Contingency Fees: Rules and Ethical Guidelines
![handle is hein.journals/geojlege11 and id is 243 raw text is: Contingency Fees: Rules and Ethical Guidelines
DREW C. PHILLIPS*
A contingency fee is a fee charged for a lawyer's services that is payable only if
the lawsuit is successful or is settled favorably out of court.' Recently, there has
been a substantial amount of scholarship on the practice of billing clients on a
contingent basis. The contingency fee has been praised as the key to the
courthouse,2 criticized for skewing compensation levels for legal services,3 and
condemned for fostering frivolous lawsuits that cripple the tort system.4 This
Note focuses not on the merits of these positions, but on the rules and ethical
guidelines that define when it is appropriate to bill a client on a contingent basis.
In addition, this Note explores the argument that the boundaries that have been
set regarding the use of contingency fees are so tenuous, and so far beyond what
would otherwise be ethical, that their existence is insignificant. Therefore, in
reality, each attorney sets her own boundaries with respect to the appropriate use
of contingency fees, a situation that, at a minimum, creates its own set of
inflammatory issues. Part I is a brief overview of what contingency fees are and
how they typically are structured. Part II explores the current rules and ethical
guidelines, and Part I evaluates their effectiveness.
I. OVERVIEW
Using the general arguments both for, and against, the use of contingency fees,
this Part provides a roadmap for the lawyer to use to evaluate whether the use of a
contingency fee is appropriate in a particular case. Contingency fees usually are
calculated as a percentage of the amount recovered.5 Typically, contingency fees
range between twenty-five and fifty percent, with the higher percentages awarded
if the case progresses beyond the trial stage, and the lower percentages awarded if
* J.D., Georgetown University Law Center, 1999; B.A., Columbia University, 1994.
1. BLACK'S LAW DICrIONARY 132 (pocket ed. 1996).
2. Philip H. Corboy, Contingency Fees: The Individual's Key to the Courthouse Door, 1976 LmG. 27
(1975-76).
3. LESTER BPicKMAN Er AL., RETHiNKING CoNrFInNENcy FEEs 7 (1994).
4. See generally Hearings on Liability Reform before the Subcomm. on Telecommunications, Trade and
Consumer Protection of the House Comm. on Commerce, 104th Cong. (Apr. 30, 1997) (statement of Lester
Brickman); ABA Comm. on Ethics and Professional Responsibility, Formal Op. 389 n.3 (1994) [hearinafter
Formal Opinion 94-389] (citing statement of Barry Keene, leader of the Association for California Tort Reform
declaring that restrictions on contingent fees are necessary to reduce financial incentives that encourage
lawyers to file unnecessary, unwarranted [,] and unmeritorious suits.).
5. See Allison F Aranson, The United States Percentage Contingent Fee System.- Ridicule and Reform from an
International Perspective, 27 TEx. INr'L LJ. 755, 760 (1992) (noting that the percentages are calculated either on the
plaintiff's gross recovery or on the net recovery, which is the gross recovery minus litigation expenses).](ViewImageLocal?handle=hein.journals/geojlege11&div=21&collection=&method=preview&ext=.png&size=3)
What Is HeinOnline?
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most
Contingency Fees: Rules and Ethical Guidelines
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most