Almost every business, be it a multinational corporation or a "mom & pop" retail store, at some point will find itself confronted by a situation which can only be resolved through litigation. It could be as simple as a collection dispute or as complex as a trade secret violation.
But too often, the business owner will decide not to seek legal redress. Their decision has nothing to do with the merits of the claim. Quite simply, they determine that they can't afford the high cost of litigation.
In a traditional attorney/client relationship, the client is billed in ten minute intervals at rates that can soar as high as $350.00 per hour. And at most big firms, the client is not represented by a single lawyer. Rather, there is a legal team, each member charged with a particular aspect of the case and billing at an individual hourly rate. Often a case can linger for years, buried under layers of pleadings and discovery filed by the various team members. Meanwhile, the clock continues to tick and the legal bills grow larger and larger.
The bottom line is that the attorneys have little financial incentive to settle the case. Their income is derived solely from the number of hours spent on a matter. The greater the number of hours, the higher the income. It is not a myth that the big winners in many cases are the attorneys.
But a growing emphasis on cost cutting has caused the corporate community to re-examine how it pays for legal services. In increasing numbers, it has discovered what the general public has known for years. Hiring an attorney willing to work on a contingent fee basis is the surest way to reach a swift and cost-effective resolution to an issue.
In a contingent fee arrangement, the risk of legal fees is borne by the trial attorney, not the client. There are no hourly charges, so the corporate bottom line isn't taxed by ever-growing legal bills. For the trial attorney, it is in his or her best interest to bring the case to the quickest possible and most-favorable conclusion. Until a verdict or settlement is reached, no income is generated.
In the August, 1996 issue of "Trial" magazine, Wayne Eastman, professor of legal studies at Rutgers University's Graduate School of Management, said, "the conflict between the client's interest and the lawyer who charges an hourly fee is greatly mitigated by the contingent fee." He goes on to assert that when a lawyer works on contingency fee, businesses face less financial risk and get a better result.
Unfortunately, many plaintiffs' attorneys are perceived as nothing more than ambulance chasers, interested only in profiting from the misfortune of others and not capable of handling complex commercial litigation. But as in all professions, not all plaintiffs' attorneys are created equal.
The National Board of Trial Advocacy (NBTA), a not-for-profit organization committed to improving the quality of trial advocacy, has established a certification program whose efficacy has been recognized by the United States Supreme Court. Of the 8,000 lawyers in Allegheny County, only 13 currently have NBTA certification. Two of the thirteen certified attorneys in Allegheny County are partners in the law firm of Sikov and Love, P.A.
In the 1990 case of Peel v. Attorney Registration and Disciplinary Commission of Illinois, the U.S. Supreme Court refers to the NBTA certification as a "highly structured" and "arduous process that employs a wide range of assessment methods," noting that the standards have been approved by a board of judges, scholars, and practitioners. They found them to be "objective and demanding."
The NBTA requires a certified attorney to have been lead counsel in at least 15 trials that have been concluded by a verdict or judgment. An NBTA certified attorney must have also been lead counsel in a minimum of 40 other contested matters. There is an exhaustive credentials screening including documentation of experience, judicial and peer references, and an all-day examination. Members must be recertified every five years.
The certified trial attorney is equipped to handle a variety of situations. For example, a corporation might find itself in a dispute with an insurance company over fire damage to one of its facilities. Who better to handle the situation than a plaintiffs' attorney who deals with insurance companies on an almost daily basis.
The capabilities of an NBTA certified trial attorney extend far beyond fire loss claims, collection disputes and insurance settlements.
We recently worked with a large real estate brokerage company which had found the anchor tenant for a downtown office complex. At issue were sizeable real estate commissions owed on account of lease renewals. After months of negotiation, talks with the building management were at an impasse. But the company hesitated in pursuing legal action. In a typical fee-for-service arrangement, pursuing the claim may not have been cost-effective. However, by entering into a contingent fee arrangement, the client was assured that a favorable verdict or settlement would generate the desired financial outcome.
We've also received referrals from large law firms which specialize in corporate legal affairs. While such referrals are a standard practice in accident cases, it is a fairly recent phenomenon on the commercial side. The reason is quite simple. Not every company has the financial resources to fund the requisite legal expense for every legal claim, regardless of its merits. Yet big firm attorneys realize that the client's ability to pay legal fees should not be the final arbiter of whether a case is pursued. By referring the case to a plaintiffs' attorney, the big firm retains its relationship with the client (such an agreement is at the heart of the referral process), the client gets first class legal representation, and if a settlement is achieved, the referring law firm receives a portion of the contingency fee.
An example is a referral we received from one of Pittsburgh's largest law firms. A young entrepreneur, the son of a large corporate client, had developed a proprietary manufacturing process. In searching for investors, he shared the concept with the head of a large manufacturing company. Within a year, the company had claimed the process as its own.
It was a classic David vs. Goliath case, but the young entrepreneur did not have the financial weapons to challenge the giant. The contingent fee arrangement leveled the playing field. A settlement was eventually reached which amply rewarded the young man for his innovation.
Of course, these examples should not be construed as a guarantee theat every case can be resolved so favorably. Nor is every situation appropriate for a contingent fee arrangement. But if you are a business person confronted with an issue that may ultimately be decided through litigation, then it is in your best interest to explore representation by an NBTA certified trial attorney working on a contingent fee arrangement. Contingent fees have historically provided the average citizen with the keys to the courthouse. Today, those keys are being passed on to the business community.
*John F. Becker and Jay N. Silberblatt are partners in the Pittsburgh law firm of Sikov and Love, P.A. Both are certified by the National Board of Trial Advocacy as Civil Trial Advocates.