Is your success-fee SaaS contract worth signing?
If your platform earns a percentage of a financial outcome, for example surfacing federal tax credits from payroll data, the fee clause and terms of service are where the risk concentrates. I draft and redline those contracts, and I send attorney demand letters when a customer or partner refuses to pay an earned success fee. Plain-English work, a straight read on where you stand. Sergei Tokmakov, California attorney.
Describe your situation
Tell me about your platform: what outcome the fee attaches to, how the fee is calculated, what data you touch, and whether a customer is now disputing a fee. I will point to the contract or demand-letter step that fits and the documents I would need. A full review of your contract is the $240 Written Attorney Consultation, not this chat. AI-generated legal information, attorney-supervised, not legal advice.
That turns on your specific role and structure, and it is not a flat yes or no. The federal rule that is settled is Circular 230 at 31 CFR 10.27, which bars a practitioner from charging a contingent fee for a matter before the IRS, with three narrow exceptions, and defines a contingent fee to include a percentage of the refund or tax saved. Whether a software-only discovery tool is a practitioner caught by that rule is unsettled, so I treat it as general information, not a conclusion, and confirm the current text before relying on it.
Because regulators are already watching this model. The IRS announced a moratorium on new Employee Retention Credit claims on September 14, 2023, citing aggressive marketing and questionable claims, and in 2025 the One, Big, Beautiful Bill strengthened enforcement, including a filing cutoff for certain 2021 claims and due-diligence penalties on some promoters. I draft your fee and disclosure language so the platform reads as a careful tool, not as the promoter conduct the IRS is targeting. That is business framing, not a guarantee of any tax position.
At minimum a customer agreement and terms of service that define the outcome, when the fee is earned and payable, what happens on a later reduction or clawback, and how disputes are resolved. If you touch payroll data through an integration, you also need a data processing addendum and security commitments. I draft or redline one business contract at $575 with up to three rounds of revisions, overflow at $240 per hour.
If you process personal data on behalf of your customer, a written data processing contract is not optional under the major privacy regimes. GDPR Article 28(3) sets the mandatory minimum contents of a processor contract, and California's Civil Code 1798.100(d) requires a written contract with specified terms when a business discloses personal information to a service provider or contractor. I link my data processing addendum generator below and can tailor it to your integration.
That is a demand-letter matter, and its strength usually tracks how clearly the contract defined the earned fee. I send an attorney letter on firm letterhead by certified mail plus email that states the amount owed, the contract terms that earned it, and the legal exposure. The $575 letter includes the first-response review and a narrow counter where strategic. Larger disputes often warrant the $1,200 package with a draft complaint attached as leverage.
A success-fee or contingent-fee SaaS platform earns a percentage of a financial outcome rather than a flat subscription. A common version analyzes payroll data to surface federal tax credits and then takes a cut of the credits the customer actually claims. The model is attractive because the customer pays only when they benefit, but that same structure is where the legal risk lives.
Three pressure points show up again and again. First, the fee clause: it has to define exactly what outcome triggers the fee, when the fee is earned versus merely projected, and what happens if a credit is later reduced, denied, or clawed back. Second, the data: a tax-credit tool usually ingests sensitive employee payroll records, often through a third-party integration, which pulls in privacy-law obligations. Third, the regulatory backdrop: percentage-of-recovery pricing for tax work sits in a heightened-scrutiny environment, and the contract should be drafted with that in mind.
I work on both sides of this. I draft and redline the customer agreement, terms of service, fee clause, and data terms so the platform is defensible from the start, and I send attorney demand letters when a customer or partner refuses to pay a fee the contract earned. The first is contract work; the second is demand-letter work. Both are priced below.
Each tile names an agreement, when you use it, and what to watch. Tap or press Enter to flip.
Customer agreement / order form
A customer signs up for the platform and the success fee is the core commercial term.
Tap for clauses ↻Key clauses
Earned-fee definition, payment timing, reduction and clawback, outcome disclaimer, term and termination.
Watch-point: the platform wants the fee earned on a claimed credit; the customer wants it earned only on a credit that survives. Draft the trigger so it is not ambiguous.
Start with Create or Redline Contract, $575
Tap to flip back ↻Terms of service
Self-serve customers accept online and you need enforceable, outcome-aware terms at scale.
Tap for clauses ↻Key clauses
Limitation of liability, disclaimer of outcome, governing law and forum, acceptable use, fee survival on audit.
