Hacker News Reader

Comment by thomascgalvin | Hacker News Reader

The argument is that the total amount of the settlement is important as a disincentive to corporations to engage in negligent behavior, and that the disproportionate amount of money that goes towards the attorneys is necessary to convince said attorneys to take up such cases.

Of course, one could also argue that this has just created a new form of venture lawyering, with attorneys who give zero shits about their clients chasing compliance violations rather than ambulances, and businesses baking these lawsuits into their profitability calculations.

View on HN

Due to health care inequalities people are talking about single payer where the government is the only payer.

However, an even bigger problem is legal inequalities. Rich people can afford top legal representation and poor people cannot. We should instead have single payer legal representation. Lawyers are required to charge a standard fee and are paid by the government for their work. They are not allowed to accept payments in addition to the standard government payment or to take contingency fees.

Doing this would ensure that the poor in America are not disadvantaged due to the rich having better lawyers.

I don't know why more people don't say this. I agree 1000%. This should absolutely be the case. Why should anyone have a lower probability of winning a lawsuit just because they're poor?

Because no one has yet come up with a better system that works.

If there exists differences in skill, then there exists arbitrage opportunity. How one can prevent that arbitrage opportunity from being used in order to keep things “fair”, I do not know and have not heard of any compelling ideas.

Isn't there already quite a few lawyers that will take a case on contingency? Usually this is based on whether the client has a legitimate/strong case, and in that way is self regulating. With healthcare there's no incentive to take on a case for free because there's no payout for a positive outcome.

That'd be the end of any chance of suing the government. A large number of Trump's proposed policies (eg. the Muslim ban) would've passed through without resistance because no lawyer is going to sue the organization that signs their paychecks.

We already have the concept of separation of powers. Judges are paid by the government, but issue injunctions agains and rule against the government all the time. We make sure that this is under the purview of the judiciary.

One of the ideas I heard about recently that I think could do well in helping address the issue is "Investable Lawsuits". This would allow potential lawsuits to crowdsource lawyer fees and get returns on this investment out of the winnings. While this might not help address the cost of representation (although it might as lawyers would work for a smaller upfront fee then a larger take of the winning if it was done pro bono), but it would help the lower and middle class individuals take on corporations and the rich.

There's quite a lot about this that I like, but I think we need a way to handle investigations. Let's say I think I'm innocent and that a blood test might prove it. Who decides whether I can order one done? What if the government decides that it's not a valid expense?

Similarly, can I have expert testimony at my trial? Can everybody?

Standard fee is a good idea. It works in Germany. Another idea is to have a portion of legal fees go to offering counsel. If you spend five million on lawyers, I get two and a half million for my lawyers.

Really reduces the incentive for overspending the opposing party and encourages cheap quick settlements.

Two problems, first is this would either end all class-action lawsuits, or spawn way too many of them. If a lawyer is guaranteed an hourly rate to work any case, then why wouldn't they? Currently, there's a natural limit on class-actions based on the validity (chance of winning) of the case. Since most people can't pay for the hundreds (or thousands) of hours of work necessary, they're all on contingency. If contingency is no longer possible, then how would class-actions be regulated?

Second issue is that there is a huge variance in the skill of lawyers and that skill has huge impacts on the outcome of cases. It'd be just like fixing the pay of software engineers in terms of results.

> However, an even bigger problem is Smart Phone inequalities. Rich people can afford top iPhones and poor people cannot. We should instead have single payer phone system. OEMs are required to charge a standard fee and are paid by the government for their work. They are not allowed to accept payments in addition to the standard government payment or to take contingency fees.

But there is so many issues with the government taking on _more_ responsibility in our lives (like they usually do things worse). Not to mention in US, we are guaranteed right to lawyer in defense, for equality, and those lawyers make way less than private lawyers, so presumable there is a difference in quality (or something else?). Additionally, its common to see legal fees part of law suits like this zappos suit), so lawyers can work for poor people because they get paid when they win a suit, which is their job anyways.

    Lawyers are required to charge a standard fee and 
    are paid by the government for their work.

Your goal is noble and I agree with it, but surely we need to recognize that some legal cases require orders of magnitude more effort and resources than others. I don't know how a standard fee could possibly cover this, even if we had different standard fees for different classes of crime.

Just like we do with doctors and Medicare. Treating someone for a cold requires much less resources than doing a liver transplant. They submit a detailed invoice stating all the work they did and the justification for it. Each item of work has a standard reimbursement rate.

It seems like this creates a large incentive to push externalities onto millions of voiceless users and then pay off a handful of lawyers to avoid the actual court case.

If you cost 300M people each $20 worth of time and aggravation so that you can make $5B, your net effect on the economy is a cool negative $1B. However, no individual person would ever find it worthwhile to file a lawsuit for $20. That's why we invented class action lawsuits, but if the company settles for say $300M (that's 5 cents on the dollar), 1/3 of that goes to the legal team and 2/3 goes to the class members (in the form of free credit monitoring or a 10%-off coupon or something), and a legal team of 10 splits the legal fees, that's F-U money for every lawyer involved, under a dollar for each class members, and a profit of $4.7B for the company. The transaction is value-destroying for the economy as a whole, but happens regardless because it fits each individual participants' incentives. All because the legal system cannot scale to the harms that may be inflicted upon members of the public.

