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GAZETTE
N E W S
JUNE 1994
Con f e r ence Considers Civil
Li t igat ion in t he 90s
At the Conference
Seminar were: l-r: J. Michael McWilliams, immediate
Past-President,
American
Bar Association;
Robert Harley, Harley & Browne, New York; Michael V.
O'Mahony, President of the Law Society; Max Abralutmson, Consultant, McCann
FitzGerald
and Michael Napier, Pannone Napier.
Speakers at the Seminar staged at the
Law Society's Annual Conference held
on 12-15 May in the Connemara Coast
Hotel in Furbo, addressed a range of
pertinent issues on the theme: Civil
Litigation in the 90s.
Contingency Fees under Scrutiny in
the US
Speaking on the topic:
Contingency Fees
in the US, Yesterday, Today and
Tomorrow,
the immediate Past-President
of the American Bar Association,
J.
Michael McWilliams,
told delegates that
the underlying principle supporting the
contingency fee system in the United
States was to enable injured persons who
did not otherwise have sufficient funds
to file a law suit.
The contingency fee system was
frequently criticised on the basis that it
encouraged litigation, prompted frivol-
ous law suits and led to excessive fees
being paid to lawyers which, in the case
of an early settlement, were unrelated to
the amount of work performed.
On the other side of the debate, said
Michael McWilliams, was the belief
that any arguable inconvenience and
inefficiency resulting from the
contingency fee system was more than
compensated for by the resulting
availability of justice to the average
person. Michael McWilliams quoted the
famous US jurist,
Michael Musmanno:
"if it were not for contingent fees,
indigent victims of tortious accidents
would be subject to the unbridled self-
willed partisanship of their tortfeasors."
Particular high-profile cases had led to a
renewed attack on the contingency fee
system. An example was a case in
September 1989 when a delivery truck
crashed into a school bus in Texas
killing 21 children and injuring dozens
of others. The insurers settled the claims
of the victims' families quickly for an
estimated Si22m. Notwithstanding the
early resolution of the case the families'
lawyers received at least one third of the
settlement in contingency fees, which
worked out a fee of at least $25,000 an
hour to each lawyer involved.
Proposals for the reform of the
contingency fee system, said Mr.
McWilliams, were attempting to bring a
relationship between the amount of
work done and the fee charged and also
to bring a more reasonable relationship
between the contingency fee and the
actual risk undertaken by the lawyer.
The latest proposal for reform had come
from the Manhattan Institute, which, in
a booklet published in January 1994,
had made five proposals to reform
contingency fee procedures i.e.
1. Contingency fees would not be
charged against settlement offers
made prior to plaintiff's retention
of counsel.
2. All defendants would be given an
opportunity to make settlement
offers, but no later than 60 days
from the receipt of a demand for
settlement by the plaintiff. If the
offer were accepted by the
plaintiff, fees would be limited to
hourly rate charges and would be
capped at 10% of the first $100,000
of the offer and 5% of any greater
amount.
3. Demands for settlement submitted
by plaintiffs would be required to
include basic, routinely
discoverable information designed
to assist defendants in evaluating
the claim and vice-versa.
4. If plaintiffs rejects defendants'
early offers, contingency fees could
only be charged against net
recoveries in excess of the offer.
5. If no offer was made within the 60
day period, contingency fees
contracts would be unaffected by
the proposal.
The Manhattan Institute wrote to the
American Bar Association calling on its
Ethics Committee to agree that, since
the ABA code of behaviour already
cautioned that contingency fees should
be charged only where the arrangement
would be beneficial to the client, it
followed that contingency fees were
unethical unless an early settlement was
considered.
Michael McWilliams outlined some of
the responses to date to the Manhattan
Institute proposal. The American Board
of Professional Liability Attornies had
described the proposals as
"extraordinarily detrimental to the
public interest", arguing that the
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