Comments on: Lack of A Retainer Can Cost Lawyers’ Their Fee

By: Eugene

Eugene — Sun, 20 Feb 2005 10:09:43 +0000

Well David, I’ve really enjoyed this little repartee of ours, in this forum kindly provided by Carolyn.
I’ve thought about your position further. I’ve got a few additional points to make.
One: The question is, which rebuttable presumption is most appropriate based on the limited facts known (assumptions and presumptions aren’t necessarily bad things, we often have to deal with limited facts to reach workable conclusions – just so long as all realize the conclusions can not be definitive for the particular fact pattern).
Given there has been a 3x increase in award, and the only the variable that may explain the difference is the presence of the lawyer, I think there’s strong grounds for a rebuttable presumption that the lawyer’s contributions substantially account for the improved result.
You seem to suggest, in contrast, that the appropriate rebuttable presumption to apply is that the lawyer’s added value should be estimated based on the limited time spent working on the case (1 week or so), and concomitantly, little risk incurred. Hence, the lawyer’s fee should be appropriately limited, perhaps to 20-25% of the recovery, as I believe you’ve mentioned.
This goes back to my point that there’s nothing wrong with a lawyer’s sharing in a portion of the BENEFIT CONFERRED, which need not be directly related to the labor he expended and the risk he incurred. You seem to argue that only labor and risk should be considered. I don’t understand the ethical risks which arise based on giving the lawyer a portion of the benefit conferred.
You also cite the social security proceeding you personally experienced as evidence supporting your contention that other factors independent of the lawyer’s efforts could be rebuttably presumed to account for the award increase. While that may be, government agencies with different missions can have strikingly different procedures. The SS Admin. and the WTC Comm. are just so utterly different (their only commonality is that they both happen to be government instrumentalities, dispensing benefits) I really don’t find your Social Security experience in the least probative.
I don’t think our positions are that far apart, as I mentioned before. However, I still think the evidence more strongly supports a rebuttable presumption that the lawyer did help.
Two: I notice you strenuously cite to ABA Ethics Opinions in your posts. It’s impressive that you go to such great lengths to make your points, and this no doubt enhances the force and credibility of your arguments. However, I question your logical consistency.
I have already pointed out that the ABA Model Rules of Professional Conduct do not contain the ethical rigor you seem to espouse. You have dismissed the ABA Rules as a workable ethical guideline and stated that lawyers should adhere to a higher ethical standard. If this is the case, I’m unsure why you cite so extensively to ABA Ethics Opinions to support your arguments.
In any case, since you seem to give at least some measure of credence to bar committees ethical guidelines, I’ll point out that, here in California, the Rules of Professional Conduct require only that lawyers’ fees not be “unconscionable”. This is more liberal than the ABA Model Rules, which requires that lawyers’ fees be “reasonable”. There is certanily some range of fees that falls between “reasonable” and “not unconscionable”. And I truly don’t believe that fees granting the lawyer some portion of the benefit conferred, even regardless of the labor expended or risk incurred, violates either ethical requirement, so long as the fee percentage itself is not excessive under the reasonableness or unconscionability standards.
In the end, I think there is no one ethical construct that everyone agrees on. The bar committee rules and opinions provide a solid foundation (in my view), but there are plenty of value judgments left for the lawyer to make, even when bar rules and opinions speak to the particular ethical question at hand. I think each lawyer’s individual views on ethics begins with a simple question: what is their view of the basic nature of lawyers (and humankind)? Good or bad?
I choose to think most lawyers are good people.

By: Eugene

Eugene — Sun, 20 Feb 2005 10:09:00 +0000

By: Anonymous

Anonymous — Sat, 19 Feb 2005 20:38:15 +0000

David, I would add that you continue to base the contingency fee on risk incurred and work done, but persist in excluding benefit bestowed as part of the formula. Again, I don’t see the ethical violation or risk inherent in basing part of the lawyer’s fee on the benefit bestowed. It’s a timeworn concept in equity (restitution), why exclude lawyers?

By: Anonymous

Anonymous — Sat, 19 Feb 2005 20:38:00 +0000

By: Eugene

Eugene — Sat, 19 Feb 2005 20:34:54 +0000

David,
I erred in stating that risk is a part of hourly fee, it is a part of contingency fee, but I typed quickly and couldn’t edit it after submission.
I understand your position better based on that well-articulated and well-reasoned last post of yours. I’m going to think further on your points, as you make good ones.
I don’t think we’re that far apart on the issues involved, but perhaps in terms of our emphases and stances. You seem to come from the perspective that lawyers are more often than not knowingly committing ethical violations. I come from the perspective that oftentimes, lawyers are professional and deliver a great deal of value that should not go unrecognized or unrewarded. Maybe it’s a half-full, half-empty kind of difference.
In my decade of practicing law, I’ve seen and worked with plenty of lawyers whom I admired and who were ethical, professional and competent. That colors my views. Maybe your experiences have similarly colored your views.

