"A Radical Proposal or Wise Consumer Protection?"

Stephen Gillers, Regulation of Lawyers
"A Radical Proposal or Wise Consumer Protection?"

*This, like the other answers to questions in the book, are largely based on student opinion and do not necessarily state the correct law. 

Pros

-           There are a number of reasons to defend a normal contingency fee rate.  

-           In many ways, the contingency fee reflects the spirit of the Sixth Amendment right to counsel in the criminal context.  In the civil arena, contingency fees give wronged individuals access to the judicial system and to much needed monetary reparations for injuries sustained.

-           Furthermore, even if one were to argue that one-third of a potential settlement offer is too substantial compensation for a lawyer, the client will still benefit from some recovery for his or her injury, where the alternative is nothing.

-           One could also argue in favor of the normal contingency fee rate of approximately 30% for lawyers because the lawyer has taken on a risk by agreeing to represent the client. Because of the possibility of losing at trial, lawyers are rewarded for taking on these risks and expending a great deal of time and resources.  Thus, contingency fees are an incentive for lawyers to represent such clients they would not otherwise represent.

-           A contingency fee also compensates a lawyer for his or her specialized skill.

Cons

-           Some would argue that by forcing a client to pay 1/3 of their overall recovery would be taking advantage of the client when they are in a precarious situation. They would have no other way to recover and have very little room to negotiate.

-           The typical contingency fee basis has dramatically increased docket congestion. People who wouldn’t otherwise be asserting claims are asserting them because they have “nothing to lose.”

-           Lawyer might not necessarily be deserving of such a tremendous contingency fee if they settle without doing a great deal of work.

2) The last paragraph of the hypothetical asks the reader to consider the proposal made in the California Voter Referendum, inspired by the “Brickman-O’Connell-Horowitz proposal. We have also come up with a list of pros and cons for the proposal itself:

Pros:

-           Clients could potentially get a greater share of the settlement or jury verdict.

-           By encouraging early settlements, all parties involved can move on with their lives quicker.

-           By encouraging early settlements, the courts will be less clogged with cases.

-           By encouraging early settlements, less money of potential attorney’s fees will be spent on sunken costs in trial preparation including paying expert witnesses.

-           Attorneys still stand to potentially make a lot of money at normal rate if defendant refuses settlement.

-           Good for lawyer because could end up losing if go to trial

-           Idea that lawyer doesn’t really deserve 1/3 just for making settlement offer – whereas if go to trial à the lawyer has earned the contingency fee

Cons:

-           After just sixty days, an attorney could potentially earn a large sum of money when all he or she may have done is made a settlement demand. Thus, does the amount of work really justify that compensation? 

-           An attorney may have incentive to want to go to trial because he or she has the potential for more money. The proposal thus does a poor job of incentivizing early settlements. 

With an early settlement offer, the defendant may be encouraged to go to trial and not have to pay any damages.

-          Such a proposal could have the affect of misaligning the client's and the lawyer's respective interests, thereby having a negative effect on the client-lawyer relationship.

-         The goal of the proposal is to reduce the settlement offer, thereby putting less money in worthy plaintiffs' pockets.

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