May 26, 2017
From a couple of days ago, the New York Times discusses a study about the benefits of litigants settling their differences rather than pressing forward to present the case to a judge or jury for decision. A couple of things struck me about this.
First, this is a study of civil lawsuits. So why is a criminal defense lawyer quoted on the first page of the article about the study? Second, I don’t understand this sentence: "[c]ritics of the profession have long argued that lawyers have an incentive to try to collect fees that are contingent on winning in court or simply to bill for all the hours required to prepare and go to trial." What does this mean? I can understand the idea that if you bill by the hour you may have a financial incentive to drag out litigation longer than the interests of the client or the merits of the litigation dictate. But what about the first part of the sentence?
I handle the great majority of my cases on a contingent fee basis. But payment of my fees in those cases never requires that I go to trial to get paid. I can’t imagine that any contingent fee attorney would require payment only if and when the case is success at trial, as opposed to incliude being paid a percentage of any recovery obtained in settlement before trial. And it is unusual for me to take a case on an hourly basis for pre-litigation work and on a contingent fee basis if the case goes into litigation. It happens, but not very often. So what does the author mean when he uses the phrase "winning in court?"
Contingency fee agreements generally do a very effective job of aligning the financial interests of client and attorney. They create in client and attorney the same interest in both maximizing recovery while at the same time correctly assessing risk. So it’s frustrating to see this language claiming that contingent fee and hourly billing arrangements each contribute to the problem of a discrepancy between the interests of client and attorney. It is self-evident that they do not have the same problems with creating divergent financial incentives. If the authors of the study or the writer of the article believe they do, they ought to provide us with an explanation for why they think that. In the context of the article, the sentence reflects poor understanding of the subject, poor writing or both.
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