By: Eugene

Eugene — Sat, 19 Feb 2005 20:34:00 +0000

By: David Giacalone

David Giacalone — Sat, 19 Feb 2005 09:21:07 +0000

Eugene, You’re right, neither of us knows the facts as to the lawyer’s contribution — just what he did to make a better presentation. My reply was to your unrestrained assertion that it was “clear” that the lawyer tripled the award and therefore the total increase was due to the lawyer’s presence.
As you probably know, in many kinds of government benefit cases it often happens that the initial stage assessment is extremely low or a rejection, and the true review of the circumstances is at the second stage, if and when the claimant appeals. (For example, my own Social Security disability claims a few years ago, which were totally rejected at the first round.) Before we know the success rates in general at the second level for the Sept. 11 compensation fund — and for people in the claimant’s employment and health situation — we cannot assume that having a talking suit sitting beside the claimant was the magical and sole source of the increase.
And, please don’t try to excuse the desire to take more from a client, by suggesting that I am simply against all use of the contingency fee. I have often stated that my beef is with excessive contingency fees not with the pricing method itself — and I would never want to take that option away from a properly-informed client (that is, informed of the lawyer’s good faith estimate of the likelihood of winning and collecting, the amount of work the lawyer is likely to do, the possibility of settlement, etc. as set forth in ABA Formal Ethics Opinion 94-389).
You want a risk-based percentage plus an outcome bonus for the lawyer. Basing the fee on a percentage of the winnings DOES reward the lawyer in accord to the benefit bestowed on the client. Choosing the percentage number to be applied to the award is an attempt to compensate the lawyer for the risk taken (that risk includes the likelihood of winning — which makes the complexity of the case relevant — and of collecting, and the likely amount of work that will be done). [By the way, a fully-informed client should be able to enter into a contingency fee agreement that has a performance bonus for the lawyer, just as the client might instead insist on an agreement that pays a lower percentage on higher damage awards, or sets a maximum.]
Your notion that “risk + time” is the basis of the hourly fee is simply strange. A tiny part of a lawyer’s hourly fee may be a safety net against uncollected fees, but risk is not an important part of the setting of an hourly fee.
The ABA’s Formal Ethics Opinion on Contingency Fees (Op. 94-389) made it clear that risk — the likelihood of winning and collecting — is at the core of a reasonable contingency fee (as is a fully-informed client). ATLA has also stated that risk is the proper criterion for setting a contingency fee. In 2003, Public Citizen, a strong advocate of both contingency fees and ATLA, told the Utah Bar’s hearing on the Common Good Early-Offer proposal:

“It is widely accepted that contingency fees should vary depending on the riskiness and complexity of the individual case; indeed, that is what the ethical rules currently require (even though almost universally honored in the breach).”

I am not going to stop advocating for fully-informed clients and risk-based contingency fees merely because the personal injury bar likes its little racket (especially the “standard fee” game) and has the power to stymie enforcement of the ethical requirement of reasonable fees. As Ethics Opinion 94-389 states:

“[A]ny lapse from the applicable requirements by some members of the profession suggests that the profession should redouble its efforts to assure that the ethical obligations associated with entering into a contingent fee arrangement are fully understood and observed.”

A lawyer’s role is to help a client receive just compensation for injuries. It is the client’s claim and the client’s pain; the lawyer is the client’s servant-agent, helping to achieve compensation. Lawyers look and act greedy when they basically impose a partnership agreement on their client through a high-percentage contingency fee that is not warranted by the risk taken. Demanding a bonus beyond the risk factor enriches the lawyer at the client’s expense and assumes you can tell just what part of the award is lawyer-added value, as opposed to an obviously-deserved compensation to the client for injury.
When any group of lawyers just happens to consistently read their ethical obligations so as to maximize their own income, I get suspicious. Wouldn’t you, if it were someone else cash cow being gored?

By: David Giacalone

David Giacalone — Sat, 19 Feb 2005 09:21:00 +0000

“It is widely accepted that contingency fees should vary depending on the riskiness and complexity of the individual case; indeed, that is what the ethical rules currently require (even though almost universally honored in the breach).”

“[A]ny lapse from the applicable requirements by some members of the profession suggests that the profession should redouble its efforts to assure that the ethical obligations associated with entering into a contingent fee arrangement are fully understood and observed.”

By: Eugene

Eugene — Thu, 17 Feb 2005 12:06:48 +0000

David,
I think it’s far more reasonable to conclude that the lawyer added value than that the client was solely or primarily responsible for the tripling of recovery. Neither of us have the facts, so *both* of us must engage in some kind of assumption to base our opinions on. Analogizing to the theory of res ipsa loquitur, we have 1) a recovery of X where the client acted pro se, and 2) a recovery of 3X where a lawyer was present. Are you telling me that the most reasonable assumption to make is that the lawyer’s contribution wasn’t that great?
Moreover, the lawyer’s compensation should not be based exclusively on the risk he assumed or the work he did. What’s wrong with also awarding the lawyer some portion of the benefit he conferred? Your view of the contingent fee is that it is some form of approximation of the value of the lawyer’s contribution based solely on the labor he expended and the risk he assumed. That, however, is the basis for the hourly fee. The contingent fee contemplates the lawyer’s sharing in some portion of the benefit conferred.
David, I think you’re real problem is that you’re opposed to the notion of the contingent fee. You wouldn’t be alone, but you’d definitely be in a distinct minority on that issue.

By: Eugene

Eugene — Thu, 17 Feb 2005 12:06:00 +0000