Banning Contingent Fees - It's about Pure Gold and Fools Gold
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Under the guise of something called tort-reform, President Bush signed an Executive Order barring the federal government from hiring lawyers on a contingent-fee basis. He's probably right in this instance although seldom is President Bush right about anything.
We need to stop referring to any measure that takes away peoples rights or their keys to the courthouse as tort-reform. Simply put its not reforming anything, its tort deform by deformers. If gas prices were to continue to go up and the government decided they would take away the car keys of anyone that complained about the price of gas, would you call that a reform measure or deforming legislation?
Taking away contingent fees from the poor and working class is just one way to shut the courthouse doors to those asking to enforce certain rights. Historically contingent fee arrangements were to be used when a person could not afford to pay a lawyers hourly fee. The contingent fee arrangement has long been described as the poor man's key to the courthouse. It still is for the poor and working person. Of course, the federal government can well afford to pay lawyers fees so one has to ask whether a contingent fee arrangement is ever proper for it. And the answer is probably no.
But does this ban say anything about whether a general policy against contingent fee arrangements should be widely adopted? And the answer is most certainly, "No." State government is the federal government's poor sister. State budgets are not in the same league and so a contingent fee is sometimes proper.
As for the working class - of which I'm still one, the contingent fee is still our key to the courthouse. And as such is a useful and legally binding contract.
So why would anyone propose an outright ban on contingent fee arrangements? There are many reasons but two of them should be obvious. One reason is to benefit corporations and the officers who might get sued for trampling on the rights of the poor and working class. Those who don't want the poor and working class to have access to the courthouse will attack and continue to malign those of us who use the contingent fee to gain access to the courthouse. Another reason is motivated by profit. Business managers whose actions have led to lawsuits will profit handsomely by avoiding accountability for their actions. Contingent fees interfere with a corporation's bottom line. Take it away and you increase the bottom line. To do so they need only take your keys away to the courthouse.
Take what I say with a grain of salt because after all I'm a lawyer and yes, I do profit financially from a contingent fee. I for one never met a lawyer until I entered law school. We couldn't afford lawyers with only my widowed mother raising us five kids. But since graduating from law school I've helped hundreds if not a few thousand people, who could not afford a lawyer on an hourly basis, to enforce their rights against an insurance industry that has no conscience, no soul and no heart. I'm really not overstating the situation. It's a matter of public record that they have no conscience. Insurance companies are corporations and corporations have no conscience. They are motivated solely by profit. That is what they report annually to shareholders. I've never read an annual report that quantifies the dollars saved by stalling or delaying payment to the injured for necessary medical treatment. Yet we know it happens. It's not about conscience for insurance companies, it's about profit. They have only two reasons to speak with anyone filing claims. One, to figure out how to deny paying any money to you; or two, to figure out how to pay less than you're asking and then to delay the payment. No other reason.
Okay so why ban contingent fee agreements for those that can't afford to pay $175.00 to $500.00 per hour for lawyers? Well, if you've run a business and aren't very good at it, then you don't like lawyers. And there is no better way to profit from bad business behavior than to ban the contingent fee. If you're born with a Texas silver spoon in your mouth then what do you know about fishing on the Elks dock in Bristol, Rhode Island to put food in the ice box? Absolutely nothing is my guess.
And there is another reason for banning contingent fees, it's about legal fees. Yes legal fees. If the federal government can't pay lawyers based upon performance or outcome then those who do the government's legal work earn a fee no matter what the outcome. Not to say that's entirely bad, but lawsuits by the government in areas of the law that are unsettled can be expensive and very uncertain in terms of the outcome. I doubt we'll hear much said from the Washington bar about guaranteeing them a fee no matter the outcome. I just wish the federal government would hire more of us Iowa lawyers.
And what about corporate America and the federal government's policy banning pay based upon performance? Will the President ban the granting of stock options for corporate officers and directors based on the contingent outcome of the stock price? Probably not because last I knew corporate officers and directors get a contingent fee based on winning or losing. Now there is a practice that the President should ban. Or is that silver spoon interfering with your vision?