Sarwal said he has nothing against contingency fees, and indeed many corporations use them in high-stakes litigation.

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Then why are contingency fees banned in criminal cases, and with lawyers representing clients on their taxes?

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IRS, said Alabama plaintiffs, unlike those in other states, could exclude their attorneys' contingency fees before reporting their winnings.

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They were represented by a fractious coalition of American and Ecuadoran lawyers, most of whom were working for contingency fees.

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In Australia and the United Kingdom, loser-pays rules and prohibitions on contingency fees created a gap in the availability of legal services.

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And while contingency fees do little to incentivize lawyers to pursue cases that would result in important injunctive relief without a significant monetary payment (such as certain varieties of public interest cases), third-party financing is no better solution.

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In this suit, Northern plaintiffs allege they weren't told that when they signed on with local asbestos lawyers, their cases were actually handed off to firms in Texas, Mississippi and North Carolina under agreements that brought the local attorneys only 2.5% to 5% of any contingency fees--typically 40% of a settlement.

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The law firms typically agree to take the cases on a contingency basis that means no fees up front but a huge share (30% or more) of any settlement or jury verdict.

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Even considering fees to set it up and a contingency fund to fight the IRS if need be over valuation, the savings can be huge.

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