Jerold S. Auerbach, Unequal Justice A Stratified Profession 44-50 (1970)
The class and ethnic biases that appeared in the [1908 ABA] Canons [of Professional Ethics] were nowhere more evident than in the special treatment reserved for contingent fees. Few other issues cut so deeply into social mores and professional concerns in an urban industrial age. An alarming proliferation of work and transportation accidents, most often borne by those least able to afford lawyers' fees, generated human tragedies which a profit economy and its legal doctrines exacerbated. Accident victims - and the surviving members of their families - were compelled to bear the full burden for the risks inherent in dangerous work. Corporate profit was the primary social value. Legal doctrine impeded the opportunity of an accident victim to recover damages; furthermore, legal services were available only to those who could afford to purchase them.
The consequences were starkly exposed in Crystal Eastman's study Work-Accidents and the Law, conducted for the Russell Sage Foundation and published in 1910 as part of the landmark Pittsburgh Survey. In more than half of all work-accident fatalities in Allegheny County, widows and children bore the entire income loss. In fewer than one-third of these cases did an employer pay as much as five hundred dollars - the equivalent of a single year's income for the lowest-paid workers. Similarly, more than half of all injured workers received no compensation; only 5 percent were fully compensated for their lost working time while disabled. The result, Eastman concluded, was "not hardship alone, but hardship an outcome of injustice." Hardship was evident; injustice was buried in a thicket of legal doctrine that exonerated an employer from liability even when he was demonstrably at fault. From a well-stocked arsenal of defense weapons even the negligent employer might claim that his maimed or dead employee was contributorily negligent, or that he had assumed the risk, or that a co-worker was at fault. Liability for fault retained its doctrinal potency until 1910, when New York enacted the first workman's compensation law (solely for dangerous occupations), which the state court of appeals overturned as being "plainly revolutionary." Not until well into the twentieth century in most jurisdictions could personal injury victims bypass doctrinal impediments to recovery - assuming they could afford the cost of counsel.
Nothing plunged the professional elite deeper into despair than contingent fees and the proliferation of negligence lawyers whose practice depended upon them. Rather than cure the doctrinal disease, and adversely affect their corporate clients, bar leaders and authors of treatises on legal ethics preferred to denounce the symptoms: contingent fees and ambulance chasers. The legality of the contingent fee - assumed to be "beyond legitimate controversy" by the Supreme Court in 1877 - was unquestioned. Its morality was another matter. Sharswood had insisted that it created a "new and dangerous relation" between client and lawyer, deposing the latter from his position as officer of the court and reducing him to a partner in the claim who was "tempted to make success, at all hazards and by all means, the sole end of his exertions." The fee, by encouraging litigation, transformed law into a "lottery" and lawyers into "higglers" with their clients. By the early twentieth century the evils attributed to the contingent fee included declining professional spirit, loss of professional independence, commercialization, and homogenization of lawyers into "one indistinguishable crowd" - with a commensurate diminution in status for elite practitioners tainted by association with their ambulance-chasing brethren.
Consequently when bar associations considered the adoption of canons of ethics the propriety of contingent fees occupied a conspicuous place in their deliberations. Members of the American Bar Association heard a virtually unprecedented floor debate over the contingent fee canon. In its original version the canon permitted such fees but cited their "many abuses" as justification for court supervision. Thomas J. Walsh, the future Progressive senator from Montana, vigorously protested against such efforts to distribute professional status according to a lawyer's willingness to contract for contingent fees. No self-respecting attorney, he suggested, would tolerate judicial scrutiny of his fee schedules. Yet the proposed canon imposed precisely this requirement upon negligence lawyers. Only contingent fees, Walsh observed, enabled the victims of work and transportation accidents - especially indigent immigrants - to obtain some measure of economic recovery. "It is altogether quixotic," he added, "to imagine that members of the Bar of high standing are going to come forward to offer gratuitously to prosecute such claims." Walsh condemned the double standard which subjected the fees of negligence lawyers to court scrutiny but ignored the attorney who capitalized upon his social contracts to procure far more lucrative corporate retainers.
