We Could Pass a Law . . . What Might Happen If Contingent & Legal Fees Were Banned
Samuel R. Gross
University of Michigan Law School
De Paul Law Review, Vol. 47, No. 2, 1998
In this article, Professor Gross considers the consequences of a most unlikely turn of events: The abolition of contingent fees in civil litigation in the United States. He anticipates three types of changes that might take place: (1) Finding other ways to shift the risks and costs of litigation away from individual plaintiffs. The most obvious response in this category is cheating -- disobedience to the new rules -- which no doubt would occur. In addition, the abolition of contingent fees would create strong pressures to permit plaintiffs to sell civil tort claims outright (a practice that is now generally prohibited); and might result in the development of a market for litigation insurance, a service now widely used in Germany. (2) Reducing the costs and risks of civil litigation. With civil plaintiffs directly responsible for lawyers' fees, there would be moves to cut those costs -- by limiting lawyers' compensation, simplifying the rules of procedure, and by shifting from ordinary lawyer-controlled civil litigation to self-representation, ADR, and public prosecution. (3) Pursuing fewer claims. The central argument of many opponents of contingent fees is that they stir up frivolous litigation. Eliminating such fees would reduce litigation, but not primarily by eliminating meritless claims. In fact, the sorting of claims by merit would probably get worse, and the number of uncompensated meritorious claims would certainly go up. One likely response would be an increase in first-party insurance, to cover losses that are now compensated through tort litigation. Overall, Professor Gross predicts that the system of compensation for those injuries that are now handled in tort litigation would become more bureaucratic; that regardless of its formal structure, the process would increasingly resemble first-party insurance; and that the role of the lawyers would be sharply reduced.
Accepted Paper Series
Date posted: November 10, 1998
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