Legislation contemplates ‘conditional fee’ lawsuits

Providing poorer Cayman Islands residents access to the courts and just compensation in civil litigation is listed as a major concern in the Law Reform Commission’s draft proposal to allow conditional fee or contingent fee lawsuits in the territory.

A draft bill, called the Private Funding of Legal Services Bill, was presented in late December by the commission. The bill generally suggests a compromise between a U.S.-style contingency fee system, in which successful lawyers are paid a percentage of their client’s winnings in a civil suit, and a U.K.-style conditional fee system, in which lawyers can be paid their normal fee and sometimes an additional “uplift fee” only if the cases are successful in court.

Contingency fee lawsuits are not allowed in Cayman. In practice, conditional fee cases are allowed by Grand Court rules. However, the application of those rules has varied in the past. The Law Reform Commission pointed to a local court case in 2012 when a conditional fee compensation agreement made by a woman who was injured in a police car crash was overturned by the Court of Appeal, which then advised the government to review its current legislation regarding post-trial compensation for attorneys.

“[Both conditional fee and contingent fee] agreements have been viewed by proponents over the years as fundamental routes to access justice by lower income persons, while opponents view such fee agreements as incentive to excessive litigation and argue that they promote a compensation culture,” the Law Reform Commission stated in its discussion paper on the topic.

One issue holding up legislative reform on the topic is the existence of what the law commission terms “ancient” statutes dating back to medieval England that outlawed the assistance of any party involved in litigation without justification, a practice called maintenance, and accepting payment or something of value in return for that assistance, called champerty.

Both of those criminal offenses still exist in the Cayman Islands, although they have since been abolished in England. The Law Reform Commission recommended that both offenses be removed from the books as part of the new draft legislation governing the payment of conditional fees in litigation.

Various local law firms over the years have argued for the need to accept some regulated system that allows for conditional fee agreements in civil court cases. One firm, Solomon Harris, supported such arrangements following a 2009 decision of the Cayman Islands Grand Court. In that case, Chief Justice Anthony Smellie sanctioned the use of a conditional fee agreement.

“This [decision] is significant for liquidators in a situation where the company has no money due to wrongdoing by persons who could, and should, be held liable for the situation of the company,” Solomon Harris representatives opined. “Without some way to pay for the litigation, wrongdoers might avoid liability.”

There are several points against contingency fee arrangements that the law commission raised as well, including that they can generally increase the overall cost of litigation and that they can give rise to bogus or frivolous legal claims.

The commission also warned against the reputational damage to the legal profession that has occurred in some jurisdictions, such as the U.S., where personal injury attorneys especially are often held in disrepute.

It is proposed by the draft bill that the Grand Court would be able to review any conditional or contingency fee arrangement between a lawyer and their client prior to that agreement being entered into.

Public comment is invited on the proposed legislation. Comments must be submitted to the Law Reform Commission by March 31.

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5 COMMENTS

  1. This will be a HUGE mistake! This will create a long list of new law suits that will overwhelm the court and our country. Now law suits against govt will occur with much greater frequency.

    Don’t become like the USA!

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  2. I think that this Legislation might not be the best thing for the Islands, but would be for the Attorneys. I can see more frivolous lawsuits coming and more over burdened courts.

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  3. In theory a good idea.

    In practice there will be a large increase in frivolous lawsuits that innocent parties will pay large amounts to settle rather than the costs of fighting the lawsuit.

    I have had good personal experience of being on the receiving end of this in the USA. Sued for example by someone who claimed they had been injured when a closing elevator door bumped their arm. She and her attorney split a $35,000 settlement from our insurance company for that.

    Then there was the lady who sued us when her own pit bulls, which her lease prohibited her from keeping, pulled apart the back door wooden staircase she had chained them to. She fell about 1 foot and again suffered no injury.

    Please let’s not go there.

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  4. i reiterate;
    "Contingency fee lawsuits are not allowed in Cayman. In practice, conditional fee cases are allowed by Grand Court rules. However, the application of those rules has varied in the past. The Law Reform Commission pointed to a local court case in 2012 when a conditional fee compensation agreement made by a woman who was injured in a police car crash was overturned by the Court of Appeal, which then advised the government to review its current legislation regarding post-trial compensation for attorneys".

    I think this is most unfortunate and a down right disgrace that lawmakers did not work on behalf of the people to avoid a grand court upturning a case where a victim could have benefitted and been fairly and justly compensated in a ciourt of law, but instead lost the case entirely.

    All cases of compensation for loss being sought by a plaintiff from a comprehensive perspective must be heard or represented by way of a "contingency fee, the" percentage agreed on between plantiff and attorney, that is no business of the courts.It is most disheartening to note that people in this UK territory are only sufferers and no winners, they just can’t seem to win not even in the most critical circumstances. I must interject Shall we conclude accurately that this is no conspiracy theory, or that "it is what it is" an outright CONSPIRACY, by whom, and for what reason?

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