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.