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Tulkinghorn
11 August, 2009  
Success fees

Queensland log-rollers to lose their success fees … Happily lawyers can keep theirs … Tulkinghorn goes to the heady days of the 1850s to trace the modern history of lawyer “success fees”


imageThe other day the Queensland government issued a discussion paper entitled Integrity and accountability in Queensland.

It says that the Queensland government …

“has committed to ban the payment of success fees to lobbyists which are contingent on success in achieving outcomes from government.”

The paper notes:

“Some lobbyists base part, or all, of the fee that they charge on the degree of success achieved through their work. This type of arrangement is called a success fee because payment is contingent on the success of the undertaking. These success fees imply that lobbying, not merit, contributed to the success of a contract bid for example, or a licence approval. Further, success fee arrangements may promote the use of improper means by lobbyists, such as distorting relevant facts to ensure success.”

However, litigation lawyers are allowed to base part, or all, of the fee they charge on whether success was achieved.

When they do this, it implies that their lawyering contributed to the success, which may have been achieved despite some lack of merit.

It is also understood that litigation lawyers do, when necessary, distort the relevant facts to ensure success.

Perhaps, in view of this, the Queensland Premier said:

“Success fees paid to other professionals will not be regulated in this legislation.”

The modern history of success fees for lawyers begins with Charles Rann Kennedy.

In the 1850s, in England, he was having it off with a litigation client, Patience Swinfen.

imageNot that any of the judges or lawyers talked about that too much. Nor did they talk about the fact that his client Patience was a former parlour maid who had married rather well into the Swinfen family she was now suing.

Things had came unstuck when her hubby carked it before his father, Samuel, which meant that Swinfen Hall (pic) would go to the heir-at-law (not Patience, who had been exercising a lot of that thus far.)

She did what any loving daughter-in-law would have done and quickly got the grieving father Samuel to make a will putting her back in the number one spot.

The witnessing of the will was, to say the least, suspect.

Anyway, it was all done just in time. He died soon after.

Litigation ensued between Patience and Samuel’s nephew, the heir-at-law, over the validity of the will.

Litigation was to continue for about a decade.

By the early 1860s things were coming to a bit of a climax, although not in the way that Kennedy might have wished.

First, Patience had now gone and married someone else (Mr Broun).

Secondly, the enormous Swinfen litigation had so far dragged down the reputations of various hugely important lawyers, largely because Kennedy had been prepared to sue (on behalf of Patience) anyone within the legal profession, no matter how high their status. The profession was out for revenge.

imageThirdly, Patience (seen here) had hardly paid Kennedy anything, despite some incredible victories that he had achieved by various adversarial tricks, such as preventing two key witnesses (as to execution of the will) from being cross-examined.

One was parked in an asylum and the other was allegedly too ill to come to court.

Fourthly, Kennedy would have to sue Patience Broun if he wanted to get the £20,000 “success fee” he had got Patience to agree to when they were getting on so well.

That would be about £1.4 million today or about A$2.8 million.

However:

“The newspaper press, which had often supported him and, more generally, the notion of ‘free trade’ within the professions, distanced itself from Kennedy when it was revealed that his ‘direct contact’ with Patience Swinfen had been amorous and adulterous as well as more purely professional.”

See Moral Panic at the English Bar by Professor Wesley Pue (p.108).

Amazingly, and apparently thanks to Justice Michael Kirby, the old English Reports cases are now online so one can read Kennedy v Broun, where Kennedy sued for his money.

Wesley Pue says (p.103):

“Kennedy had not – as etiquette demanded – obtained payment of his fees in advance, for the simple reason that his client, then a disinherited widow of no independent means, was quite unable to do so… His payment thus became contingent upon success in the litigation – an arrangement which Kennedy’s opponents castigated as involving a breach of long-standing legal prohibitions on champerty and maintenance.”

Kennedy’s arguments (which have a ring of truth about them, even today) must have infuriated the court (p.104) This is the sort of thing he said (and there is plenty more):

“The alleged rule of etiquette requiring prepayment of fees was a mischievous device which simultaneously prevented elite barristers from suffering competition from their juniors and served as a barrier to impecunious would be litigant … as a matter of practical policy he insisted that [the case] raised one central question: ‘whether a suitor with small means shall have his case taken up by the lawyers, or whether he shall fall into the hands of the money-lenders, or whether he shall be denied justice altogether’ ... In any event, he argued, it was hypocritical for his opponents to criticize him for not insisting on prepayment of fees when they knew full well that the ‘rule of etiquette’ was more commonly breached than followed.”

At the end of Kennedy v Broun the jury decided in favour of Kennedy as to the facts of the £20,000 deal, but then later on the judges found as a matter of law that Kennedy couldn’t have the money.

The media of the time did not universally acclaim that verdict, with Wesley Pue saying that the journal John Bull in April 1862 …

“asserted that Kennedy was entitled to the fees Patience Swinfen had promised him and argued that other papers had used ‘a great deal of claptrap available’ to launch attacks on him”

We will never know the real reasons why Kennedy’s claim was rejected and success fees thereby definitively banned.

Kennedy had offended an awful lot of people who could (and did) draw on the huge claptrap resources of the common law to “justify” doing what had to be done to an upstart lawyer.

The claptrap has continued for about 150 years since then, with lawyer success fees now being allowed in some situations and not in others, with policies being guided by business imperatives and not ethical ones.

Goodness knows how the Queensland government is going to explain banning success fees for lobbyists, while permitting success fees for lawyers.

Hopefully, no one will ask.

Patience, incidentally, achieved an amazing fee arrangement.

It’s called a “win – no fee” deal.

It’s not very common.