February 5, 2013

Appreciating Contingency Fees & Open Access to Justice

by Levin & Perconti

The Center for Justice & Democracy released a new report recently that discusses contingency fee arrangements and their value. There are many different misconceptions about the importance of the system, its history, and the benefit that it provides to all community members. The full report is available online and entitled Courthouse Cornerstone: Contingency Fees & Their Importance for Everyday Americans.

How It Works
Most are familiar with the basics of contingency fee arrangements. They are far and away the most common type of arrangements in personal injury cases, including Chicago medical malpractice lawsuits. The basic idea is that the arrangements allows those hurt by the misconduct of others to pursue justice without having to come up with significant funds (or any funds) at the outset. Instead, a legal professional works without pay and covers all costs with the understanding that payment for those services will be paid out of a settlement or judgement. If no favorable settlement or judgement is reached, then the attorney does not receive anything for his or her time and loses the costs incurred. The plaintiff generally does not have any financial obligation following a loss.

Influence on Legal Cases
The use of contingency fee arrangement incentives efficient work on cases with merit. Here’s why: plaintiff’s attorneys bear all the risk and they have no incentive to drag out a legal matter for their own billable hours. Cases that would be difficult to prove or that have less clear negligence implicated are unlikely to be taken up by an attorney working on a contingency attorney--because they are the ones who will lose significant time, money, and energy with an unfavorable result.

Alternatively, with traditional hourly billing, the attorney is incentivized to take up any case that will be paid and to drag the case out as much as possible. Of course, professional standards would counsel against such actions, but the risk of inefficient work is far more likely in that alternative system.

It is not a stretch to understand how contingency fee arrangements work to strengthen the civil justice system. For example, consider a local man who goes to a hospital complaining of chest pain. The medical professionals may take some tests but fail to read them. If they had read the tests they would have known immediately that the man was at serious risk of a heart attack. Because of their failure, the man is discharged without any knowledge of his risk. A few days later he suffers a massive heart attack and dies, leaving behind a wife and three young children. The man was the family’s only income provider, and the wife and children struggle desperately to get by after his passing.

The Chicago medical malpractice is clear in the case, but the family has no money to actually pay an attorney to pursue the case. Without the possibility of contingency fee arrangements, there would be little that they could do. However, because the costs of the litigation can be taken out of possible settlement earnings down the road, the family is able to visit with legal professionals experienced in these matters and get a case underway without paying anything. The family is then able to hold the facility accountable and receive compensation for their losses.

See Other Blog Posts:

Malpractice Run Amok in Cook County?

States Continue to Pass Misguided Tort Reform Laws