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f/k/a archives . . . real opinions & real haiku

April 3, 2006

contingency fees: risk matters

Filed under: pre-06-2006 — David Giacalone @ 6:55 pm

Many members of the personal injury bar argue that you have to be

a tort-reformin’, insurer-lovin’, consumer-hatin,’ ethics whore — or

a dupe of the above — to assert that contigency fees should relate

to the risk being taken by the lawyer in a particular case.  I don’t

know if the tort lawyers really believe their own propaganda, but

they do profess this belief, while reminding the world that they “earn”

their above-hourly-fee premimum precisely because they are taking

the huge risk of working hard, and fronting litigation expenses, without

being compensated at all, or enough.

tiny check The main components of the risk are, of course, how

likely the client is to succeed with the claim, how much

is likely to be awarded and collected, and how much work

and resources the law firm is likely to put into the case. The

risk is lower, and the fee should therefore be lower, when

the case is likely to be a winner with a big jackpot, and when

relatively fewer hours and dollars will be expended to win.



When legal ethics experts espouse the link between the reasonable-

ness of a contingency fee and the perceived risk at the time the fee 

arrangement is being entered, they are called captives of evil forces or 

simply insensitive simpletons who will destroy the American justice

system and deprive the injured Little Guy of competent legal counsel   

(see, for example, this Jan. 2004 article from the Miami Herald, and this

press release by Public Citizen, for sample p/i rhetoric).  


The p/i bar points to the ubiquitous use of what appears to be — but

they no longer acknowldge to be — a standard percentage rate in most

jurisdictions, and the lack of disciplinary action against such fees.  That

is supposed to settle the debate.




Well, before I give up, I thought I would point out again just who — besides

people like Lester Brickman, Derek Bok, Howard Phillips, and myself, plus  

lots of state and federal judges  — is on record saying that risk is central

in evaluating the reasonableness of a contingency fee. 


In case you have a short attention span or are in a hurry, I’ll start with my

Big Gun: The American Trial Lawyers Association. . . . . 


. . . . please click to read the rest of this post,

which is part II of a four-part series, that includes: 




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