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August 11, 2004
New Featured Discussion next week on contingency fee reform!
Next week, PointOfLaw.com will have its second Featured Discussion, on the subject of contingency fee reform. Two of the nation's leading experts on legal ethics, Lester Brickman and Richard Painter, will discuss potential ways to improve the legal system through reforming the way lawyers charge contingency fees.
As our editor Walter Olson described in his first book, The Litigation Explosion, the contingency fee lies at the heart of the lawsuit abuse problem in America: "The ethical rules of many professions share a common underlying principle: if temptations are allowed to get out of hand, many will yield. To put it in raw dollar terms, if under system A people can grab a thousand dollars by telling a lie, and under system B they can grab a million by telling the same lie, more people-not all, but more-will tell the lie under system B." (Walter's entire chapter on the contingency fee from The Litigation Explosion is available at PointOfLaw.com here. For a condensed version, see our overview under "Attorneys' Fees and Ethics," here.)
Over the years, various proposals have surfaced to deal with the contingency fee problem. Ten years ago, Professor Brickman co-authored a Manhattan Institute proposal along with Virginia Law School's Jeffrey O'Connell and Michael Horowitz, then with the Manhattan Institute and now with the Hudson Institute (online version of proposal forthcoming). The proposal, in essence, would require contingency fees to be based on "value added" by attorneys, i.e., that above early offers to settle a case by defendants. As our editor noted last week, the proposal has recently attracted support from many highly regarded academics and thinkers.
A few years later, Jim Wootton, then-President of the U.S. Chamber of Commerce's Institute for Legal Reform, offered a different proposal for contingency fee reform, "The New American Rule." His idea, in essence, was to permit attorneys to charge their clients contingency fees only up to a pre-agreed limit (i.e., a fee based on comparable dollars billed per hour, contracted at the outset of the attorney-client relationship), and to force attorneys to disclose prior fees charged to other clients before the agreement was reached. Professor Painter described the attractions of this reform in a Civil Justice Report authored for the Manhattan Institute in 2000.
Thus, each professor we will feature next week has been a strong supporter of contingency fee reform, even though each comes at the problem with a different approach. We look forward to their exchange, and we hope you will join us.
Posted by James R. Copland at 11:00 AM
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Attorneys' Fees and Ethics