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JURIST's Lithuania Correspondent is Tadas Klimas, Dean, Vytautas Magnus University School of Law, Kaunas.
New Lithuanian Law on Contingency Fees

[Kaunas; Special to JURIST] On November 23, 1999, the Parliament of the Republic of Lithuania passed a law allowing contingency fees by a vote of 57 in favor, 3 against, and 23 abstaining.

The law, which went into effect on December 8, 1999, provides that an attorney can enter into a contingency fee arrangement with a client for a fee of up to one-third of any eventual award. It is limited to personal injury cases. The law is rather similar to the original law on contingency fees enacted in England.

The purpose of the law was to increase the public's access to the courts, and especially to enhance the chances that a person who has been hurt by someone's negligence would be able to recover compensation.

Lithuania's legal system, emerging from the shadow of Soviet law, does not have a well developed civil (private) law system which would act to recompense individuals for torts committed against them. There really was no civil law nor, really, were there private legal relations in the Soviet state. Proponents of the legislation successfully argued in committee that the change couldn't much hurt the present situation and could possibly serve to lessen injustice. The news media in Lithuania regularly report on alleged gross negligence on the part of physicians, and the general opinion seems to be that these injuries are not compensated properly.

Although official government offices did not anticipate any collision of the proposed measure with European Union law, opposition to the measure came from both the Council of Barristers (Advokats) and the Ministry of Justice. Both groups testified during the committee hearings that themeasure is in conflict with EU law (it isn't). A representative of the Ministry of Justice denied that the English allow contingency fees.

Other arguments against the contingency fee law were presented in the name of justice. It didn't seem right to opponents that a person should lose a third of his recovery to fees, and they felt that someone other than the injured person should bear that cost. They were, however, unable to specify who that other should be. Moreover, it was pointed out that under the existing system a person can contract to pay an hourly fee to an attorney, which is due and payable whether the attorney wins or loses. These latter arguments carried the day with the parliament members.

Another argument, advanced during expert testimony, was also telling. A well-respected member of a think-tank in Lithuania's capital, Vilnius, advanced the proposition that contingency fees are entered into all the time, but that the barristers are not reporting them as income (taking the payments under the table as it were). Therefore, he argued the measure should allow advokats (barristers) to enter into such agreements formally, resulting in an increase of the amount of taxes paid.

Having lived in the USA for many years, it was strange and rather scary to see an unelected representative of a ministry dare to oppose a measure so stridently, to flat out deny its appropriateness. One can argue back and forth about the contingency fee's merits. It is usurpation, however, of the lawgiver's role for an employee of an executive branch to act in the manner I witnessed. Unfortunately, it was not the exception, but the rule. Legal reform here advances at a creeping pace, slouching its way with regret.

The measure was initiated by the Chairman of the Parliament, Professor Vytautas Landsbergis. It was conceived of and written by myself in my capacity as then Acting Chief Legal Counsel to the Chairman of the Parliament.

Tadas Klimas
JURIST Lithuania Correspondent
Vytautas Magnus University School of Law

October 16, 2000


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