In Love With Lawsuits

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BY THE MIDDLE 1800S THE ENSHRINEMENT OF THE contingent fee was complete, making litigation a contest that anyone could enter. True, eligibility did depend on the presence of an injury. The harm, however, need not be physical. A woman libeled by a newspaper, a customer fleeced by a fraud-peddling salesman, a client harmed by a lawyer’s bad advice—all could find an attorney who would, for nothing more than a share of the possible recovery, commence legal action against the malefactor.

Because it makes lawyer and client co-venturers in a very real sense, the contingent fee arrangement has always drawn detractors. Even its most valid justification —that “the poor man’s fee” offers legal relief to those who otherwise could not afford a remedy—has provoked the disdain of some bar leaders, those lawyers with clients wealthy enough to pay per-hour fees, and even many judges. The distinguished Boston lawyer Moorfield Storey was speaking for many when in 1911 he damned the whole concept of personal-injury litigation as “frequently legalized piracy.”

AS EARLY AS 1305 AN ENGLISH ORDINANCE HAD even defined champerty as a crime, and champertors as “they that move Pleas and Suits, and sue them at their proper [i.e., own] costs [i.e., expense], for to have part of the land in variance [i.e., in controversy], or part of the gains.” Three centuries later Francis Bacon was railing at “sowers of suits; which make the Court swell, and the country pine.” In the 1760s William Blackstone’s Commentaries on the Laws of England , the underpinning of early American legal theory and practice, labeled champerty “a practice so much abhorred by the law” and champertors “these pests of civil society.”

Early in the nineteenth century the great American judge and author James Kent added his thunder: “The purchase of a lawsuit by an attorney ... is champerty in its most odious form; and it ought equally to be condemned on principles of public policy. It would lead to fraud, oppression, and corruption. As a sworn minister of the courts of justice, the attorney ought not to be permitted to avail himself of the knowledge he acquires in his professional character, to speculate in lawsuits. The precedent would tend to corrupt the profession, and produce lasting mischief to the community.”

CHIEF JUSTICE ISAAC PARKER OF MASSACHUSETTS chose to ignore the distasteful trend. “Probably,” he wrote in 1823, “the practice of encouraging others in lawsuits, by advancing the expense and taking the compensation from the proceeds, was formerly more frequent and more mischievous than in modern times.”

The judicial establishment could only grumble. Champerty was losing its opprobrium. In 1835 Chief Justice John Bannister Gibson of Pennsylvania, using the modern label, was conceding the possible “legality of contingent fees,” although they were “not to be encouraged by implication, from a questionable usage, nor established by less than a positive stipulation.” Eight years later Gibson’s court admitted that the practice, although “a subject of regret,” had become general.

When in 1848 the reformer David Dudley Field prepared New York’s Code of Procedure, his product, in the disgusted phrase of George Sharswood, another Pennsylvania chief justice and the author of America’s first treatise on legal ethics, “changed the law ... to enable parties to make such bargains as they please with their attorneys.” Other states followed New York’s lead. By 1900 “personal-injury litigation” and “contingent fee” had become a smooth-stepping tandem, pulling the courts along.

WHATEVER THE ARGUMENTS IN ITS FAVOR, an arrangement that permits (some might say encourages) cost-free participation in an enterprise offering a possible large payout is nothing more than a sophisticated, albeit socially justifiable, lottery. Indeed, regardless of the attorney’s fee structure, a suit to recover for injury, physical or otherwise, is, in every sense of the word, a straight-out gamble.

The main element of chance, recognized by everyone who spends any time in or around the court system, is the trier of fact, almost always the jury. Here I must confess a strong personal belief that for deciding the kinds of issues likely to arise in tort litigation, twelve (or, in the federal system, six) heads are better than one. Yet I accept the courthouse wisdom that a jury trial is merely expensive dice rolling. So widespread is this belief that ever since we have been keeping serious statistics, the nationwide settlement rate has hovered at around 95 percent. Thus only five of one hundred civil cases go the full forensic distance. In all the rest the parties do not wait for the jury verdicts; instead they reach their own negotiated settlements. Crowded dockets and greater pre-trial “discovery” (forced exchange of information) may, as Judge Wyzanski suggested in 1952, increase the pressure to settle.

The concept of the lawsuit as a bettable event affects even nonlitigants. People give a “big” trial the same avid attention they lavish on other forms of competitive entertainment. If the jury confers on the plaintiff a handsome return, we all share the winner’s joy, just as we relate to the triumphant Super Jackpot Sweepstakes ticket holder.