NCPA - National Center for Policy Analysis

Chamber Seeks To Limit Use Of Contingency Lawyers

October 15, 1999

As states start launching suits against former makers of lead-based paints and cities are taking gun manufacturers to court, the U.S. Chamber of Commerce is developing a strategy to reduce the clout of the lawyers who initiate these legal actions.

Specifically, the Chamber wants to convince state legislators to rein in states' use of contingency lawyers -- those whose earnings are contingent upon their winning a jury award or settlement. The lawyers are usually hired by a state's attorney general and they negotiate a percentage of the award or settlement as their fee. Those who favor the system say it gives states the skills and resources of outside lawyers to fight difficult cases against equally skilled lawyers.

But many experts say that because the sums involved in such cases are so huge, the mammoth fees the lawyers walk away with bear no reasonable relationship to the amount of work and effort they put into cases.

  • Under the legislation proposed by the Chamber, any outside lawyer who contributed more than $250 to the campaign of a public official would be barred from being hired to pursue a lawsuit -- thus discouraging influence peddling.
  • It would prohibit a state from changing any laws that could affect litigation while a state sued an industry or even contemplated such a suit.
  • Legal experts say the interests of contingency lawyers do not always coincide with the interests of the public -- for example, in a decision as to whether to settle a case or not.
  • Many of the lawyers who split up hundreds of millions of dollars in the recent suits against tobacco companies are also active in the lead-paint and gun cases -- and are exploring the lucrative prospects of suing health maintenance organizations as well.

This year, Republican lawmakers in Texas passed legislation requiring the state's attorney general to have contingency-fee contracts approved by a board appointed by top state officials. Legal fees could not exceed $4,000 an hour.

Utah legislators have also passed a bill requiring that state's attorney general to get approval from the governor before filing a civil lawsuit. But after the attorney general threatened to challenge its constitutionality, an agreement was reached requiring only that the governor be kept informed of any litigation.

Source: Barry Meier and Richard A. Oppel Jr., "States' Big Suits Against Industry Bring Battle on Contingency Fees," New York Times, October 15, 1999.

 

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