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January 26, 2005

Percentage Contingency Fees

From Professional Responsibility reading:
Even though the same amount of work is involved, the whiplash verdict might be $4,500, for a fee of $50 per hour, while the amputation verdict might be $200,000, providing a fee of more than $6,000 per hour. ... [The author notes that fees can be even more disproportionate to work done by the lawyer in cases that settle before trial, which is the vast majority.] Surely there is much to be said for providing a means to permit indigent persons to engage counsel to press meritorious suits. ... [But t]he problem, it seems to me, is that we have regarded the “one third contingent fee” arrangement as applicable to all cases invovling personal injuries, without paying enough attention to the facts of the particular case and the needs of the particular client.
Thomas D. Morgan & Ronald D. Rotunda, Professional Responsibility, 5th ed. 105, quoting John F. Grady, “Some Ethical Questions About Percentage Fees,” 2 Litigation 20 (Summer, 1976.). No wonder there are so many personal injury lawyers advertising on tv! Questions prompted by these readings:
  • What would our society be like if lawyers made little to no money, or if a career as a lawyer only made average money, instead of above average (on average)?
  • How could we make this happen? How could we take the money out of the practice of law?
  • In a “free market” for legal services, would there be an excess of lawyers and a shortage of work?
  • In what ways is the current market for legal services not “free”?
  • Would fixed fees for routine (or even non-routine) services make the legal market more competitive (and drive down prices for consumers)?
See also: Writings by Lisa G. Lerman on unethical billing practices by lawyers (focused primarily on the billable hour). Patrick J. Schiltz, “On Being a Happy, Healthy, and Ethical Member of an Unhappy, Unhealthy, and Unethical Profession,” 52 Vand. L. Rev. 871 (1999).

Posted January 26, 2005 07:04 AM | 2L

To answer your second question, you won't be able to take the money out of the law. Because a lot of cases involve big money, the services of lawyers are thus worth a lot of money.

Moreover, lawyers in general will not let legal services be separated from the fees they collect.

Posted by: Unreasonable Man at January 26, 2005 10:56 AM

i don't necessarily think that it's bad to pay lawyers a lot. someone has to pay a pretty good amount to get people to do the (tedious, boring) work lawyers do. someone has to wade through discovery documents, and someone has to spend their time researching and writing briefs that will help justice to be done. if there were no contingency fees, then there would be no incentive to deliver justice to the whiplashed/amputee.

Posted by: monica at January 26, 2005 04:00 PM

Well, sure, lawyers should get paid, but why "a lot"? Is what lawyers do so much more tedious or boring, really, than driving a bus, picking up the garbage, or cleaning motel rooms? The tedious and boring argument seems fairly weak. The argument I hear more is that lawyers are highly educated and earned the right to charge high fees by working through law school (or some variant along those lines). That might justify lawyers making some small amount more than the average American's annual income, but not that much.

But the more important question: Is there no human motivation besides cash? Do you really have no other incentive to work toward delivering justice than that it earns you a paycheck?

Perhaps we scoff today at the rhetoric of the 19th and early 20th centuries that law was a "learned profession" and a "public service" rather than a business, but there may have been something behind that rhetoric we've lost and should seek to regain. You think?

Posted by: ambimb at January 26, 2005 04:41 PM

yeah, i mean, i'd be in favor of like, a $50k/year pay cap or something.

and there are other things that motivate people besides money, but not most people.

Posted by: monica at January 27, 2005 06:58 AM

That's just it: People who are motivated by money should go sell stocks or something. If we could take the money out of the practice of law, people who just do it for money would no longer do it (theoretically). That would seem to me a good thing.

Example: I got a call yesterday at our clinic from a man who has this billing issue with a major corporation, and w/out getting into any details, it's really screwing up his already tough life. He's got this hearing where he's been told he needs legal counsel, but he can't find help anywhere -- legal aid, won't do it, he's talked to several law student clinics, etc. Why can't he find a lawyer to show up at his hearing for an hour to help make sure he is treated fairly? Because there's not money in it, and that just sucks.

This is just one of many many cases like this I've learned about in the short time I've been working in law-related jobs. It's worth noting that if I wasn't working these jobs, I wouldn't know about these people and their problems, so probably many law students get their J.D.s w/little to no real knowledge of the real effects of the fact that the "profession" seems to have sold itself to the highest bidder. Or maybe they just don't care?

Posted by: ambimb at January 27, 2005 07:13 AM

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