Fri | Mar 22, 2019

Reining them in! - Mercenary lawyers cause GLC to consider new rules on contingency fees

Published:Sunday | November 11, 2018 | 12:00 AMErica Virtue
Lowel Morgan, who chaired the sub-committee established by the General Legal Council, to tighten the rules governing contingency fees charged by lawyers.
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Faced with a mountain of allegations against attorneys-at-law, the General Legal Council (GLC) is considering several changes to tighten the rules governing contingency fees charged by lawyers operating in Jamaica.

Under a contingent fee arrangement, the lawyer does not charge the client but instead agrees to accept a fixed percentage of any amount awarded to their client if they win the case.

Currently, there are no regulations governing the percentage of any award which lawyers can claim for their contingency fee, and some lawyers charge as much as 40 per cent, plus general consumption tax (GCT), which could leave their client losing almost half of the payout.

This has sparked concerns that in some instances, claimants are losing the bulk of their money to mercenary lawyers.

"Where cases are sure, lawyers are loaning monies to the claimants at loan-shark rates. When the payout comes, with the high interest rates, plus contingency fees and GCT, the claimants are left with nothing," one lawyer who asked not to be named told The Sunday Gleaner.

"This arrangement forms the basis of many reports to the disciplinary committee of the GLC. And when the matter is investigated, it's incorrect. It's not ethical, but it's not stealing. Hence the need for more stringent rules," added the lawyer.

Against this background, the GLC appointed a subcommittee led by attorney-at-law Lowel Morgan, managing partner of the law firm Nunes, Scholefield, DeLeon & Co, to consider changes to tighten the rules governing contingency fees.

The committee has proposed that, among other things, lawyers be barred from collecting contingency fees from any interim payments granted for medical purposes in personal-injury cases.

It has also recommended that attorneys be banned from entering into contingency fee agreements with clients seeking to recover maintenance payments for persons under 23 years old.

The recommendations are contained in a recent letter to attorneys.

In the letter, it is noted that the committee has been sitting since the latter half of 2016 and all of 2017, and has been reviewing the draft proposals through presentations at legal professional development forums across the island.

Those presentations provided attorneys-at-law the opportunity to air their concerns and to provide suggestions regarding the proposed changes.

Arising from those discussions, the committee made amendments to its recommendations before submitting them to the GLC.

Under Section 21 of the Legal Profession Act, an attorney's entitlement to contingency fees is restricted to sums recovered in the event of success in the prosecution of any action, suit or contentious proceedings.

But the committee has argued that the wording of the section has been judicially interpreted to "exclude sums received under settlements arrived at between parties without the delivery of judgment by the court".

As a result, the committee said an amendment to the act is required to include provisions for the application of contingency fee agreements to out-of-court settlements.

It was noted that initially, the regulations focused on two main practice areas where contingency fees were most commonly utilised - personal injury and family matters.

The committee said the discussions revealed the need for an extension of the regulations to "comprehensively address all contingency fee agreements entered into with clients, who are desirous of instituting legal proceedings or actions, regardless of the type of matter".

A streamlined approach of applying a maximum percentage at various predetermined stages in the litigation process was proposed, with 20 per cent to be applied before the case management conference, 25 per cent for the post-conference stage, and 30 per cent at the trial stage.

In respect to the matrimonial home, the committee recommended that the maximum fee applied should be 20 per cent the value of home, or the sum recovered, regardless of the stage of the matter.

Morgan's committee has also recommended that attorneys should not be entitled to retain the total sums recovered as cost. All such sums are to be included in the pool of funds from which the contingency fees due to the attorney are to be deducted.

Contacted last Friday, Morgan confirmed that he chairs the committee, and that all lawyers have been contacted on the mater.

But he noted that the recommendations have not yet been implemented.

The GLC has statutory responsibility under the Legal Profession Act to organise legal education and uphold standards of professional conduct for lawyers.

erica.virtue@gleanerjm.com