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One-Sided Disclosure Requirements May Harm Plaintiffs

Proposal to Change Contingency Fee System Should Be Rejected

WASHINGTON, D.C. -- August 8, 2003 -- Common Good, a group whose goal is to "overhaul America's lawsuit culture" and combat so-called "legal fear," has proposed changing the ethics rules about fees charged by attorneys for plaintiffs in personal injury cases. Plaintiffs' attorneys would be required to provide the defendants with substantial information early in the settlement process or face penalties. If an early settlement is reached, the plaintiff's attorney would limit the size of his or her fees to the lesser of an hourly rate or 10% of the recovery.

One probable effect of the rule would be to discourage plaintiffs' lawyers from taking contingent fee cases, restricting access to the courts to only those who could afford to pay a retainer to hire a lawyer and pay the costs of the case. This obviously favors defendants and their insurance companies. It may achieve the goal of reducing the number of lawsuits, but not the goal of insuring access to justice and fair compensation for all injured persons. The contingent fee system was designed to level the playing field, and let the little guy have access to a lawyer and the courthouse, and it should be preserved.

The consumers' group, Public Citizen, has pointed to these flaws in Common Good proposal:

  • Minimizes the contingency fee system
    Under the contingency fee system, a lawyer does not receive payment unless the client receives a settlement or wins the case. This benefits clients who otherwise could not afford to pay a lawyer on an hourly basis. The Common Good proposal undermines this system without showing a clear public benefit.
  • Establishes a discovery process that harms plaintiffs, but benefits defendants
    Defendants would be provided with detailed information about the plaintiff, some of which exceeds what is required in the initial complaint. This includes the nature of the injuries, the basis for liability, copies of medical records, other documents showing wage and other losses, a witness list, and photographs, according to Public Citizen. The defendants would not be required to divulge any information in return.
  • Effects all personal injury cases
    The proposal applies to all personal injury cases, not just those in which liability and damages are straightforward, or those in which both sides have similar access to the facts. It could be particularly inappropriate in product liability and medical malpractice cases, where questions of damages and liability may be complicated and the defendant may have an information advantage.
  • Does not take into account the risks in all contingency fee cases
    Even cases that are settled early have some risk involved since the attorney has already invested time without guaranteed payment. Public Citizen believes that attorneys should not be required to limit fees to an hourly rate if an early settlement is accepted, but should instead be allowed to take a reduced percentage fee.

Common Good has filed petitions to amend state ethics rules in thirteen states: Alabama, Arizona, California, Colorado, Maryland, Mississippi, New Jersey, New York, Ohio, Oklahoma, Texas, Utah, and Virginia. For more information about the Common Good actions, see the group's press release. For the full text of Public Citizen's critique and analysis of the proposal, see the Public Citizen report.

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