Open season on lawyers?
THE LEGAL profession seems determined to ignore the real problem and use some lawyers’ avariciousness to make freedom of contract the scapegoat.
The Gleaner reports (November 11): “Faced with a mountain of allegations against attorneys, the General Legal Council (GLC) is considering several changes to tighten rules governing contingency fees charged by lawyers.”
Guess how? A committee was formed, of course. Jamaica LOVES committees! The Gleaner reports the committee’s significant progress:
“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.”
Rubbish! Contingency fees are most used (and abused) in real-estate law.
“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 ... [my emphasis].”
“A streamlined approach of applying a maximum percentage at various predetermined stages IN THE LITIGATION PROCESS [my emphasis] was proposed, with 20 per cent to be applied before case management conference, 25 per cent for the post-conference stage, and 30 per cent at trial stage.
“In respect to the matrimonial home, the committee recommended that the maximum fee applied should be 20 per cent of the value home or sum recovered ... . ”
DWL! This report follows hard and fast upon a high-profile complaint by a client that Government delayed payment of a judgment to her only to discover “millions” (not necessarily the full judgment) had long been paid to her lawyer. The lawyer swiftly scrambled about and reported that “millions” had been subsequently sent to the client’s account. It wasn’t immediately clear whether there was a disparity between Government’s “millions” and the lawyer’s belated forwarding of “millions” and, if so, what was the reason for the difference. Was a contingency fee solely responsible?
Based on The Gleaner’s latest report, GLC seems determined to blame similar scenarios on contingency fees rather than the real culprit, which is lawyers collecting monies belonging to others. You see, if not for misdirection encouraging us to focus on wicked and rapacious contingencies, we might discover that many lawyers’ income is subsidised by rinsing clients’ money, whether the legal issues are, as GLC seems fixated, “personal injury and family matters” or realestate/commercial transactions.
Why is GLC so intent on telling personal injury/family lawyers how much to charge? Have they restricted conveyancing lawyers’ fees in any way (save to ban ‘scales’)? Do real estate lawyers’ contingency fees differ whether the property sold is valued at $2,000,000 or $200,000,000? Don’t real estate vendors have the identical difficulty of collecting purchase money from some unethical or unprincipled lawyers as some personal injury clients have experienced with their lawyers? How does regulating the size of litigation contingencies ALONE address this real problem?
Decades ago, GLC abolished “scales of fees” for conveyancing lawyers, allowing market forces to decide the level of contingencies charged by realestate practitioners. Now, in 2018, it wants to introduce a scale of fees for litigation lawyers’ contingencies? This MUST be the Guy Lombardo Show!
In its haste to obfuscate, GLC might’ve overlooked a worldwide, centuries-old, fundamental legal principle called ‘freedom of contract’. Some of the most reasoned recent expressions of the principle come from South Africa, whose system of justice, post-apartheid, is among the planet’s best.
Last year, the South African Supreme Court of Appeal, in Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd [2017] ZASCA 176 (paragraphs 22-23) had this to say:
“This court in Sasfin (Pty) Ltd v Beukes 1989(1) SA 1 (AD) said:
‘The power to declare contracts contrary to public policy should ... be exercised sparingly and only in the clearest of cases lest uncertainty as to the validity of contracts results from an arbitrary and indiscriminate use of the power. One must be careful not to conclude that a contract is contrary to public policy merely because its terms (or some of them) offend one’s individual sense of propriety and fairness.’
Privity and sanctity of contract entails (sic) that contractual obligations must be honoured when parties have entered into the contractual agreement freely and voluntarily. The notion of privity and sanctity of contracts goes hand in hand with the freedom to contract ... . freedom to contract denotes that parties are free to enter into contracts and decide on the terms of the contract.”
In that case, a tenant was threatened with eviction for non-payment of rent as specifically and unambiguously permitted by the contract. It turned out the non-payment was due to the tenant’s bankers’ error, which the tenant, as soon as he received the eviction notice, moved to address. The court below held that eviction was unreasonable despite the contractual breach.
But the Supreme Court of Appeal held that freedom of contract should only be interfered with if a contractual clause is “manifestly unreasonable or unfair to the extent that it is contrary to public policy” (paragraph 21). The issue as to what would justify such interference was settled by South Africa’s Constitutional Court in Barkhuizen v Napier [2007] ZACC5; 2007 (5) SA 323. The Court of Appeal, in Mohammed’s case, applied the Barkhuizen principles to the facts of the eviction case before it as follows:
“(T)he terms of the contract are not, on their face, inconsistent with public policy; (b) the relative position of the parties was one of bargaining equality; the parties could have negotiated a clause in terms of which the respondent was given notice to remedy a breach before the contract was cancelled; and (c) the performance on time was not impossible because the respondent could have diarised well ahead of time to monitor this important monthly payment.”
GLC’s exclusion of conveyancing contingencies from proposed new restrictions make it impossible for litigation contingency fees to be considered inconsistent with public policy. Income tax and GCT are contingency fees.
The contracting parties (lawyer/client) are in a position of bargaining equality, especially as the plethora of lawyers offering services on contingency give the client market leverage;
Bearing in mind the number and presumed quality of professional services to be rendered, contingency agreements are reasonable, sensible, and performable. Lawyers must upfront services for years, and if nothing is collected, nothing is owed.
In Jamaica, freedom of contract has recently been bolstered by a constitutional right to protection of property rights, including “interest in or right over any property of any description” [Constitution, Section 15(1)]. Persons should be reminded that in a fundamental shift to the nature and effect of fundamental rights and freedoms, the new charter now provides: “All persons are under a responsibility to respect and uphold the rights of others recognised in this Chapter.” That includes GLC.
We’re living in a new constitutional paradigm, only most of us don’t know it. Regardless of what you might’ve heard elsewhere, ‘regulations’ can’t be passed willy-nilly without regard to their effect on fundamental rights like freedom of contract. That gig can no longer spin.
Two clarifications are necessary. First, I dislike contingencies because they do me no financial good at all. I avoid them like the plague. Contrary to popular belief, variegated persons/companies regularly ask me and other lawyers to take cases on contingency. I steadfastly refuse. Everybody wants to sell their product for cash, but very few want to pay lawyers for theirs.
If I wasn’t such an ardent embracer of poverty or was a legal novice, I don’t know how I’d survive without accepting matters on contingency. Many contingency matters result in zero collection (including some ‘won’ in court). Contingency lawyers must hope to recoup from swings what has been lost on roundabouts.
Second, I’m not defending any lawyer who sets up a scheme to ‘lend’ clients sums for “legal fees” to be paid to the lawyer then repaid with interest out of any damages collected. That’s NOT a contingency fee properly so called.
I’m not defending lawyers who charge a fee (contingency or otherwise) and then keep the ‘costs’ (ordered by the court so the client can recoup some of his/her legal fees) collected from the other side without the client’s full knowledge and consent. But those practices don’t need new GLC Regulations.
Somebody, please tell the GLC to stop over-reaching and instead ensure that NO LAWYER KEEPS MONEY BELONGING TO SOMEONE ELSE. That’s the legal profession’s biggest mistake. If lawyers weren’t allowed to collect deposits or purchase prices (or settlement sums), none could be accused of conversion or arbitrarily ‘selling’ people’s properties. There’d be no motive.
Don’t tell me it can’t work. Can’t is a four-letter word. In this case, its use is assisted by an insidious agent of mental slavery called “tradition”. It “can’t” work because lawyers don’t want it to work.
Peace and love.
Gordon Robinson is an attorneyat-law. Email feedback to columns@gleanerjm.com.
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