To most ABA members, however, such distinctions were appropriate. Court supervision was justified on behalf of the personal injury victim, who presumably needed protection from his attorney more than he needed monetary damages for his injury. Indeed the ethics committee, prodded by expressions of dissatisfaction with the broad tolerance for contingent fees under the proposed canon, offered a more restrictive substitute which the members adopted. Contingent fees, it stated, "where sanctioned by law, should be under the supervision of the Court in order that clients may be protected from unjust charges." The critical change was to couple judicial scrutiny with a states-rights position that limited ABA acquiescence to those jurisdictions that permitted contingent-fee arrangements. In one of these, Massachusetts, both the state and Boston bar associations adopted a more stringent provision than the ABA canon. Lawyers were urged not to stipulate a fixed percentage of the recovery as their fee, and they were advised to accept contingent fees only when the client had a meritorious cause of action. The promotion of "groundless and vexation suits" was condemned - a veiled reference to one class of lawyers and the type of litigation they stirred. Any social value of stirring litigation was slighted: that if a lawyer took action, legitimate claims might be pressed; that legal services would be provided to the needy; and that the assertion of rights would be channeled into the legal process. The provision of legal services to a working-class clientele was distinctly secondary to concern for the public image of the legal profession and for corporate profits.
Ambulance chasers became the scapegoats in a heterogeneous profession increasingly populated by foreign-born lawyers. As Boston attorney Reginald Heber Smith concluded, the contingent fee system might be the logical outcome of the existing maldistribution of legal services but it nonetheless constituted "the great blot on the history of the American Bar" - primarily because the lure of money attracted "undesirable persons" to the profession. Years later the problem still would be perceived as personal rather than systemic, the responsibility of mercenary lawyers rather than the result of institutional inequity. In 1929, after a lengthy, publicized investigation in New York into the evils of ambulance chasing, resulting in recommendations of disciplinary proceedings against seventy-four lawyers, the chief counsel pointedly observed that some attorneys who had testified "could not speak the King's English correctly. . . . These men by character, by background, by environment, by education were unfitted to be lawyers." The only remedy, he suggested, was a character examination, prior to law-school admission, to eliminate those who lacked proper antecedents, home environment, education, and social contacts. If such an examination created a legal aristocracy, he told applauding members of the New York State Bar Association, so be it.
By attributing responsibility to inferior character, lawyers deflected criticism from a social system which accepted uncompensated injury and death to a substantial number of workers as a tolerable consequence of economic growth and private profit. Once the consequences finally were seen as intolerable, maximum and minimum solutions were available: alteration of legal doctrine and provision of legal services. The doctrinal approach was far-reaching, and therefore belated. As an interim measure it was easier to permit (and criticize) contingent fees than to alter assumptions that sustained profits. But the costs were always high: plaintiffs sacrificed a large portion of their recovery; negligence lawyers paid with their professional stature.
"Ambulance chasing" was never precisely defined. As a term of art it ostracized plaintiffs' lawyers who, representing outsiders to the economic system, solicited certain types of business. Once fee-hungry ambulance chasers were isolated, they could be excluded from professional respectability by a series of discriminatory ethical judgments. Their methods of solicitation were condemned, but nothing was said about company claim agent who visited hospitalized workers to urge a quick and inexpensive settlement. Their fees were isolated for judicial scrutiny, but larger corporate retainers were ignored by professional associations. Their pecuniary interest in the outcome of litigation was criticized, but the pecuniary interest of most lawyers in their cases (even when not ascertainable in advance) was disregarded. ... Commercialization, speculation, solicitation, and excessive litigation were decried, but there was no mention of the contribution of contingent fees to the enforcement of legitimate claims otherwise denied by the victim's poverty. Few lawyers complained about the Hobson's choice imposed upon an accident victim, who could either relinquish all hopes of recovery or merely relinquish (to his attorney) one-third of what he might recover if he overcame doctrinal impediments. Aggressive solicitation of personal injury litigation through a contingent fee arrangement doubtlessly produced its share of abuses. But when the sole alternative was the waiver of legitimate claims, one is compelled to agree with the conclusion that "the social advantage seems clearly on the side of the contingent fee."