The Gazette 1994

GAZETTE

JUNE 1994

N E W S

Con f e r ence Considers Civil Li t igat ion in t he 90s

Speakers at the Seminar staged at the Law Society's Annual Conference held on 12-15 May in the Connemara Coast Hotel in Furbo, addressed a range of pertinent issues on the theme: Civil Litigation in the 90s.

Contingency Fees under Scrutiny in the US

Speaking on the topic: Contingency Fees in the US, Yesterday, Today and Tomorrow, the immediate Past-President of the American Bar Association, J. Michael McWilliams, told delegates that the underlying principle supporting the contingency fee system in the United States was to enable injured persons who did not otherwise have sufficient funds to file a law suit. The contingency fee system was frequently criticised on the basis that it encouraged litigation, prompted frivol- ous law suits and led to excessive fees being paid to lawyers which, in the case of an early settlement, were unrelated to the amount of work performed. On the other side of the debate, said Michael McWilliams, was the belief that any arguable inconvenience and inefficiency resulting from the contingency fee system was more than compensated for by the resulting availability of justice to the average person. Michael McWilliams quoted the famous US jurist, Michael Musmanno: "if it were not for contingent fees, indigent victims of tortious accidents would be subject to the unbridled self- willed partisanship of their tortfeasors." Particular high-profile cases had led to a renewed attack on the contingency fee system. An example was a case in September 1989 when a delivery truck crashed into a school bus in Texas killing 21 children and injuring dozens of others. The insurers settled the claims of the victims' families quickly for an estimated Si22m. Notwithstanding the early resolution of the case the families' lawyers received at least one third of the

At the Conference

Seminar were: l-r: J. Michael McWilliams, immediate

Past-President,

American

Bar Association;

Robert Harley, Harley & Browne, New York; Michael V.

O'Mahony, President of the Law Society; Max Abralutmson, Consultant, McCann

FitzGerald

and Michael Napier, Pannone Napier.

3. Demands for settlement submitted by plaintiffs would be required to include basic, routinely discoverable information designed to assist defendants in evaluating the claim and vice-versa. 4. If plaintiffs rejects defendants' early offers, contingency fees could only be charged against net recoveries in excess of the offer. 5. If no offer was made within the 60 day period, contingency fees contracts would be unaffected by the proposal. The Manhattan Institute wrote to the American Bar Association calling on its Ethics Committee to agree that, since the ABA code of behaviour already cautioned that contingency fees should be charged only where the arrangement would be beneficial to the client, it followed that contingency fees were unethical unless an early settlement was considered. Michael McWilliams outlined some of the responses to date to the Manhattan Institute proposal. The American Board of Professional Liability Attornies had described the proposals as "extraordinarily detrimental to the public interest", arguing that the

settlement in contingency fees, which worked out a fee of at least $25,000 an hour to each lawyer involved. Proposals for the reform of the contingency fee system, said Mr. McWilliams, were attempting to bring a relationship between the amount of work done and the fee charged and also to bring a more reasonable relationship between the contingency fee and the actual risk undertaken by the lawyer. The latest proposal for reform had come from the Manhattan Institute, which, in a booklet published in January 1994, had made five proposals to reform contingency fee procedures i.e. 1. Contingency fees would not be charged against settlement offers made prior to plaintiff's retention of counsel. 2. All defendants would be given an opportunity to make settlement offers, but no later than 60 days from the receipt of a demand for settlement by the plaintiff. If the offer were accepted by the plaintiff, fees would be limited to hourly rate charges and would be capped at 10% of the first $100,000 of the offer and 5% of any greater amount.

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