Welcome to the Dalai Lawyer's Blog.
My plan is to offer daily commentary on the law and the legal system in the United States. I am a lawyer with over ten years experience with a wide variety of civil litigation (law suits). I mainly focus on business-related law suits. I have been reading and thinking a lot lately about "big picture" issues relating to our legal system and how lawyers function in it. I'm hoping that by writing some daily commentary, I will help clarify my own thinking and maybe offer some worthwhile ideas and observations along the way. Thanks for reading.
Last night, I was reading an article about class action lawsuits. There's all sorts of consternation and general teeth-gnashing going on in certain circles because of the perception that class actions are just vehicles for greedy lawyers to reel in huge fees, while doing pretty darn little to help out the people they're supposed to be representing.
For those of you who haven't had to deal with these things before, a class action is a law suit in which a person, or a small group of people, sue on behalf of everyone who has suffered the same (or roughly the same) wrong at the hands of the defendant. The background idea is that sometimes a person can suffer a small injury that isn't worth suing over. But if the defendant is inflicting that same wrong on lots of people, it can add up to a mighty big wrong overall. But because no one is willing to incur the expense and trouble of suing over their little piece of the big wrong, the defendant keeps getting away with it, and can make lots of money over time. For example, let's say a company sells an inexpensive product that it knows won't work right, and stiffs all the customers who buy it. But it's cheap, so no one is going to sue over it. The company can make big bucks off its shoddy product and no one will call it to account.
Enter the class action. The idea is to accumulate all the little wrongs and add them up to make something worth suing over. The problem is that lawyers can use this as a vehicle to trump up marginal lawsuits, that defendants will have to settle, because if they lose, the amount demanded in damages is so big it could put them out of business.
So, anyway, this article I was reading proposed that lawyers be required to pay the defendant's legal fees if they bring a class action and lose. This did not strike me as a great idea. Plaintiffs' lawyers usually work on a contingency fee arrangement. This means they only get paid if they recover money from the defendant(s). If they bring a class action and lose, then they already lose all their time, and often a fairly large sum of money that they invest in the other costs associated with bringing a lawsuit (I can ramble about those costs another time). If they also faced the prospect of paying the defendant's legal fees, the number of class actions would drop dramatically. That, to be fair, is the point to the idea.
But wouldn't that mean that only rich people would be able to bring class actions? I think that if such a rule were adopted, then lawyers wouldn't want to take contingency cases anymore, at least not without some serious financial backing in case things go sour.
Also, do we really want lawyers to have to be virtually sure they're going to win before they even file a lawsuit? I can tell you from experience that there are almost always surprises along the way in a lawsuit. Sometimes you think you have a dead on winner and it goes south on you halfway through the lawsuit. Sometimes you think it's a dog, but your client is insistent so you soldier on, only to find out that the client was right all along, and it's a great claim. Usually, things are up the middle somewhere. Some things go your way, some don't. Sometimes you think you're going to win and you lose. Sometimes the reverse.
In this country, the general rule is that people pay their own legal fees, win, lose or draw. There are exceptions to the rule, of course, and a number of statutes that shift the fees in certain cases. But usually you bear your own costs. The rest of the world (pretty much) uses a "loser pays" rule. The consequences of who pays the lawyers are huge, because lawsuits are so expensive. In a class action, everything is magnified because the stakes get so high.
More thinking on these issues to come.