Merce­nary lawyers cause GLC to con­sider new rules on con­tin­gency fees

Jamaica Gleaner - - FRONT PAGE - Erica Virtue Se­nior Sun­day Gleaner Writer

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 per­son­al­in­jury 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-of­court 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.


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