Contingency Fees and the Litigation Game

One of the allegations made about contingency fees is that they encourage lawyers to cut corners because they are not paid by the hour. It is an allegation which has been specifically made to me in the context of equal pay claims. So I was interested to see this latest Employment Appeal Tribunal decision which deals with a number of mistakes made during high volume equal pay cases. The first point that is worth making is that it is a reminder of how hard fought these equal pay cases are. A concern about bringing cases under a contingency fee is that opponents can string cases out, or take highly adversarial approaches, to ensure that these cases cost the contingency fee lawyers lots of their time. The longer they take, the harder it is for contingency fee lawyers to make a profit, and the less likely it is to arise in these cases. It is a charge which might be laid at the local authority in this case: seeking to strike cases out where they have not suffered substantial prejudice, appeal failures to strike out, and then if they lose their appeals (with the EAT allowing cases to be reinstated) and ask for decisions to be remitted for rehearing rather than allowing the appeal to be decided in substance as well as in form. That’s not to say the Council’s tactics are illegitimate; but they may have the intention of trying to grind the claimants’ and their lawyers down. It may also be an indication of how one should read allegations that contingency fee lawyers only bring easy cases, cherry pick the ones that settle early and so on. Indeed, this was an allegation made against claimant contingency fee firms in equal pay cases. The trajectory of the litigation so far does not suggest that it is a fair description.

To return to the contingency fee lawyers cut corners argument, this is again an argument which was specifically made against contingency fee funded equal pay lawyers. Indeed, in this case the lawyers do appear to have made some mistakes [although the EAT lays no blame and see also in the comments section thoughts from the Stefan Cross himself]. The case turns on what to do when some employee job-titles are incorrectly stated when making the claims. What the case also makes clear is that it appears that it was the same claimant firm that was first to spot the mistakes; that a trade union firm made similar mistakes but spotted them later and that the local authority also made mistakes of its own (failing to serve notices of appeal on a whole group of claimants who – it so happened – were represented by the contingency fee firm). The lesson here appears to be that multi-party cases give rise to mistakes, as the EAT recognised:

In the context of mass litigation it is inevitable that mistakes will occur in relation to job titles, particularly where the titles themselves are so multifarious and, often, only finely distinguished one from another. Subject to the question of any prejudice caused to the Council, or any specific points as to jurisdiction, we believe that a tribunal should be very ready to allow the correction of such mistakes. An individual who by reason of such an error is prevented from pursuing her claim, or her best claim, in circumstances where her colleagues’ claims are proceeding, will feel an acute and legitimate sense of injustice; whereas for the respondent the fact that one claim out of thousands may not proceed, or proceed on all the bases available, is a matter of marginal significance.

There follows an admirable recognition that:

Litigation is not a game, and it is not the business of courts or tribunals to punish accidental error that has not created any real prejudice or risk to justice being done

Nevertheless, it is difficult not to read the case without perceiving that it was not the contingency fee lawyers who were most at fault. They appear, on the face of the decision to have been the most on the ball. Trade Union lawyers were somewhat later in spotting their own mistakes, but the EAT did not criticise them for it. They did however criticise the local authority solicitor:

In our view, although the performance of the Council’s solicitor throughout this sorry story was very unimpressive, even making allowances for the pressures of handling such complex litigation, it would not be in the interests of justice to refuse permission to amend. It would be extremely unsatisfactory if an important point of the kind under consideration were not be to be permitted to be taken because of an administrative error; and all the more so when the result would be that the point was open in some cases but not in others, depending on the identity of the Claimants’ representative.

This is only one case, of course, and one should not make too much of it but it is a reminder that one should be wary of being too accepting the idea that contingency fee lawyers cherry pick cases or cut corners and that, in debating how fees influence practice, one should always be comparing their behaviour with lawyers funded under other arrangement.

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About Richard Moorhead

Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London with an interest in teaching and research on the legal ethics, the professions, legal aid, access to justice and the courts.
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4 Responses to Contingency Fees and the Litigation Game

  1. sara kovach clark says:

    I have never seen any hard evidence that contingency fees or indeed fixed fees mean cherry picking-all this shows is that legal departments still allowed to charge by the hour can try and take advantage. Roll on the day when in house legal also have to justify their costs and start having to think about their clients’ costs too-it must be around the corner….

  2. stefan Cross says:

    Richard

    you make the assumption that the mistake was ours and in some cases it might have been but in the vast majority of cases the mistake, if it can even be called a mistake, was that of the claimants who simply used a different label for their jobs. BCC is not the only council to take this idiotic approach.

    Your main point is a good one – the council’s literally spend millions stringing these cases out. In redcar there have been 15 separate judgments by the ET alone, 5 appeals to the EAT at least, and it has been to the CA twice. The cases started in 2003 and are still going with the latest appeal lodged by the council last week.

    Sunderland is similar. The ET hearing has been sliced into tranches and the cases started in 2005 and are due tranche 3 in summer 2012. We have been to the EAT 6 times and are listed in the CA in March 2012. There are many more examples I could give.

    We have virtually no cashflow from these cases whilst they litigate and continue to litigate, 8 years for redcar, 6 for sunderland and 5 for birmingham, and counting. Most firms would refuse to act even on a fee paid basis with no payments over that time frame. An foi request for the amount spent by these councils over that time might be interesting. Barristers on these cases have been paid millions by the councils and lost. We have not yet been paid even though we won.

    stefan

  3. Simon Jeffreys says:

    not disagreeing with Stefan, but contingency fees are never going to be an effective substitute for the sort of Legal Help work I do – clients often with very small claims in £ terms, but which are very important for them because they are so lowly paid, and who typically can’t explain clearly what happened, were never given written contracts or lost them and their payslips, and who therefore take time to get the story out of them, usually coupled with ignorant, stubborn and often immoral employers. Who would run an ET case for £500 to 1000 say, for 35% of the winnings?

  4. Pingback: The Hitch-Hiker's Guide to the Legal Services Act

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