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The Plaintiff's attorneys pursued this case on a contingent fee basis.
But to pay counsel on a contingent fee basis is bad public policy akin to paying the police on a contingent or piecemeal basis.
For Personal Injury claims, the firm works on a 1/3 contingent fee basis and in Social Security disability claims we work on a 25% contingent fee basis (unless the case proceeeds to Federal District Court) as per the Social Security rules.
Therefore, the Court of Chancery found that an award representing 15% of the common fund was reasonable in light of the absolute risk taken by Plaintiff's counsel in prosecuting the case through trial on a fully contingent fee basis.
While I agree with most of Professor Coffee's analysis of the enforcement issues, I am troubled by his suggestion that the SEC hire outside counsel on a contingent fee basis to prosecute large, important financial market cases.
(My favorite legal theory was that the admission paperwork constituted an open-price contract, and thus subsequent charges had to be fair and reasonable). The problem is that an individual patient's charges are rarely high enough to justify an attorney taking the case on a contingent fee basis.
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States frequently engage private attorneys on a contingency fee basis.
However, most lawyers will work on a contingency fee basis.
But in Texas it is a felony to lobby the Legislature on a contingent-fee basis, because it can skew the incentives underlying public policy.
The arrangement between Nichols and the agent was on a contingent-fee basis; Nichols was to be paid only if he produced useful information.
The most logical response would be for the SEC to retain private counsel on a contingent-fee basis in those large cases that it cannot staff adequately itself.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com