You are sitting in your living room in a placid state when the bell rings; it’s the county sheriff, and he serves you with a complaint from your next-door neighbor, alleging that last summer’s addition to your garage has caused a flood in his basement, and he wants $100,000. You can’t get to a lawyer fast enough to express your outrage; your spouse and you have spent a sleepless weekend; and you demand a counter-suit for your emotional distress, the time lost in building your defense, and the lawyer’s fees you are about to incur.
Morally and philosophically you are probably right; but not legally. If you win, the best you can expect is to be reimbursed actual out-of-pocket court expenses, such as filing fees. What you will not recover are your attorney’s fees, your time lost from work to defend, your distress caused by sleepless nights, etc. Where is justice?
We are the most litigious people in the world by a factor of perhaps three or four compared to the other industrialized nations. It is not likely that we are any more pugilistic than the others; rather, the reason is that our courts are readily accessible and the process (for the person bringing the action) is relatively cheap. Check the Yellow Pages under “Lawyer” and you are confronted with dozens of advertisements, many full-page and in color, begging people (in effect) to start lawsuits, often stating in bold letters: “No fees unless you win”.
Unfortunately the system has spawned more abuse than is healthy. People see insurance companies as broad targets (in the trade, “deep pockets”), and bumper stickers proclaiming “Hit Me – I Can Use The Cash” do not help matters. Verdicts in class actions and product liability cases have reached astronomical and in several cases unreasonable limits.
While the population of Montgomery County, Pennsylvania, has about doubled over the past 40 years, the number of lawyers practicing in the County has gone from about 250 to more than 3,000! The numbers are up dramatically across the country, and the amount of work available has not grown at a corresponding pace; voila, a vacuum!
Headlines proclaim seven figure verdicts on questionable claims; hungry lawyers are searching for something to keep them busy; and a lot of people see possible bonanzas in claims that are often marginal or less. What’s to lose? The lawyer works on a contingent fee basis, so the investment is minimal; and, “we might get lucky”.
Insurance companies, faced with claims involving even minor injuries will often pay $10,000, $20,000, or more just to avoid the counsel fees, even though a claim may seem spurious. They reason, “Let’s pay $10,000 to get rid of this; we not only avoid attorneys’ fees but we might even lose – then what?”
Eliminate contingent fee arrangements, you say. Make the loser pay all fees, and the amount of litigation might fall by 50% or more. Perhaps this is a solution, and there seems to be growing sentiment to support it.
Under certain conditions where abuse of legal process is manifest and clearly excessive, the courts may impose all costs and counsel fees on the loser, but it is limited to extreme circumstances. Why then have we not adopted that kind of a system which would seem to be equitable and in the process might take a giant step in reducing frivolous litigation? The reason probably has to do with one of the most cherished American values: egalitarianism.
To say that you may start a lawsuit only if you are prepared to pay all of the expenses if you lose is to say you must have money to litigate. Such a system would mean that the courts are no longer accessible to all; for many, litigation would be beyond their means. In a sense the “free ride” would end, but at what cost?
If we were to impose all costs and fees upon the loser, to make the rule meaningful, we would probably need at the outset of each lawsuit some kind of bond or posting of cash by the person commencing the action to cover the potential costs. If the action becomes unexpectedly complex, we would have to require an increase in the amount posted to assure that at all times it will cover the expenses. Otherwise at the conclusion of the litigation the winner would be compelled to sue the loser for expense. (More lost wages, angst, and what about the expenses of the second suit?)
Further, it has been argued (especially by trial lawyers) that without product liability and class actions many dangerous products or conditions would be permitted to endure. You may remember the trucks with the misplaced gasoline tanks which lit up all too easily and frequently; the manufacturer was quick to correct the problem in the face of product liability actions. Many believe that the class action (such as the airline attendants’ claim against the tobacco industry for illness suffered from inhaling “secondary” smoke) is the most effective way to bring about needed reforms. Would such beneficent litigation disappear if the contingent fee were abolished?
