Arbitrators are Paid on Percentage on Sum in Dispute, let’s do the same for Lawyers and fix the Cap

Vide Notification as on dated 23.04.2010 of Bombay High Court (Fee Payable to Arbitrators) Rules, 2018; the Fee for the Arbitrators has been fixed as stated at Rule 2. Rule 3 speaks of sharing of fees and states what to be paid in the event proceedings are terminated on account of mutual settlement of dispute by the parties. The fees stated in such event are the percentage which be paid to Arbitrators, which is as under:
1. 40% of the fees if the pleadings are complete.
2. 60% of the fees if the hearing has commenced.
3. 80% of the fees if the hearing is concluded but the award is yet to be passed
Schedule of Fees of Arbitral Tribunal
Sum in Dispute = Fees
• Claim Upto Rs. 5,00,000 = Rs. 45,000
• Claim Above Rs. 5,00,000 and upto Rs. 20,00,000 = Rs. 45,000 plus 3.5 percent of the claim amount over and above Rs. 5,00,000
• Claim Above Rs. 20,00,000 and above Rs. 1,00,00,000 = Rs. 97,500 plus 3 per cent of Claim amount over and above Rs. 20,00,000
• Claim above Rs. 1,00,00,000 and over and above Rs. 10,00,00,000 = Rs. 3,37,500 plus 1 per cent of the Claim amount over and above Rs. 1,00,00,000
• Claim above Rs. 10,00,00,000 and upto Rs. 20,00,00,000 = Rs. 12,37,500 plus 0.75 per cent of the claim amount over and above Rs. 10,00,00,000
• Claim above Rs. 20,00,00,000 = Rs. 19,87,500 plus 0.5 per cent of the Claim amount over and above Rs. 20,00,00,000 with a ceiling of Rs. 30,00,000
Note: In the event, the arbitral tribunal is a sole arbitrator; he shall be entitled to an additional amount of twenty-five percent on the fee as per the Table set out above.
The reading of the above shows that today the Arbitrators are being on percentage basis and the percentage if calculated come near to around 10% of the claim amount to be paid by each Party in equal ratio.
There is no doubt that Legal Profession has become too costly and in fact such is the fee charged that for MSME/ Start-ups/Individuals/Middle Class People/Poor People it is almost impossible to approach Court for any remedy and this is totally against the concept of legal services at least in India and hence there shall be a law to regular the Legal Fees and there has been a debate going around since a long time but yet is pending.
Why not Lawyer Fee be kept in the same manner as stated above?
In India, a Lawyer charging fee on percentage basis is illegal and infact the Supreme Court in Sunitha Vs State of Telangana & Anr made a scathing attack on high fees being charged by Legal Professionals and categorically held that Advocate’s fee based on a percentage of the result of the litigation was illegal (Dated: 05.12.2017).
The Supreme Court have further stated that it favours a law to check the growing commercialization of the legal profession and to “prescribe floor and ceiling in fees” to ensure the poor were not nudged out of the justice delivery system. Supreme Court has also called the Centre to regular Legal Profession and to Cap Legal Fees.
From the reading of the above paras, the conclusion be drawn that Supreme Court wants to cap Legal fees and if so, then why not in the manner similar to what has been done to Arbitrator (percentage and sum can be taken care by Centre). Infact, by allowing the Third Party Funding, indirectly the Supreme Court has allowed percentage fee basis legal fee. Third party Funding is nothing but Litigation Funding. Litigation funding, the term means the third party who will fund the case for Aggrieved Party and this is very much a common factor in foreign litigation. However, this term is not common in India, and in fact, there are certain sections who have started this funding but there are many criteria to understand the concept of Litigation Funding/Third Party Funding as executing any agreement without understanding will lead to disaster in terms of monetary understanding and sharing. Litigation funding is also called as Third-Party Funding. In 2015, the Supreme Court in “Bar Council of India v. AK Balaji”, clarified the legal permissibility of Third-Party Funding in litigation and observed that “There appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.”. As on date, there is no legislative instrument that regulates such funding. However, the (Indian) Code of Civil Procedure, 1908 as amended by a few Indian states including Maharashtra, Karnataka, Gujarat, and Madhya Pradesh, expressly acknowledges the role of the financier of litigation costs of a plaintiff and sets out the situations when such financier may be made a party to the proceedings. TPF has also received favorable reference in the report of the High-Level Committee to review the Institutionalization of Arbitration Mechanism in India (2017). The Bar Council of India Rules does not explicitly prohibit litigation funding by advocates. However, it has been noted in one of the cases that “a conjoint reading of Rule 18, Rule 20, Rule 21 and Rule 22 indicates that advocates in India cannot fund the litigation on behalf of their clients.
In my view, instead of opening a market for Litigation Funding which in any case will grow if not now then later but surely it will and making the percentage fee be paid by clients indirectly, let’s make the Lawyers Fee cap in the similar manner as being done for Arbitrators. There is nothing illegal in the same as this will ensure win-win situation to all Litigant Parties