There is a lot of talk among the “tort reform” people about placing caps on contingency fees. The idea is simple. If you limit the amount that an attorney can collect, they will not take as many cases and you will limit the number of cases filed in court. Thus, you “reform” the system.
This is wrong for so many reasons. However, instead of telling you my own reasons, I will share with the findings from the “American Enterprise Institute,” a conservative organization. Two economists, Prof. Alexnader Tabarrok of George Mason University and Prof. Eric Helland of Claremont McKenna College analyzed closed cases from 16 states. They had 4 major conclusions:
- Contingent fees give lawyers incentive to screen cases and weed out “frivolous” cases;
- Contingent fees motivate lawyers to win;
- Contingent fees improve acces to the courts for low income plaintiffs;
- Contingent fees help spread risk because a contingent fee lawyer is a venture capitalist of torts who takes significant risks, puts up funds, and brings needed expertise to the case.
There you have it. Contingency fees are good, from the tort reform group. I know some people will argue with this, and those of you who read this who believe in tort reform, let me know your comments.
However, the next time you hear that we need to ban contingency fees, refer someone to this study.