{"id":5245,"date":"2006-04-03T18:55:36","date_gmt":"2006-04-03T22:55:36","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/formerlyknownas\/2006\/04\/03\/contingency-fees-risk-matters"},"modified":"2011-08-05T14:54:02","modified_gmt":"2011-08-05T18:54:02","slug":"contingency-fees-risk-matters","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2006\/04\/03\/contingency-fees-risk-matters\/","title":{"rendered":"contingency fees: risk matters"},"content":{"rendered":"

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Many members of the personal injury bar argue that<\/FONT> you have to be <\/FONT><\/DIV>
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a tort-reformin’, insurer-lovin’, consumer-hatin,’ <\/FONT>ethics whore — or <\/FONT><\/DIV>
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a dupe of the above — to assert <\/FONT>that contigency fees should relate <\/FONT><\/FONT><\/DIV>
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to the risk being taken by the lawyer <\/FONT>in a particular <\/FONT>case.  I don’t <\/FONT><\/FONT><\/DIV>
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know if the tort lawyers really believe their own propaganda, but<\/FONT><\/FONT><\/DIV>
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they do profess this belief, while reminding the world that they “earn” <\/FONT><\/DIV>
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their above-hourly-fee premimum precisely<\/EM> because they are taking <\/FONT><\/DIV>
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the huge risk of working hard, and fronting litigation expenses, without <\/FONT><\/DIV>
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being <\/FONT>compensated at all, or enough.<\/FONT><\/DIV>
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\"tiny The main components of the risk are, of course, how <\/FONT><\/DIV>
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likely the client is to succeed with the claim, how much <\/FONT><\/DIV>
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is likely to be awarded and collected, and how much work <\/FONT><\/DIV>
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and resources the law firm is likely to put into the case. The <\/FONT><\/DIV>
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risk is lower, and the fee should therefore be lower, when <\/FONT><\/DIV>
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the case is likely to be a winner with a big jackpot, and when <\/FONT><\/DIV>
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relatively fewer hours and dollars will be expended to win.<\/FONT><\/DIV><\/BLOCKQUOTE>
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“slicingThePieF”<\/FONT><\/DIV>
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<\/FONT> <\/DIV>
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When legal ethics experts espouse the link between the reasonable-<\/FONT><\/DIV>
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ness of a contingency fee and the perceived risk <\/FONT>at the time the fee <\/FONT><\/DIV>
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arrangement is being entered, they are called captives of evil forces or <\/FONT><\/DIV>
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simply insensitive simpletons who will destroy the American justice <\/FONT><\/DIV>
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system and deprive the injured Little Guy of competent legal counsel   <\/FONT><\/DIV>
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(see, for example, this Jan. 2004 <\/FONT>article<\/FONT><\/A> from the Miami Herald<\/FONT><\/A><\/EM>,<\/FONT> and this <\/FONT><\/DIV>
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press release<\/FONT><\/A> by Public Citizen, for sample p\/i rhetoric).  <\/FONT><\/DIV>
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<\/FONT> <\/DIV>
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The p\/i bar points to the ubiquitous use <\/FONT>of what appears to be — but <\/FONT><\/DIV>
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they no longer acknowldge to be — a standard percentage rate in most <\/FONT><\/DIV>
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jurisdictions, and the lack of disciplinary action against such fees.  That <\/FONT><\/DIV>
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is supposed to settle the debate.<\/FONT><\/DIV>
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<\/FONT> <\/DIV>
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                                                                                              \"mushroomsG\"<\/FONT><\/DIV>
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<\/FONT> <\/DIV>
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Well, before I give up, I thought I would point out again just who<\/EM> — besides <\/FONT><\/DIV>
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people like Lester Brickman, Derek Bok, Howard Phillips, and myself, plus  <\/FONT><\/DIV>
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lots <\/FONT>of state and federal judges <\/FONT> — <\/FONT>is on record saying that risk is central <\/FONT><\/DIV>
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in evaluating the reason<\/FONT>ableness of a contingency fee.  <\/FONT><\/DIV>
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<\/FONT> <\/DIV>
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In case you have a short attention span or are in a hurry, I’ll start with my <\/FONT><\/DIV>
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Big Gun: The <\/FONT>American Trial Lawyers Association<\/A>. . . . .  <\/FONT><\/DIV>
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<\/FONT><\/FONT> <\/DIV>
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. . . . please click to read the rest<\/A> <\/EM>of this post, <\/EM><\/FONT><\/FONT><\/DIV>
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which is part II of a four-part series, that includes: <\/FONT><\/EM><\/DIV>
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