Corporate interest groups have criticized the contingency fee system, claiming that it encourages frivolous lawsuits. However, the opposite is true. A prudent attorney accepts only meritorious cases. He or she must carefully evaluate and turn away frivolous cases. Otherwise, the attorney will recover nothing, and will simply face an unhappy client.
The true reason why big business opposes the contingency fee system is because most consumers could not afford to file a lawsuit. The fee rates for attorneys can be several hundred dollars per hour. For a typical case, the client would have to pay thousands of dollars per month in attorney fees. The system enables consumers to have legal representation without paying prohibitive out-of-pocket expenses.
Generally, attorneys handle personal injury, wage and hour, and insurance cases on a contingent fee basis. Payment for attorneys' services is dependent on the results of the case. The attorneys and not the clients, advance the costs of litigation. These costs will include court filing fees, deposition fees, and fees to experts and investigators.
Unlike cases involving criminal defense, immigration, or divorce, the client does not pay the attorney from out of his or her own pocket. Instead, the client pays the attorney a percentage of the monies recovered in the case. If there is no recovery, the client does not pay any fee.
The contingent fee system gives average persons the opportunity to seek redress when they are seriously injured, or when insurance companies deny them their lawful benefits, or when their employers do not pay them fair wages. This access to justice helps to deter bad corporate or employer behavior. The system levels the playing field between ordinary individuals and big businesses who can afford to pay expensive attorney fees.
Manufacturers that make defective products that injure their customers, insurance companies that treat their insured unfairly, or corporations that discriminate against women or minorities – these entities generally aim to avoid taking financial responsibility for the harm they cause. If seriously injured individuals or unfairly treated employees are unable to assert their rights because they cannot afford to pay an attorney to help them, then those who did them wrong would never be held accountable.
The contingency system provides the average citizen with a ticket to the court house. Without this system, consumers, employees, and policyholders will be unable to seek remedies for the wrongs done to them.