Paper Claims Contingency Fees “Inordinately High”, Often Without Risk

With all the talk being bandied about on alternative billing, one form which is often discussed (although it’s far from new) is the contingency, or “upon recovery” fee.  Per a recent post in Point of Law, it’s generally believed that, allowing for the risk of non-payment, the amounts earned are on a par with their defense counterparts.  

However, a Washington University Law Quarterly paper quoted by PoL surmised that the opposite is true and that, in fact, “…yields from contingency-fee practice have become inordinately high.”  The paper, written by Lester  Brickman, Benjamin Cardozo Professor of Law, claims that data showing otherwise is “unreliable and invalid.”  Prof. Brickman contends that these fees, central to the ongoing debate on tort reform, have increased “enormously” in the past few decades.   Brickman goes on to claim that currently, these amounts are often in the thousands of dollars per-hour range.  

Professor Brickman doesn’t mince words when he takes the position that “the real role of ethical rules is to inhibit price competition so that tort lawyers can continue to extract substantial rents.” 

Brickman acknowledges that the scope of liability has increased in the past four decades, but opines that this is due largely not to an expanded rate of injury, but rather to the accelerated fees collected in contingent litigation.  Adding to the allure of such cases, the rate of non-payment has remained constant and has actually diminished in cases of “high-end” product liability and medical malpractice, says Brickman.

An open letter penned by a Chicago, Illinois accident lawyer a few years back embraces the opposing view.  The online letter, entitled “The Plaintiff Lawyer’s Perspective on Contingency Fees”, puts forth the supposition that those who don’t like the litigation contingency system don’t have the best interests of the public at heart. “The parties seeking to limit contingency fees have only one goal in mind,” says Christopher Hurley of Hurley, Mckenna & Metz, “[and that is] to make certain tort cases less economically feasible to pursue, thereby making it often impossible…to find lawyers”.  Hurley explains that such a happenstance would “help tortfeasers and their insurers keep the money that should be used to compensate the victims.”  Hurley also claims that the contingency cases are harder to try, the awards lower and the risks of loss nothing to sneer at.  As to the complexity of what Hurley calls the “simplest” case, he often finds himself going to depositions and hearings while the defendants haggle among themselves for liability. 

To show how things have changed (or perhaps not), The Albany Law Journal, a historical compilation on the law and lawyers (William S. Hein & Co. Inc.) includes a clipping of current events from the year 1882 in which The Ethics of Compensation for Professional Services are discussed. One of the premises put forth concerns an ages-old view on greed. “First, does not the contingent fee business naturally and practically tend to the charging of exorbitant amounts?” asks the 19th century reporter.  “And,” he goes on, “is there a lawyer in the country …who is not ashamed or afraid to have it known in public, or at least in court, that he is carrying on a single case on such terms?”

What remains a point of debate across the board is the amount of risk involved.  Back to Brickman’s contentions, he claims fees of up to tens of thousands per-hour are often obtained “in cases where lawyers bear no meaningful risk of low or no recovery.”   To read more, go to: 

http://www.pointoflaw.com/articles/archives/2003/01/effective-hourly-rates-of-cont.php;  

http://www.hurley-law.com/lawyer-attorney-1257058.html; and   

http://bit.ly/gxKpa4

 

-EM

 

 

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