Arguably, this is the system we're living in now.

I agree with this.

Suits do not always make the suing party whole, for a number of reasons, yet still have value in enforcing law.

Additionally, many arrangements (particularly class action) have attorneys assuming the entire financial risk of the a loss, and it's reasonable for them to be paid for this service.

---

That said...we're not taking about 30% to the plaintiff, or even 5%. It's 1.4%!!!

It's like saying Facebook founders get a combined 1.4% of the company.

The justice system is really in all ways more biased towards dealing out punishment than making aggrieved parties whole.

Although, to be fair, no harm or negligence has actually been demonstrated in the case of this suit. Which is probably why the settlement amount is so low. I can hardly imagine these lawyers actually made their typical rates getting paid only $1.5M for a matter that took seven years to resolve. From the outside this looks more like a situation where Zappos said, "fine, we'll give you a token amount to go away."

It's worse than that. The actual award to the class is a 10% off coupon. So, to get compensation, a class member would need to send Zappos money.

Citizens should not need to spend millions of their own dollars to “enforce the law”

I've never heard the term "venture lawyering" before but it seems apt.

It reminds me of somebody who lawyered up after being denied disability benefits. The lawyer took the case if the client signed over 25% of the payment in perpetuity.

On one hand, yes, they're helping someone resolve the issue without funds to pay for it. But I'm still bothered by the fact the lawyer is either a) cutting deeply into the funds of somebody who needs it because of a true disability or b) is helping someone game the system if they don't need it.

There are companies whose business model is funding litigating in exchange for a percentage of the settlement / judgement.

EG: https://www.vanityfair.com/news/2016/08/peter-thiels-foundat...

The attorneys have also been working on this case since 2012. Paying the salaries of a law firm (including paralegals, and through any number of appeals up to the Supreme Court) over the course of 7 years is going to be really, really, expensive.

In light of that, $1.5m is probably an overall loss for the law firm.

It's really expensive if you have to pay the lawyers their regular rates. But their costs are a small fraction of that. You should not compare 'retail' with 'house'.

It's similar to a car dealership trading in a car that is 'uneconomical to repair' on a new vehicle. Then they repair it anyway and sell it. Because shop costs and parts costs for them are not the same as shop costs and parts costs for you.

How about we compare it with software development (knowledge work) instead of retail or car mechanics?

One good software dev will cost a company almost a quarter of a million dollars every year. More if in NY or SF. 6 years of one knowledge worker’s salary would run the bill over the $1.5m. 7 years, with paralegals, expenses (for physically attending the various appeals), and a dozen other small expenses I’d be shocked if their actual costs were under $1.5m.

The cost of programmers in a very limited area of the United States is not sufficient to define the cost of software development in general.

Paralegals are essentially slave laborers who get billed out at huge rates but who take home a pittance in the hope of making partner one day. The legal profession is not what it's cracked up to be unless you make partner or go into business for yourself.

My cost of a knowledge worker is based out of Ames, IA. Not precisely a hotbed of 200,000 salaries. But it is indicative of a professional and the indirect costs associated with employing them (payroll taxes, health benefits, bonuses, etc).

It's 7 years, and a minimum of 3 in-person court visits, plus any number of briefs, letters, preparation, and communicating with the plaintiffs (only some of this work is done by the paralegals; all the paralegal's work still goes through a lawyer). Perhaps you can be a bit more explicit in how you think all that effort wouldn't cost the firm millions of dollars?

>...Paying the salaries of a law firm (including paralegals, and through any number of appeals up to the Supreme Court) over the course of 7 years is going to be really, really, expensive.

According to the document:

"...Both sides agreed to a settlement to avoid the uncertainty and cost of litigation, ..."

>...In light of that, $1.5m is probably an overall loss for the law firm.

I don't think there is any evidence that this is an overall loss for the firm.

Are our nation's courts + lawyers the best risk management managers out there? There are other people in government that could be doing this work (the people at the FAA or FDA spring to mind).

> venture lawyering

We ran into this at a previous job. The firm got sued by a group of attorneys, who between them didn't have a single plaintiff. We settled out of court, which means that while they didn't get the windfall they wanted, they still got a decent payday that more than paid their filing costs.

An even more convincing case would be if companies screwing with their customers would have to pay MUCH more, and as a consequence plaintiffs would get a bit more $$ each.

And in this way companies will be made to comply without the expenditure of government resources.

Fantastic.

Yes, the Prenda Law business model.

You're leaving out the fact that the attorneys take these cases on contingency and front the costs.

I think a better solution is for consumers to simply stop giving so much information to companies. If you are selling apparel/shoes etc then the only information you need from me is my shipping information. This is why I like cryptocurrencies. When you pay, all of your personal information is concealed.

Reply on news.ycombinator.com