Was A Lawyer Taking A Pecentage Of Personal Injury Case A Bad Thing?

I was watching an episode of the old Australian soap opera Prisoner (Prisoner: Cell Block H)

And there is a conversation between Erica, the somewhat idealistic governor of the prison, and a Meg who is at this point is a probation officer (she was also a warder in the show)

The conversation goes:

Meg) I met her solicitor

Erica) Yes, I’ve know him for awhile

Meg) I don’t know what to make of him?

Erica) He’s competent, but he’s the type of solicitor who takes on personal injury cases and then charges his client a percentage of the take.

Both Meg and Erica shake their heads in disgust like this is such a slimely horrible thing to do.

Now this show was in Australia in the early 1980s, so I’m not sure if this feeling was just back then or if it’s an Australian thing or what.

My question is, at one time was it considered “bad form” or for lack of a better word, “shyster” thing for a lawyer to do. I mean, take a personal injury case and then charge the client a percentage of the money he wins.

Were personal injury cases handled differently back then? Or is it an Australian attitude or both or what?

Thanks

Some jurisdictions do not allow contingency fees, and some not in certain cases, such as criminal or divorce.

In most jurisdictions in Australia in the 80s, both plaintiffs and defendants hired lawyers and paid them fees based on the work done. Sometimes the fees were calculated on the basis of the size of the file and complexity of the work done, sometimes on the basis of time costing (the latter process eventually became the industry standard).

If you won, then on top of damages, you got an order for the other side to pay your costs.

In practice, that sounds better than it was, because the costs you could claim were based on a statutory scale, to prevent overlawyering and rapacious cost gouging, but most lawyers’ fees (even honest lawyers) were higher than scale.

But that was the system. So called “speculative fees” or “contingency fees” (where you only got paid if you won) were frowned on and in many places were declared ethical violations because the thought was that a lawyer who had a financial interest in the outcome would be tempted to breach his/her ethical obligations of honesty, etc.

As observed above, awards of damages made by the court were not calculated with a built in component for costs; that was calculated separately. So if you were awarded $98,565, that was exactly what your claim was worth - the cost of fixing up your home to cater for your disability, having remedial medical work done, ongoing therapy, help at home, and so on. A lawyer who got a percentage was essentially dipping into the pool of money you needed. Extravagant costs for pain and suffering were not (and still are not) the norm here. Punitive damages are very rare. So there wasn’t a lot of fat to hand over to the lawyer.

But the practice obviously had the potential to make the lawyer a lot more money in a big case than the usual fee calculating process might.

All this strictness about contingency fees sounds terribly high and principled, but in fact what was happening was that everyone but the very rich were being costed out of access to courts because they couldn’t afford the upfront fees. The system needed loosening up, and that has occurred.

Nowadays in Oz, there are rules allowing speculative fees and contingency fees, etc. But that has been abused too. “No win no fee” lawyers tend to be the plaintiff lawyer, declasse end of the spectrum. It has happened that plaintiffs were invited to sign costs agreements that sounded good on the surface - we only get our costs if you win - but had quite rapacious terms built in.

There was a firm that operated on the basis that if you had a claim and they got you (say) $10,000, they would then charge you their costs, calculated on time costing, at $15,000. No allowance was made for the size of the claim. So you were in fact worse off than if you had never sued at all. And the firm would aggressively pursue you for the balance. It was an appalling abuse, and was stopped quickly, but things like that give lawyers who charge on a no win no fee basis a bad name.

So - because of the system of costs, it was not the practice in the 80s to charge fees based on a percentage of the win, like real estate agents. For all I know, it still may not be (I don’t work in civil litigation.) Anyone who did was quite possibly behaving unethically, to maximise their profits at your expense.

Interesting.

In the U.S., of course, the plaintiff’s bar is overwhelmingly paid on a contingency basis, earning between 30-40% of any judgment or settlement they procure for their clients. Our courts don’t give “costs” in the same way as Commonwealth courts; unless they’re suing the government, successful plaintiffs get their damage award and, perhaps, a small supplement for “court costs,” but that covers only filing fees and the like.

Because U.S. courts don’t award attorney’s fees as a matter of course, prohibiting contingency fee arrangements would totally foreclose the courts to anyone but the most well-heeled plaintiffs.

–Cliffy

Thanks for the info, it was interesting.