Comments on: What Makes A Fee Unreasonable?

By: Terence Jesse

Terence Jesse — Fri, 21 Sep 2007 10:08:07 +0000

The National Association of Legal Fee Analysis (NALFA) is a membership association of qualified experts that engage in the practice of reviewing, analyzing, and evaluating attorney fees. We help attorneys in fee-shifting cases by having prevailing party’s attorney fees evaluated for reasonableness.
Whether you’re seeking to recover attorney fees or have them evaluated for reasonableness, our network of legal auditors and attorney fee experts can meet your attorney fee needs. Please visit http://www.thenalfa.org or call 312.907.7275.

By: Don

Don — Mon, 11 Sep 2006 15:47:38 +0000

I believe that the attorney is entitled to and should keep his fees. He was under no obligation to give advice about what other attorney’s were charging and the client obviously was pleased with the outcome of her case being that she recieved double the amount she was originall entitled to.
Playing devil’s advocate, I believe the fee was excessive and I would propose a more staggered fee structure.
The higher the recovery, then the lower the percentage. In such a case, a 10% limit plus expenses, sounds reasonable .

By: Overlawyered

Overlawyered — Thu, 07 Sep 2006 19:39:27 +0000

$2 million 9/11 fee under fire

“Laura Balemian, whose husband Edward J. Mardovich died in the World Trade Center, received one of the largest awards paid out by the September 11th Victim Compensation Fund: $6.7 million. But she in turn paid…

By: Carolyn Elefant

Carolyn Elefant — Wed, 30 Aug 2006 13:03:19 +0000

I think that what makes the case controversial is not that it is a 9-11 case, but rather, the circumstances unique to recovery from the 9-11 fund. In contrast to funds set up for insurance claimants or bankruptcy matters or other such cases, here the recommended guideline for the fund was 5 percent. In this case, special free trainings were set up to enable lawyers to handle 9-11 claims (see, e.g., http://www.familiesofseptember11.org/newsletter.aspx?item_id=55) And many attorneys voluntarily reduced their fees. Moreover, the free trainings and 5 percent guidelines were underway at the time that Troiano signed his retainer agreement (which was after the fund had already been created)
Does that make a difference? I believe yes. The reasonableness of a fee is judged by client expectations and prevailing commununity standards and rates. That’s why charging $600 an hour for a corporate bankruptcy flies, but would probably not be found reasonable if $600 hourly fee were charged to an individual debtor.
Again, to me, this all boils down to whether the client was informed of her options. If she was and agreed to the fee, I have no problem with the outcome.

By: mythago

mythago — Wed, 30 Aug 2006 12:33:42 +0000

If you read the entire article, Troiano says that he did a lot more than simply ‘filing a claim’, and that he got his client a greater award because he contested the initial finding.
If this were a claim for, say, bankruptcy in a products-liability case rather than a 9/11 case, would this even be controversial?

By: Susan Cartier-Liebel

Susan Cartier-Liebel — Wed, 30 Aug 2006 05:19:01 +0000

Carolyn,
You mention Feinberg’s role:
“Kenneth R. Feinberg, the special master who oversaw the fund’s distribution of some $7 billion, submitted an April 21 affidavit in the federal case in which he called Troiano’s fee “shocking and unconscionable” in light of the fund’s purpose and its guidelines recommending attorney fees be kept under 5 percent.”
Chances are Mr. Feinberg acted altruistically and took a reduced fee or no fee for his work because he was motivated beyond dollars which is extraordinarily commendable. However, these were “guidelines” issued; not mandates meaning other arrangements could be made. (others took between 5 – 9 percent..is he offended by that?) If I was sitting in Mr. Feinberg’s shoes I would be offended, too, which is why I posted the comment, “If I choose to do pro bono work it is not for me to judge others who don’t.”
But if you look at the fund as an “insurance policy”, which in effect it functioned as, the “claims adjuster” should not be offended by how the recipient distributed their payout based upon a contractual arrangement that has nothing to do with the claims adjuster.
I think it is purely an emotional response, a legitimate and heartfelt one, but not a basis for negating the contract.
If there is another basis, such as being uniformed, or emotional duress that can stand up to scrutiny, then of course there could be a different scenario. And I don’t think Troiano just filed a paper and hired one expert. There has to be more that we are not privvy to.
I’m playing the devil’s advocate here, not really stating what I would have done representing Badamian. But I’m sure this case will be fodder for much scholarly debate.

