In today’s The Hill, Professor Lester Brickman discusses the class action lawsuit brought against BP in respect of the 2010 oil spill. Professor Brickman argues that the BP suit is representative of a larger trend in American class action litigation whereby the plaintiffs’ lawyers are hired on a contingency fee basis and end up reaping enormous sums from the settlement. As Professor Brickman writes, “contingency fees have empowered lawyers to shape our civil justice system in ways that further their financial interests while relegating the interests of the public to secondary importance.”
Professor Brickman notes that in the BP case, many of the class members are alleging injuries or losses “that are UNRELATED to the spill.” According to his research, effective hourly rates have risen by over 1400 percent in the last 50 years. Professor Brickman concludes that “[t]he immense financial incentives to litigate have unleashed a litigation explosion unjustified by any rising level of injury. These financial incentives have also turned the class action into a weapon of mass destruction.”
Canada is certainly not immune to what Professor Brickman laments as the “rule of lawyers” overtaking the “rule of law.” Plaintiff-side class action litigation is perhaps the most remunerative work a lawyer can do in Canada. Like the United States, class action lawyers are permitted to work on contingency and have been known to recover multi-million dollar fees, in circumstances where the many class members each recover a four-figure sum. Unlike the United States, however, our courts are permitted to reduce the contingency fee where it is excessive. The practical reality is that class action work in Canada is lucrative, but not quite as lucrative as the United States.
Freedom of contract is, by and large, intimately connected to the rule of law. In the context of lawyer fees, however, the freedom to contract must be properly balanced against the integrity of the judicial system as a whole. Lawyers can and should be entitled to bill their clients on a contingency fee basis – and indeed, in the context of personal injury claims, the contingency fee agreement has greatly enhanced access to justice – but those agreements must be subject to judicial scrutiny. This is most true in the context of class actions, where most of the contracting parties have no practical involvement in the execution of the contract. A court that allows any fee agreement to stand on the basis of freedom of contract will only undermine the very judicial system that provides for the formation and adjudication of contracts in the first place.