provide data on time, the contract does not say so. The dispute becomes about performance rather than about dependencies.

## If this answer turns out to be wrong

Technology E&O questions describe what you promised your own clients, and the policy language decides how strictly your description of that is held. Whether anything follows from an inaccuracy depends on materiality, on the policy wording, and on the law of the governing state: [whether an answer is a warranty or a representation](https://insuranceposture.com/glossary/warranty). The other consequence terms are collected in the [glossary](https://insuranceposture.com/glossary).

## Frequently asked

### Are contingent fees a problem for cover?

They raise the likelihood of a dispute and are not usually a barrier. Underwriters want to know the proportion of revenue involved.

### How should outcomes be defined?

Objectively and measurably, with a named measurement method and a named party who measures. Subjective satisfaction criteria are where disputes start.

### Should missing a target create liability?

No. Say explicitly that it affects fees only. Without that, the target reads as a warranty.

### What cap basis works here?

Total contract value or a fixed sum rather than fees paid, since fees paid can be near zero exactly when a claim arises.

## Related questions

- [Do the Applicant's client contracts address guarantees or warranties?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-client-contracts-address-guarantees-warranties)
- [Do the Applicant's client contracts contain limitation of liability clauses benefiting the Applicant?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-client-contracts-contain-limitation-liability-clauses-benefiting)
- [Do the Applicant's contracts include customer acceptance / final sign-off?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-contracts-include-customer-acceptance-final-sign-off)
- [Do the Applicant's contracts define project phases / milestones?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-contracts-define-project-phases-milestones)

---

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