By: Carolyn Elefant

Carolyn Elefant — Wed, 30 Aug 2006 03:50:04 +0000

Susan,
Agreed that the headine was intended to shock readers. But there are two other issues that make me wary. First, in PI cases of this magnitude, not only does the lawyer risk non recovery, but also risks money. In an ordinary PI or med mal case, the lawyer typically needs to retain a medical expert, an economic expert, not to mention, depose various witnesses, subpoena documents etc…Here, Troiano did invest time in the case, there is no doubt about that. But the bulk of the expense was his time spent resarching and monitoring the matter which is a cost, but it’s not the same, for example, as taking out a mortgage on your house to pay for a case (as the lawyers did in the book A Civil Action). Troiano’s sole out of pocket expense was to hire the professor who performed an economic analysis of Mardovich’s expected earnings. What’s more, the absence of risk was known up front. Any lawyer who took a 9/11 matter knew that at most, they would have to prove damages, not causation or liability.
What I also find compelling is that Special Master Kenneth Feinberg prepared an affidavit testifying that Troiano’s work was not all that special. Feinberg oversaw the resolution of the hundreds of cases handled by the fund and I am not sure what motive he would have to criticize an attorney’s fee.
I would be interested in hearing the other side of this story.

By: Susan Cartier-Liebel

Susan Cartier-Liebel — Tue, 29 Aug 2006 20:41:15 +0000

Interestingly enough, I’ve been in e-mail correspondence with the attorney representing Troiano and he, without any additional discussion regarding the matter, as it was tangential to the purpose of our conversation,informed me the article was “unbalanced” which leads me to believe the shock value of the headline was meant to bias the reader.
In principle, however, I don’t think the “client” was uninformed. There is alot of conversation that the contingency concept is one of risk…the lawyer undertakes a case with a possibility of no return therefore the higher percentage is proportional to the risk. It is suggested in this case there was no risk, just a determination of how much the claimant would receive. I beg to differ. In a personal injury case, loss of consortium, future earnings etc. where responsibility is accepted, it also turns on damages yet noone suggests the contingency percentages should be reduced in that scenario. When the lawyer goes the extra mile as required by due diligence, should he expect his percentage to be reduced in that circumstance? If we strip away the emotions surrounding 9/11, this lawyer entered into a responsible retainer, the client received a compensation well beyond her expectation for her tragic loss as a result of the lawyer’s efforts. To now measure his fee in absolute dollars versus percentages is incorrect and prejudicial.
Had he received one third of the original settlement offer would everyone be as shocked his portion was $300,000+. It wouldn’t have been headline worthy.
If he has all his ducks in a row….he’s earned his fee as she is in a far better position for his efforts then if she went to a lawyer pro bono who got her the original 1.1 million. It is not for others to quantify his efforts based upon absolute dollars.
If I choose to do pro bono work, it is not for me to judge those who don’t make that choice.
She trusted her lawyer and I don’t think her trust was misplaced.

By: f/k/a

f/k/a — Tue, 29 Aug 2006 08:21:04 +0000

still allergic to (o)pine

We hope that won?t stop you from checking out Carolyn?s post What Makes a Legal Fee Unreasonable?,

By: RJON@HowToMakeItRain.com

RJON@HowToMakeItRain.com — Tue, 29 Aug 2006 06:23:19 +0000

A THIRD PRONG TO THE ANALYSIS: Informed consent with few options.
I think we need to consider a third prong in this analysis. It’s a dynamic that every PI & Bkcy lawyer should be very familiar with: Clients who are desperate for cash flow often make bad deals because they need to pay the mortgage, keep the lights on, and feed the kids today.
There are in fact several entire industries built upon the knowledge that people who are in desperate financial straights very often make informed, but still not ideal financial decisions that later come back & bite them. It’s not always the case that these people are stupid, or don’t know what their rights are.
In my experience, most of them know what they are doing, but they need the money so they make the best choice they can from amongst several bad options – how do you think so many smart lawyers end up with so many bad clients and big a/r problems?! (rhetorical question)
In this case, as much as the opposite conclusion tugs at my heartstrings, I have to come down on Troiano’s side.
A FOURTH PRONG: Greed
Let’s say for the sake of argument, that Troiano told Baleman what the procedure was, that the chance of recovering up to the $3M cap was high, and that she could find other lawyers to fill out the routine paperwork for only 5%. But for whatever reason, maybe even reasons we might disagree with or disrespect (like the prospect of getting $6M instead of just $3M), Baleman did the math & decided to pay Troiano 33% anyway in hopes of netting an extra $1.1M. Again, I come down on Troiano’s side, but without the heartstrings being tugged upon.
WAS THE CLIENT INFORMED?
Of course, this is the big question we don’t know the answer to from the article. The lesson for all lawyers reading this is to learn how to conduct a proper sales call in which you identify and understand the client’s problem in all three of its dimensions, and then document your understandings.
HOW I WOULD HAVE HANDLED THE SITUATION
If I were in Troiano’s shoes I would have not only sought to understand Balemian’s problem in all three dimensions, but recognizing the extraordinary circumstances (everything related to 9/11 was extraordinary) I would have gone beyond a standard retainer agreement and I would have recited the understandings between the parties to better document the “informed” part of the consent to the terms of the agreement.
Respectfully,
RJON ROBINS
http://www.HowToMakeItRain.com
Helping Small Law Firms Make ALOT More Money!