Watch-point: a liability cap pegged to fees paid behaves very differently when fees are a percentage of a large recovery. Set it on purpose.
See the TOS and liability section
Tap to flip back ↻Data processing addendum
You process payroll or other personal data on behalf of the customer through an integration.
Tap for clauses ↻Key clauses
GDPR Article 28(3) mandatory terms, CCPA service-provider prohibitions, sub-processor flow-down, security, deletion or return, audit rights.
Watch-point: without a compliant DPA you are exposed under GDPR Article 28 and CCPA; the customer should insist on one.
Tap to flip back ↻Partner / referral agreement
An accountant, payroll provider, or reseller sends you customers in exchange for a share.
Tap for clauses ↻Key clauses
Revenue-share definition, who owns the customer, compliance representations, and what happens if the underlying success fee is reduced.
Watch-point: a referral fee tied to a tax outcome can raise its own scrutiny; keep the partner's role and any disclosures clean.
Start with Create or Redline Contract, $575
Tap to flip back ↻Attorney demand letter
A customer or partner refuses to pay a success fee the contract clearly earned.
Tap for clauses ↻What it contains
The amount owed, the contract terms that earned it, the legal exposure, and a deadline, sent certified mail with a delivery record.
Watch-point: the letter is only as strong as the earned-fee clause behind it, which is why the contract work comes first.
Start with the $575 Attorney Demand Letter
Tap to flip back ↻Draft complaint / arbitration demand
The dispute is serious or litigation-ready and you want the filing threat to be concrete.
Tap for clauses ↻What it contains
A court-ready pleading or arbitration demand prepared in parallel and attached to the letter as leverage. It is not filed automatically.
Watch-point: filing it and appearing as counsel of record is a separate, California-only engagement, quoted on its own.
Start with the $1,200 leverage package
Tap to flip back ↻People want a single answer to one question: can my platform charge a percentage of the credits it finds? The honest answer is that part of the law here is settled and part is not, and a careful clause respects both.
What is settled (cited)
What stays general (no citation, confirm against your facts)
How I draft the clause
- Define the earned event precisely. Tie the fee to a concrete, verifiable outcome (for example a credit actually claimed and accepted), not to a projection, so the fee is defensible and collectible.
- Address reduction and clawback. Say what happens if a credit is later disallowed or reduced, so a dispute does not turn into litigation over an undefined term.
- Separate software from tax advice. Make clear in the contract what the platform does and does not do, so the fee model is not framed as practitioner-level tax representation.
- Keep disclosures honest. Eligibility is the customer's risk; the contract and disclosures should not oversimplify it, which is exactly what regulators have criticized in this space.
A flat-subscription SaaS contract and a success-fee SaaS contract are not the same document. When your revenue is a percentage of the customer's outcome, several standard terms have to be rewritten rather than copied.
- Limitation of liability. A liability cap pegged to fees paid behaves very differently when fees are a percentage of a large recovery. Decide deliberately whether the cap is tied to fees, a fixed amount, or something else, rather than inheriting a template number.
- Disclaimer of outcome. The terms should disclaim any guarantee that a credit will be approved or survive audit, and separate the platform's analysis from a tax-position opinion.
- Fee survival and audit cooperation. Address whether the fee survives if the customer is later audited, and who does what if the customer has to defend the position.
- Governing law and forum. Choose the governing law and dispute forum on purpose. For a national platform, an arbitration clause with a defined seat can make a non-payment dispute cheaper to resolve, but the clause has to be drafted to actually be enforceable.
A tax-credit platform usually ingests sensitive employee payroll records, often by connecting to the customer's payroll provider. If you process personal data on behalf of your customer, you are a processor, and a written data processing contract is mandatory under the major privacy regimes. This is not a nice-to-have.
The IRS has said directly that some honest businesses were misled into filing Employee Retention Credit claims by promoters who often misrepresented or oversimplified eligibility rules. For a success-fee platform, clear customer disclosures are both a compliance posture and a defense against that exact framing.
- Eligibility is the customer's risk. State plainly that qualifying for a credit depends on the customer's facts and is not guaranteed by the platform.
- Not tax advice. Distinguish software analysis from a tax-position opinion, and direct the customer to their own tax professional for the decision to claim.
- Clawback and audit. Explain what happens to the fee and to the customer if a credit is later reduced, denied, or audited.
- Filing-deadline reality. Where a filing cutoff applies to a credit, say so, so the customer is not surprised. For example, the One, Big, Beautiful Bill barred allowance or refund of certain third and fourth quarter 2021 ERC claims filed after January 31, 2024, per OBBB section 70605(d).
