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CARROLL: Trial lawyer triumph

By Vincent Carroll, Rocky Mountain News (Contact)

Published May 8, 2008 at 12:05 a.m.

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Trial lawyers are great ones for invoking the principles of fairness and justice to explain the litigious society they've helped to create. But let someone suggest that a 40 percent contingency fee amounting, in some cases, to a wage of hundreds of dollars per hour - or even more - is neither fair nor just and they'll denounce that critic as a busybody who threatens the sacred right to private contracts.

That's what happened when former Senate GOP leader Mark Hillman, backed by homebuilders from Colorado Springs, mounted a campaign this year to cap contingency fees by way of a ballot measure. But the Colorado Trial Lawyers Association went one better, too. It filed a raft of countermeasures that would have done everything from capping real estate agents' commissions to limiting CEO pay, to hiking potential damages for defective construction work.

It was a ploy reminiscent of the Cold War strategy of Mutual Assured Destruction, and it quickly paid dividends: On Wednesday, the trial lawyers triumphantly announced that after "recent negotiations," both sides had withdrawn their initiatives.

Whew! I say this not only because the lawyers dropped their threat to push measures that amount, in my view, to atrocious public policy. It's also because I'm not convinced that capping contingency fees is a good idea, either.

The driving emotion behind such caps, it seems to me, is the gut sense that some lawyers pocket a windfall at the expense of clients in the wake of major settlements or court judgments. Critics insist this isn't fair.

Maybe it's not. But then lots of compensation appears "unfair" through the prism of our personal biases or ethics. If trial lawyers' income can be targeted - Hillman's measure would have capped their take at 30 percent of the first $250,000, 25 percent of the next $250,000 and 10 percent of anything over $500,000 - what's to stop voters from trying to limit the pay of athletes, entertainers, investment bankers, surgeons and CEOs?

To be sure, highly successful trial lawyers are different from most others who pull down big bucks because their income ultimately depends on involuntary transactions. None of us has to pay to see a Nuggets game, for example, and thus contribute to Kenyon Martin's ridiculous salary. But those targeted by lawsuits, whether they deserve to be sued or not, will pay if they lose or settle because they have no choice.

Even so, the contract between a lawyer and client at least is voluntary.

The best argument for capping contingency fees is that they give lawyers and litigants an incentive to play the "lawsuit lottery" and push cases with long odds in hopes of a jackpot payoff. Be that as it may, it's also probably true, as George Mason University economics professor Alexander Tabarrok has argued, that "an attorney charging hourly fees is more likely to begin litigation with a relatively low likelihood of success" so long as the client is willing to pay. At least under a contingency fee, Tabarrok notes, "counsel benefits only if the case yields money and cannot benefit from unnecessary or inefficient works."

Meanwhile, contingency fees have the benefit of providing access to the courts for those without the resources to pay an hourly rate as well as peace of mind for litigants unequipped to judge what number of billed hours makes sense for a specific legal action.

The American legal system is not terribly efficient, and the contingency fee is one of the reasons that is so. But inefficiency and excess are often preferable to an assault on liberty - yes, even the liberty of lawyers to take more than some people think is their fair share.

Vincent Carroll is editor of the editorial pages. Reach him at carrollv@RockyMountainNews.com.

Comments

  • May 8, 2008

    8:11 a.m.

    Suggest removal

    jay writes:

    lol...railing against the evil specter of "trial lawyers", vinnie? come on...an industry is getting sued because of inferior product and craftsmanship...and you're actually defending them?

    right out of the gop playbook.

    you're a good little footsoldier.

  • May 8, 2008

    10:53 a.m.

    Suggest removal

    Spencer writes:

    I guess VC believes in Capitalism except for when he doesn't.

  • May 8, 2008

    2:48 p.m.

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    opinionatedcolo writes:

    Once again ignorance rules. AWARDS ARE CAPPED and have been in this state for years. There are caps on malpractice awards, there are caps on non-economic damages and there are caps on awards against governmental entities. The legislature just loves caps, as they encourage the businesses protected to give thousands to reelection campaigns. It is not a coincidence that the doctors and home builders and insurance companies pay for Republican election campaigns.

    The majority of civil suits are businesses suing businesses and those are done on a hourly fee. Contingency fees cases are not and have not grown. This was a case of Hillman showing off and proposing an unconstitutional bill for publicity and he backed off when he got called on it. If we are not going to cap the salaries of CEO's like Joe Nacchio or the Adelphia thieves then leave the lawyers alone. Since when is it conservative to tell people what they can earn?

  • May 8, 2008

    5:15 p.m.

    Suggest removal

    Spencer writes:

    watched Nightline last week. Mostly about Countrywide and the CEO fraud. In 1980 the average CEO's salary was 40 times that of their average employee. Today the average CEO's salary is 433 times that of their average employee. Shareholders are left holding the bag. CEO's are on each others Boards of Directors. That is where we need reform.

  • May 19, 2008

    12:19 p.m.

    Suggest removal

    fatheromalley writes:

    "Tort reform is conservative politics because trial lawyers don't contribute to economic outputs but rather cause a drag on GDP and drive up the cost of virtually all goods and services which hurts the economy as whole and interferes with the pursuit of happiness for too many American, especially the middle class."

    How about tort reform is simply American politics in the spirit of Alexander Hamilton, John Adams, Thomas Jefferson.. all three warned us of the legal profession's and the banking profession's potential to enslave us all..

    They are doing a damn good job too.. taxing success (income, profit, captial gains,etc.) is punishing success.. and to my recollection that is not what our founders had in mind.. Alexander Hamilton Federalist #21

    Otherwise AMEN to the comment quoted above. If the American people would repeal most laws and regulations designed to "protect us" our cost of living could be 30% to 40% of what it is now..
    Anyone want a 70% DECREASE in the cost of living? Contact your representatives after coming here tell them to start repealing laws not pass new ones!..
    www.fatheromalley.com

    Get the staight talk....
    may god bless
    father omalley..