In recent months, Uber has quietly pledged millions of dollars in support of a somewhat obscure ballot measure in Nevada. A New York Times report last week revealed that the ridesharing company has invested $5 million into Nevadans for Fair Recovery, a political action committee created by Uber—and the driving force behind the ballot campaign.
The proposed measure would impose a 20% cap on contingency fees in civil cases, limiting how much attorneys can earn when they represent plaintiffs who would otherwise be unable to afford legal representation. When lawyers accept a client on a contingency basis—an arrangement that is most common in personal injury or employment cases—they typically front the legal expenses; if they win the case, they receive a percentage of the recovered damages.
“A contingency fee is access to justice for normal workers and consumers and injured victims,” says employment attorney Cliff Palefsky. “I don’t know anyone—other than a corporation—who can actually afford to pay a lawyer hourly.”
This might seem like an unusual position for Uber to stake out. The company has framed the ballot measure as a win for plaintiffs, since it would curtail attorneys’ fees. But the Times report, along with plaintiffs’ attorneys who have spoken out against the proposal, have argued it is more likely a strategy to reduce the number of lawsuits and legal claims Uber is facing over driver misconduct. (Multiple cases involve sexual assault allegations from passengers in Nevada.)
Like many other tech companies, Uber faced public pressure over its forced arbitration policy in the aftermath of the #MeToo movement—and in light of its own culture issues—and in 2018, the company stopped using mandatory arbitration to address claims of sexual misconduct, whether from employees, users, or drivers. Since dropping the practice, Uber has faced hundreds of lawsuits from riders alleging that they were sexually assaulted by drivers.
Palefsky, who has been a vocal advocate for ending mandatory arbitration, sees a clear link between this move and the fact that Uber can no longer rely on arbitration to privately address all legal claims. The arbitration process usually favors companies—not just because it happens behind closed doors, but also because employers typically choose the arbitrator. “It is dishonest,” Palefsky says of Uber’s rationale for pursuing this ballot proposal. “It has absolutely nothing to do with benefitting victims or getting them more money. It’s a naked attempt to make it harder for people to get attorneys.” A group of plaintiffs’ lawyers has also characterized the ballot measure as “misleading” and is fighting it through a lawsuit.
In a statement to Fast Company, an Uber spokesperson denied that the ballot measure was intended to make it more difficult for plaintiffs to bring lawsuits against the company. “This measure does not limit Uber’s exposure to lawsuits, period, and it’s simply false to suggest otherwise. Uber is committed to doing the right thing, which is why we were the first in the industry to eliminate forced arbitration for survivors of sexual assault, making it easier for them to take us to court. The ballot initiative is consistent with those goals by ensuring Nevada plaintiff’s are not taken advantage of by TV attorneys and get 80% of all net settlements and awards.” (Several companies eliminated forced arbitration for sexual misconduct claims around the same time as Uber, and Microsoft was the first major tech company to do so in late 2017.)
The proposal will need 100,000 signatures from residents to get on the ballot, which Uber claims will be secured within the month. If the measure passes, it could help some plaintiffs take home a greater percentage of their winnings. But it could also make it harder for them to bring lawsuits in the first place—and across all kinds of civil cases, particularly those involving personal injury or employment issues. “Trying to pass something of this sort extends way beyond sexual assault cases,” Palefsky says. “[Uber is] basically saying: ‘We can spend as much as we want on our lawyers, but you can’t retain quality counsel.’”
It can already be difficult for workers and other plaintiffs to find a lawyer who will take their case on a contingency basis. In cases that involve employment discrimination, for example, the potential payout can be relatively low, since federal law caps damages at $300,000 even for large companies. (The general counsel at the Equal Employment Opportunity Commission has criticized this cap and called it “outdated.”)
If contingency fees are capped at 20%—well below the 33-40% cut that is typical in a state like Nevada—lawyers may not be able to represent certain types of plaintiffs. “Picture a sexual harassment case that’s only worth $30,000 to $40,000,” Palefsky says. “A lawyer is not going to be able to take that case and get started against a big firm.”
There is limited precedent for such a sweeping contingency cap at the state level. While the state of Oklahoma does limit contingency fees, the cap is much higher, at 50%. Many states have introduced caps on contingency fees in medical malpractice cases, though they often use a sliding scale based on the scope of damages. (At the federal level, the Federal Tort Claims Act limits contingency fees to 20-25%, but only for personal injury cases that involve a federal employee.)
Some lawyers have suggested that Nevada might be a testing ground for this ballot measure, to see if the campaign succeeds and could be replicated in other states. In fact, a similar initiative to cap contingency fees at 20% was proposed in California in 2021 but failed to make it onto the ballot; back in 1996, a similar effort to curb contingency fees in the state got on the ballot but was ultimately rejected by voters. Voters in Nevada have already indicated that they are amenable to Uber’s argument that the proposal would benefit people who seek legal action: According to the Times, polling by Nevadans for Fair Recovery found that about 86% of residents believed that lawyers were paid too much and cut into plaintiffs’ damages.
As Palefsky points out, this move also seems at odds with the broader shift Uber has undergone in recent years since ousting former CEO Travis Kalanick. With his successor Dara Khosrowshahi at the helm, Uber has taken significant steps to overhaul its corporate reputation and “culture of sexual harassment and retaliation,” as the EEOC concluded, following an investigation into the company.
Uber has also worked to address rider safety concerns and vet drivers more thoroughly, claiming that 80,000 drivers had been removed from the app in 2022 after more extensive background checks. But the countless lawsuits brought by users, as well as Uber’s support for this ballot initiative, seem to indicate that the company is still struggling to resolve those issues. “It’s not too late to pull the plug on this and approach it differently,” Palefsky says. “You can’t turn the justice system on its head because you haven’t done a good job screening your drivers. This is not how they want to be perceived in the marketplace.”