Lawyers paid by commission?

[sgrizzle]

I believe that people should be paid according to their talents and amount of work they do. However, at what point does that end and greedienss come in. The new trend in sales is "no commission sales staff" but we still have a phone book full of "you don't get paid unless we do" lawyers who take huge percentages. Are the interests of these lawyers necessarily in line with their clients? Is there a better model? Discuss.

[guido911]

I believe that people should be paid according to their talents and amount of work they do. However, at what point does that end and greedienss come in. The new trend in sales is "no commission sales staff" but we still have a phone book full of "you don't get paid unless we do" lawyers who take huge percentages. Are the interests of these lawyers necessarily in line with their clients? Is there a better model? Discuss.

CF:  Please pick up the white courtesy phone.

[sgrizzle]

CF:  Please pick up the white courtesy phone.

I was wondering your perspective as well. I see some flaws in the system but not sure there is a fix.

[guido911]

I was wondering your perspective as well. I see some flaws in the system but not sure there is a fix.

I rarely work on a contingency basis so my perspective is somewhat skewed. I guess a "fix" to the flaws in the system would be to statutorily cap contingency fees at some percentage like what is done in workers compensation cases. Doing this would certainly result in those affected wanting hourly paid lawyers fees capped. If you're criticism is about the commission-based compensation concept, my thought is that such is necessary given the attorneys hourly rate that many could not pay.

[cannon_fodder]

My practice is varied.  1/3 on contingency in PI,  then the other 2/3rds criminal, business law, and civil defense work.   

1)  If you want me to work for you, my hourly rate is $200 an hour (plus expenses).  To file a petition on your behalf I will want at least $2500 on retainer.  You're John Q Public, you just got in a car accident.  Give me $2500 or you have to take whatever is offered by the other guys insurance company.

Most Americans don't have  $2500.  Ergo, most Americans couldn't afford to hire an attorney.  If given the choice, I'll take the "paying client" any day of the week.

2) On a contingency fee case, my goal is to get you as much money as quickly as possible with as little expense as possible.  Generally, that seems to be in line with the goal of the client.  On occasion (like the phone call I just got off of), the client thinks settling is not a good option and I have to go to trial on a nickle and dime case.  A few times I would like to press for more and the client wants to take the settlement.

At the end of the day, the client is in charge.  But for the most part, it seems the the plaintiff's attorney interests are the same as their clients.

3) The idea of capping contingency fees fails for several  reasons: 

i) when on a contingency fee you necessarily are taking some risks.  You will not be paid for every case as a plaintiffs attorney whereas a Defense attorney will.  No matter how skilled you are it isn't going to happen.  Therefore, on the cases that you are paid for a Plaintiff's attorney need to make more money per hour to compensate for the lost cases.  Simple mathematics. 

ii) Some cases are high risk/high reward.   You may spend hundreds of hours on a case hoping to get a big payoff (I have a case with 8 parties, 3 cross claims, 2 interveners, and a concurrent Federal DEC action).  The complexity of the case requires insane hours just to survive to trial.  The claim is solid, the question is what insurance company pays.  So I'll work my butt off hoping to get me, and my client paid.  If my reward was capped, I simply wouldn't take the case.  Ergo, the widow I represent would have to take the $50,000 the company offered for killing her husband.

iii) The workers comp. comparison has serious flaws.    Workers comp is largely a "copy/paste" bureaucratic walk threw.  Form A, then form B, then form C with a visit to your doctor and my doctor in between.  You can process the claims quickly and en mass.  Many civil cases do not fall into this category  unless they are settled between insurance companies, in which case the contingency fee is in line with a workers comp fee. 

4) Finally, a Defense attorney getting paid an hourly rate already has an inherent advantage.  My fee is fixed at X% no matter how much work I do.  If a Defendant has the cash to spend he can file as many motions, schedule as many hearings, and send off as much discovery as he deems fit.  The result is me doing weeks of work hoping to get paid as the Defense counsel racks up hourly wages.   Very often this is done with little or no merit in an effort to force the Plaintiffs counsel to settle for a lesser sum to avoid work, it's a strong enticement since adding work is a one way street (more $ for Defense counsel, none for Plaintiffs). 

By capping contingency fees you are essentially reducing the income of Plaintiff's counsel while Defense counsel is still able to charge as they please.  The effect would ultimately be to encourage Plaintiff's settlement en mass.  Why would this encourage Plaintiff's attorney to work harder for their clients?
- - -

There are flaws with the system.  Plaintiff's and Defendant's attorneys who make stupid claims.  Who file frivolous pleadings.  And who operate with NO ethical considerations.   But it seems an odd solution to such problems to reduce the pay of one side.

A person should be free to charge as they see fit.  If a Defense attorney can be worth $400 an hour for his work (which he assuredly can), why can't a Plaintiff's attorney be worth whatever percent of an award the client thinks is fair?  No person should be told what they can potentially earn.

[nathanm]

If we do cap contingency fees and/or hourly rates for attorneys, why stop there? Why not directly regulate what doctors get paid, what insurance companies charge, and everything else? Let's go back to the days of WWII when we had price controls on everything. 

If "excessive" fees were being caused by a shortage of attorneys and there were a scheme preventing the supply of attorneys increasing to meet demand, price controls would be in order. Until then, not so much.

[Red Arrow]

Small companies don't always have unlimited funds for defense lawyers.

[brianh]

I can see a utopia where lawyers get paid only minimum wage for hours if they lose a case.  And if they win is when they get to charge their normal fee, contingent or other(civil cases only).  Everything would proceed as normal for criminal cases.

[nathanm]

I can see a utopia where lawyers get paid only minimum wage for hours if they lose a case.  And if they win is when they get to charge their normal fee, contingent or other(civil cases only).  Everything would proceed as normal for criminal cases.

And accountants, they should only be paid their full hourly rate if they save you money on your taxes?

[sgrizzle]

Pay for performance lawyers?

The "I don't make money unless you make money" seems flawed a bit. Is not the primary complaint of tort reform supporters that we have too many frivolous/excessive suits? Hasn't it created a "sue all you want, they're no harm in trying" environment?

I took my cat to the vet and he died, I still had to pay the vet. I took a car to the mechanic that I ended up selling as-is, but I still had to pay the mechanic.

[cannon_fodder]

Pay for performance lawyers?

The "I don't make money unless you make money" seems flawed a bit. Is not the primary complaint of tort reform supporters that we have too many frivolous/excessive suits? Hasn't it created a "sue all you want, they're no harm in trying" environment?

No.  While it does create an incentive for customers to want to sue everybody, it is not in the attorneys interest to do so.  Why would I want to take your case and invest both time and money in it, if I didn't think I was going to get a return?  A lawyer that doesn't turn away bad cases will waste a ton of time and lose money while pissing off clients.  I'd say an attorney has an incentive to not "sue all you want."

Again, most attorneys are happy to take hourly work.  But for TORT work a contingency fee works out better for both parties (client probably can't pay up front, attorney has a chance to make more money).

And to add to the list of "pay to play" suggestions:  if my team loses the game, I get at least a partial refund.  If the drugs prescribed don't solve my ill, money back guarantee!  250 channels on my cable subscription - but nothing on, I don't have to pay!   

[pmcalk]

The idea that "there's no harm in trying" is flawed, also.  Yes, the lawyer doesn't get paid unless you win.  But the stenographer, the court clerk, the expert witness, etc... all get pay regardless (not to mention the very real possibility that you will pay the other party's attorney if you lose).  If you file suit and lose, you are going to lose some money, maybe even a significant amount.