While we may continue to whittle away at the present rule in certain areas as described above, the bet here is that we will not change it fundamentally in the foreseeable future. The system is too well entrenched; it would be deemed an encroachment upon our goal of equality for all; it might be impossible to administer; certain desirable litigation might disappear; and we would all miss those bad lawyers’ jokes. (What term describes a lawyer swimming unharmed in shark-infested waters? Professional courtesy.)
Morally and philosophically you are probably right; but not legally. If you win, the best you can expect is to be reimbursed actual out-of-pocket court expenses, such as filing fees. What you will not recover are your attorney’s fees, your time lost from work to defend, your distress caused by sleepless nights, etc. Where is justice?
We are the most litigious people in the world by a factor of perhaps three or four compared to the other industrialized nations. It is not likely that we are any more pugilistic than the others; rather, the reason is that our courts are readily accessible and the process (for the person bringing the action) is relatively cheap. Check the Yellow Pages under “Lawyer” and you are confronted with dozens of advertisements, many full-page and in color, begging people (in effect) to start lawsuits, often stating in bold letters: “No fees unless you win”.
Unfortunately the system has spawned more abuse than is healthy. People see insurance companies as broad targets (in the trade, “deep pockets”), and bumper stickers proclaiming “Hit Me – I Can Use The Cash” do not help matters. Verdicts in class actions and product liability cases have reached astronomical and in several cases unreasonable limits.
While the population of Montgomery County, Pennsylvania, has about doubled over the past 40 years, the number of lawyers practicing in the County has gone from about 250 to more than 3,000! The numbers are up dramatically across the country, and the amount of work available has not grown at a corresponding pace; voila, a vacuum!
Headlines proclaim seven figure verdicts on questionable claims; hungry lawyers are searching for something to keep them busy; and a lot of people see possible bonanzas in claims that are often marginal or less. What’s to lose? The lawyer works on a contingent fee basis, so the investment is minimal; and, “we might get lucky”.
Insurance companies, faced with claims involving even minor injuries will often pay $10,000, $20,000, or more just to avoid the counsel fees, even though a claim may seem spurious. They reason, “Let’s pay $10,000 to get rid of this; we not only avoid attorneys’ fees but we might even lose – then what?”
Eliminate contingent fee arrangements, you say. Make the loser pay all fees, and the amount of litigation might fall by 50% or more. Perhaps this is a solution, and there seems to be growing sentiment to support it.
Under certain conditions where abuse of legal process is manifest and clearly excessive, the courts may impose all costs and counsel fees on the loser, but it is limited to extreme circumstances. Why then have we not adopted that kind of a system which would seem to be equitable and in the process might take a giant step in reducing frivolous litigation? The reason probably has to do with one of the most cherished American values: egalitarianism.
To say that you may start a lawsuit only if you are prepared to pay all of the expenses if you lose is to say you must have money to litigate. Such a system would mean that the courts are no longer accessible to all; for many, litigation would be beyond their means. In a sense the “free ride” would end, but at what cost?
If we were to impose all costs and fees upon the loser, to make the rule meaningful, we would probably need at the outset of each lawsuit some kind of bond or posting of cash by the person commencing the action to cover the potential costs. If the action becomes unexpectedly complex, we would have to require an increase in the amount posted to assure that at all times it will cover the expenses. Otherwise at the conclusion of the litigation the winner would be compelled to sue the loser for expense. (More lost wages, angst, and what about the expenses of the second suit?)
Further, it has been argued (especially by trial lawyers) that without product liability and class actions many dangerous products or conditions would be permitted to endure. You may remember the trucks with the misplaced gasoline tanks which lit up all too easily and frequently; the manufacturer was quick to correct the problem in the face of product liability actions. Many believe that the class action (such as the airline attendants’ claim against the tobacco industry for illness suffered from inhaling “secondary” smoke) is the most effective way to bring about needed reforms. Would such beneficent litigation disappear if the contingent fee were abolished?
While we may continue to whittle away at the present rule in certain areas as described above, the bet here is that we will not change it fundamentally in the foreseeable future. The system is too well entrenched; it would be deemed an encroachment upon our goal of equality for all; it might be impossible to administer; certain desirable litigation might disappear; and we would all miss those bad lawyers’ jokes. (What term describes a lawyer swimming unharmed in shark-infested waters? Professional courtesy.)
– Ken Butera