A partial solution proposed by Michael Johnson is that plaintiffs are charged a registration fee in advance for contingent fee
lawsuits, even though this could be viewed as a contradiction in terms.
However, under the contingent fee
agreements, the expert is accountable to no one.
The statute may prove useful in dealing with some contingent fee
agents in that it prohibits some of the more offensive tactics of collection agencies.
The fundamental error of the trial lawyers who espouse percentage contingent attorney fees without stint, is their indulgence in the assumption that free market economics and a "sacred" right of contract invest them with the power, right, or privilege to charge percentage contingent fees
to whatever extent the "market" will bear.
Most of the shortcomings with contingent fee
audits are also present where third-party auditors are paid on an "hourly basis".
With a contingent fee
arrangement, there is generally no immediate "hit" or expense to a business unit's or tax department's budget for the incremental cost of performing the study.
27(b) (2), does allow a contingent fee
arrangement between the practitioner and taxpayer in certain situations.
Boards need to be prepared to address concerned shareholders, who in some cases worry that the contingent fees
paid to investment banks compromise the financial institutions' independence and objectivity.
Commissions and contingent fees
are acceptable in specific circumstances, but referral fees are not acceptable unless the CPA is paying a fee for obtaining clients in conjunction with the purchase of an accounting practice.
Despite the attractive features of contingent fee
arrangements, some clients hesitate to accept them.
The bill included language allowing attorneys to deduct the out-of-pocket costs related to contingent fee
cases as ordinary and necessary business expenses under Internal Revenue Code [section] 162.
A natural question--which we can address using our model is then why the lawyer's contingent fee
is not one-half of the award, nor two-thirds, but one-third.