Source for the filing cutoff: IRS FAQ on the ERC compliance provisions of the One, Big, Beautiful Bill, referencing OBBB section 70605(d), irs.gov.
Readiness checklist
Two views: what the platform should have in place, and what a customer should look for before signing. General guidance, not a substitute for review of your actual documents.
- Earned-fee definition. The contract ties the fee to a concrete, verifiable outcome, not a projection.
- Reduction and clawback terms. What happens if a credit is later disallowed or reduced is spelled out.
- Software-not-tax-advice line. The contract separates the platform's analysis from a tax-position opinion.
- Data processing addendum. A written DPA covers payroll data, with GDPR Article 28 and CCPA terms where they apply.
- Limitation of liability decided on purpose. The cap is not an inherited template number.
- Governing law and forum. Chosen deliberately, with an enforceable dispute clause.
- Honest customer disclosures. Eligibility risk, clawback, and not-tax-advice language are present and clear.
- When is the fee earned. Confirm you only owe a fee on a credit actually claimed and accepted, not on an estimate.
- What if the credit is reduced. Check whether you owe the fee, or part of it, if the credit is later cut or denied.
- Who bears audit risk. Understand who defends the position and who pays if the IRS challenges it.
- How your data is used. Read the data terms: is your payroll data only used for your benefit, and is it deleted or returned at the end.
- Liability cap. See whether the platform's liability is capped at a number that is fair given the fee it takes.
- Eligibility honesty. Be wary of a platform that promises eligibility rather than analyzing it; the IRS has flagged oversimplified marketing.
Start the intake when you are ready
A few short questions plus the documents I will need (your current customer agreement or terms, your fee model, and how your data flows). I respond in writing with a recommended package and next-step plan within 2 business days. No call required.
Pricing and tiers
Create or Redline Contract
Drafting or redline of one business contract: customer agreement, terms of service, fee clause, limitation of liability, or a data processing addendum. Up to three rounds of email revisions. Overflow at $240 per hour.
Attorney Demand Letter
Attorney letter on firm letterhead, USPS certified plus email, up to two client revision rounds, review of the first response, and a narrow counter-response if strategically appropriate.
Litigation-Leverage Demand Package
Everything in the $575 letter plus a court-ready draft complaint or arbitration demand prepared in parallel and attached as settlement leverage. Up to two revision rounds.
Pre-Litigation Negotiation Phase
Triggered when the matter enters multi-round negotiation: additional counter-letters, written settlement negotiations through settlement or impasse, and one settlement-agreement or mutual-release review.
Written Attorney Consultation
Written attorney response identifying the main legal issues, risks, leverage points, and practical next steps for your matter. The right first step if you want a read before committing to a draft.
1-Hour Zoom Strategy Session
A live one-hour session, including screen sharing and preliminary review of key documents sent before the session. Best when you want to talk the structure through.
Turnaround: a first draft is usually 3 to 5 business days after I receive the necessary documents. Overflow beyond a package estimate bills at $240 per hour.
Create or Redline Contract
$575 flat fee- Drafting or redline of one business contract for your platform
- Customer agreement, terms of service, fee clause, limitation of liability, or DPA
- Up to three rounds of email revisions
- Brief written comments explaining the key issues and suggested changes
Attorney Demand Letter
$575 flat fee- Single attorney letter on firm letterhead
- USPS certified mail with signature requested, plus email delivery
- Up to two client revision rounds before sending
- Review of the first substantive response and a narrow counter-response if strategically appropriate
Litigation-Leverage Demand Package
$1,200 flat fee- Everything in the $575 Attorney Demand Letter
- Court-ready draft complaint or arbitration demand prepared in parallel and attached as leverage (not filed automatically)
- Up to two client revision rounds before sending
- First-response review with a short next-step recommendation
If you received one of my demand letters and you are reading this to judge whether I actually follow through, here is the straight answer. I do not stop at the letter. When a demand is ignored or no settlement is reached, the matter escalates on a defined path, and I file complaints and represent clients in California when the matter calls for it.
Attorney demand letter
Certified letter stating the earned fee, the contract terms, and the legal exposure. First-response review included.
Leverage package
A court-ready draft complaint or arbitration demand prepared and attached, so the filing threat is specific and credible.
Negotiation phase
Multi-round counter-letters and written settlement negotiation through settlement or impasse, with one release review.
