Home >Opinion >Online-views >Making a case for using CFAs
Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

Making a case for using CFAs

In a country where access to justice is dependent on claimants' economic resources, the benefits of CFAs might greatly outweigh the disadvantages

A fascinating article in The New York Times last week profiled Robert Bilott, a lawyer at a Cincinnati-based corporate law firm, who “became DuPont’s worst nightmare", according to the article’s headline. In short, Bilott works in the environmental law practice of law firm Taft Stettinius & Hollister, and had been defending big chemical companies and helping them comply with environmental norms.

Then, in 1999, Bilott began representing a farmer in West Virginia, in a town that was for all intents and purposes owned by DuPont, which operated a giant chemicals plant there. The farmer’s cows all died horribly, which later, after many years of investigation, secret documents and court orders, emerged was the result of poisoning of the local water table that had been polluted with tonnes of dumped PFOA (perflurooctanoic acid), a highly toxic non-degradable chemical used in manufacturing the non-stick Teflon material at DuPont’s nearby factory.

Trouble is, despite internal DuPont research having allegedly shown its harmful effects for decades, publicly the company had continued to deny and bitterly fight all claims by those allegedly poisoned by PFOA.

According to Bilott, every single person in the US currently has some PFOA in their bloodstream due to tainted water supplies, and the chemical has been detected in polar bears in Alaska, and fish and birds half an ocean away.

So far, so Erin Brockovich.

But for me, an important takeaway here other than the brazenness of corporate denials and secrecy that is reminiscent of Big Tobacco denying smoking-cancer links for decades, is that this happened in the US, a country that is supposedly less corrupt than India, according to most reports.

It’s clear that in the case of DuPont (as in the case of Wall Street, Big Pharma and dangerous drugs, the oil industry with Deepwater Horizon, and countless other dangerous industries), there has been one systemic failure after another with the regulatory system co-opted as a pliant extension of corporate America.

In India, looking at haphazard regulation until now on something as straightforward as air pollution, one shudders to think about the real state of river water supplies and other places in which industry no doubt disposes of its toxic waste.

The only real source of hope in the DuPont case is the US legal system and the article’s protagonist lawyer, because the US is such that there can actually be profit made for a lawyer willing to chase big companies hurting consumers or the environment.

The US may often be derided as litigious to a ridiculous extent, with courts and juries awarding multimillion dollar damages and lawyers getting similar amounts, but it can act as a necessary check and balance on corporate greed and be a strong driver in encouraging compliance with environmental laws.

If there are no potentially dire financial consequences for a company that pollutes, there is little reason for most companies not to pollute.

In India, the legal system can do very little. Apart from rampant judicial delays, the most one can hope in the case of environmental pollution, such as in the Bhopal gas disaster or countless others, is that a few publicly minded lawyers donate their time pro bono for years to go after the corporates, which are always better funded with nearly infinite lawyer time at their disposal.

The main tool available to lawyers is the venerable public interest litigation (PIL), to nudge government departments to do their job properly and occasionally obtain a small amount of damages, or approaching the National Green Tribunal (NGT).

Notwithstanding the slow pace of cases, contingency fee arrangements (CFAs) would be useful in such situations. In CFAs, a lawyer agrees not to charge any fees at all, unless the case is won, in which case the lawyer can get a percentage of the damages awarded.

Together with class actions, where hundreds or thousands of plaintiffs get together and sue together as one large group, filing civil suits for damages against errant companies could become lucrative work for lawyers.

Unfortunately, CFAs are forbidden under the Indian Advocates Act, partly due to the antiquated nature of legal regulations and the fear of ambulance-chasing lawyers clogging up the courts further.

But the benefits might greatly outweigh the disadvantages. In a country where access to justice is hugely dependent on the economic resources available to claimants, and where those suffering most from environmental harm tend to be the poor living in rural areas, the only way to ever allow justice to provide remedies in such cases would be via CFAs and a strong system of class action.

The closest thing to class action in India is the venerable PIL, though that is a blunt instrument that some courts frown upon and which usually does not yield payment of major damages.

Even so, CFAs and class action are far from a panacea even in the US when faced with corporate might.

Despite potentially sitting on one of the biggest class action lawsuits in US history, Bilott does not quite emerge as a winner. He and his firm made a worthwhile $21.7 million in contingency fees for three years’ work in the first $70 million class action settlement with DuPont in 2004.

But since then, after waiting for seven years for the results of scientific studies proving that there was a “probable link" between PFOA and certain cancers and diseases and launching a class action of 3,535 plaintiffs against DuPont, the company has fought every individual claim relating to PFOA bitterly and may continue to do so.

Bilott emerges as the tragic hero of the piece, after a possible nervous breakdown and pressures within the firm to generate revenues, and after other clients drop the firm for going so aggressively after DuPont, a giant of the industry.

Kian Ganz is publishing editor at Legally India.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
My Reads Redeem a Gift Card Logout