A Warning to Consumers
When I was younger, I had an interaction with the police in which I thought my civil rights were violated. Being young, hopefully, and naïve, I called an attorney with what I thought was a slam dunk civil rights claim. I was surprised and taken aback when I was told that regardless of whether my civil rights were violated, I could not establish sufficient damages for the attorney to take my case. Today, I am still confident that my civil rights were violated but I also understand the attorney’s position, in fact it is one that I must share far too often.
As an attorney who practices both civil rights and consumer protection law, I often see cases where there is a violation of someone’s constitutional rights, but I cannot represent them because the costs associated with litigating the case far exceed any potential recovery. (This is particularly true when representing prisoners because the Prison Litigation Reform Act has cap on attorney fees). Consumer protection cases also frequently suffer from the same problem. As a young adult, not yet jaded by the world, I did not stop to think that the attorney might not be able to afford taking a losing case, that they might lose a house or be unable to provide for their family, I assumed that attorneys could simply see a wrong and the courts would sort out the rest. Today, I have a better understanding of the limitations of what attorneys can do and by extension, where there are gaps in protection for the average person.
Background – Attorney Compensation
There are four ways – that I’m aware of – for a plaintiff’s attorney to receive compensation for their work. As a general rule each party to a lawsuit bears their own costs and fees. Usually, this is either an hourly rate, a contingency fee, or a flat fee. An hourly rate is often out of reach for the average person, especially if the case is going to trial. Between pleadings, discovery, motion practice, and all the other parts of a case, fees can easily exceed $10,000 or $20,000. That is why so many plaintiffs choose the contingency fee approach, where the attorney gets a set percentage of any settlement or judgment – limited in Michigan to one-third – but the client does not need to pay attorneys fees if they do not win. This makes attorneys more accessible to the majority of people but only in cases where the expected recovery is sufficient to cover the costs and risks associated with litigation. In cases where the potential recovery is between $10,000 and $20,000 (or even higher), a contingency fee agreement is generally not going to be available because an attorney might spend hundreds of hours on a case just to receive a few thousand dollars. Flat fee retainers are generally reserved for straightforward and discrete tasks that an attorney can reasonably anticipate the amount of time that will be dedicated to the work. These retainers provide everyone with certainty about the total fees but are not amenable to cases where there is significant uncertainty as to the amount of time required to reach a resolution.
The final way for plaintiffs’ attorneys to be compensated is under a fee-shifting statute. These statutes change the normal rule that each party pays its own way by permitting the plaintiffs’, or prevailing, attorney to recover their fees from the other side. Examples of this include the federal civil rights statute, 42 U.S.C. § 1988, Michigan’s Elliot-Larsen Civil Rights Act, MCL 37.2801–37.2802, and Michigan’s Consumer Protection Act, MCL 445.911. The purpose of these fee-shifting statutes are to enable more people to assert their rights in court by making the cases economically viable for attorneys to litigate. Unfortunately, Michigan’s Consumer Protection Act is currently broken leaving a large group of people who are injured by companies and corporations without the ability to assert their rights.
The Broken Michigan Consumer Protection Act
In the early 2000’s the Michigan Supreme Court held that a provision in the MCPA which was intended to prevent lawsuit based on conduct specifically authorized or required by a statute or regulation meant that no regulated entity could be sued under the Act. I will give you a moment to think of any business that is not subject to some type of regulation. Done? If you’ve thought of something let me know because I have never figured out how to use the MCPA under the current interpretation. This brings me to my warning to consumers. I’ve recently seen an uptick in claims made against car dealerships in what appears to be a systemic title washing scheme where vehicles are declared a total loss by an insurance company, sold at an auto auction with a clean title, then sold at a dealership “as-is” under a clean title. In many cases just days or weeks after the vehicle is purchased, things start to go wrong and the buyer takes the vehicle to a mechanic who informs them that there is structural damage or that a major component of the vehicle needs to be replaced because it is unsafe to drive on the road. These cars often cost between $10,000 and $20,000, and other factors make the total recoverable damages less. This means that a contingency fee retainer is not something I am able to agree to, because at the end of the day, I can only do what I do if the business succeeds. I generally will not accept a client in these cases on an hourly rate because they would most likely end up losing money after everything is said and done. However, it is these people who need the protection of the legal system. People purchase cars so that they can go to work, school, shopping, and all the other things we do to live. When someone buys a vehicle that they need and it stops working but they still have to pay on the car note, it can destroy lives. If the MCPA is fixed, these cases will become viable and the Michigan consumer – who is just trying to live their life – can once again claim protection of the laws.
Currently, a case is pending before the Michigan Supreme Court seeking to overturn the prior bad precedent. I hope the Justices agree and reverse the decades old bad precedent.