File and represent (California)
Filing the complaint, initiating arbitration, or appearing as counsel of record. A separate engagement, California only.
Is a percentage-of-credit success fee allowed for a tax-credit SaaS platform?
That depends on facts I would need to review, and it is not a question I answer with a flat yes or no on a web page. What is settled in the federal rules is narrower than people assume. Circular 230, at 31 CFR 10.27(b)(1), says a practitioner may not charge a contingent fee for services in connection with any matter before the IRS, with three narrow exceptions, and 31 CFR 10.27(c)(1) defines a contingent fee to include any fee based in whole or part on whether a position avoids challenge or is sustained, including a percentage of the refund or tax saved. What is not settled, and what I treat as general information rather than a conclusion, is whether a software-only discovery tool that surfaces potential credits is itself a practitioner caught by that rule, or whether percentage pricing for that tool is prohibited. That turns on your specific role and structure and needs matter-specific analysis. Confirm the current text of 31 CFR 10.27 before relying on any summary.
Why does the ERC enforcement environment matter to my fee clause?
Because the regulators are already paying attention to this exact model. On September 14, 2023 the IRS announced a moratorium on processing new Employee Retention Credit claims, citing aggressive ERC marketing and a surge of questionable claims, and it has said some honest businesses were misled by promoters who misrepresented or oversimplified eligibility. In 2025 the One, Big, Beautiful Bill strengthened ERC enforcement, including barring allowance or refund of third and fourth quarter 2021 credits if the claim was filed after January 31, 2024, per OBBB section 70605(d), and adding due-diligence penalties on certain ERC promoters. A success-fee clause drafted without regard to that environment can read like the promoter conduct the IRS is targeting. I draft the fee and disclosure language to keep your platform clearly on the right side of it, as a business-framing matter, not as a guarantee of any tax position.
What contracts does a success-fee SaaS platform actually need?
At minimum a customer agreement and terms of service that define the outcome the fee attaches to, when the fee is earned and payable, what happens if a credit is later reduced or clawed back, and how disputes are resolved. If the platform touches sensitive data such as payroll records through a third-party integration, it also needs a data processing addendum and security commitments. I draft or redline one business contract under the $575 Create or Redline Contract tier, with up to three rounds of email revisions, and overflow at $240 per hour. The data processing addendum can be a separate document under the same tier or scoped together.
Do I need a data processing addendum if I handle payroll data through an integration?
If your platform processes personal data on behalf of your customer, a written data processing contract is not optional under the major privacy regimes. GDPR Article 28(3) sets the mandatory minimum contents of a processor contract, including documented-instructions-only processing under Article 28(3)(a), confidentiality under 28(3)(b), Article 32 security under 28(3)(c), sub-processor flow-down under 28(3)(d), deletion or return at the end under 28(3)(g), and audit cooperation under 28(3)(h). Under California law, Civil Code 1798.100(d) requires a written contract with specified terms when a business discloses personal information to a service provider or contractor, and 1798.140(ag) and (j) set the prohibitions that contract must contain. I link my data processing addendum generator above and can tailor the document to your integration.
What happens if a customer refuses to pay the success fee?
That is a demand-letter matter, and the strength of it usually tracks how clearly the contract defined the earned fee. I send an attorney letter on firm letterhead, by USPS certified mail plus email, that states the amount owed, the contract terms that earned it, and the legal exposure. The $575 letter includes up to two client revision rounds, review of the first response, and a narrow counter-response where strategic. For serious or larger disputes, the $1,200 package attaches a court-ready draft complaint or arbitration demand as leverage. Multi-round negotiation is the $1,500 Pre-Litigation Negotiation Phase, and filing or appearing as counsel of record is a separate engagement, California only.
Do you only handle California matters?
Contract drafting and review for a SaaS platform is not tied to one state, so I draft and redline customer agreements, terms of service, fee clauses, and data processing addenda for platforms based anywhere in the United States. A demand letter is a pre-litigation communication, not a court filing, so I can often send one nationwide using the applicable law for the recipient's jurisdiction. Filing a complaint, initiating arbitration, or appearing as counsel of record requires bar admission in the relevant state, and I handle that directly in California as a separate, separately-quoted engagement.
Related resources
Ready to get your fee model and contracts right?
Pick the step that fits. I respond in writing with a recommended package and a next-step plan within 2 business days.
Create or Redline Contract
Attorney Demand Letter
Written Attorney Consultation
Sergei Tokmakov, Esq. | California Bar #279869