lawyer

#Hong Kong - s Law Society to study idea of allowing victorious lawyers to charge more

Law Society president Stephen Hung. Photo: Felix Wong

The president of the Law Society has thrown his weight behind a controversial plan to study a charging model that will enable lawyers to earn extra fees when they win cases in court, and possibly make law firms more competitive.

Stephen Hung Wan-shun said the solicitors' body would gauge members' views on the idea. "This is different from the 'no win, no fees' mechanism," Hung stressed.

He was referring to a model banned in the city under the law of champerty - which prevents a person with no interest in litigation from offering help or encouragement to an involved party and sharing in the proceeds of a lawsuit or settlement.

The conditional fee model, Hung said, could allow lawyers to set out in a contract how much they would be entitled to in case of a court victory, though the amount should not be in proportion to the rewards due to clients.

Nor should the mechanism apply to personal injury lawsuits, he said. But it might be used in cases involving the winding up of companies and the rights of minority shareholders.

Hung said the question of litigation funding needed discussion given the rise of private funding in jurisdictions such as Britain and the United States. In that model, a third party puts up the money for a lawsuit in return for a cut of the proceeds.

In this month's edition of Hong Kong Lawyer magazine, Hung wrote: "With the growing prevalence of private litigation funding in other jurisdictions, there is concern that Hong Kong may lose out on its competitiveness as a venue for international dispute resolution and arbitration to those common law jurisdictions that allow litigation funding."

Eric Cheung Tat-ming, a principal law lecturer at the University of Hong Kong, agreed different funding models could be studied as the issues were not clear-cut.

But Cheung noted the British practice was introduced in response to a scaling back of legal aid funding, whereas in Hong Kong, "the service is better than in most other jurisdictions".

The idea came up for discussion recently on the Legislative Council's panel on administration of justice and legal services, but the insurance sector registered strong opposition, fearing a surge of officious intermeddling - or what the Americans call "ambulance chasing".

In 2007, the government-appointed Law Reform Commission studied the idea and recommended the creation of a conditional legal aid fund. This would allocate cases to private lawyers, finance the litigation and pay the opponent's legal costs should the suit be defeated. But the government rejected the proposal.

Then in 2013, the commission started studying third-party funding in arbitration. It has not yet reached any conclusion.