In Oklahoma there are only 2 investigators and one supervisor for on average more than 1,100. bar complaints a year. In 2006 as a result the bar only pulled 4 liceses. Murdock, the general counsel in Oklahoma said in an above the fold “Daily Oklahoman” interview that HALT said underfunding of bar associations is the cause for lack of prosecution of the unethical practice of law. The OBA raised their dues from 175 to 275 since, but none went for enforcement. So Murdock and the unethical crowd at the OBA continue the support of
the practice of unethically presenting before the court facts an attorney knows untrue. This is at the heart of ethics avoidance and frivolous lawsuits. The public should take over ethical enforcement of lawyers as a part of Tort reform. (Tort Reform needs to move this issue up the list)

I do not believe that any of the factors warrant using a “standard” percentage fee with every client.

Yes, an agreement to charge the same percentage fee — or not to advertise the percentage or your willingness to negotiate it — would indeed amount to price-fixing. Proving the existence of the conspiracy is the rub.

“Model Rules of Professional Conduct
Client-Lawyer Relationship
Rule 1.5 Fees

(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.”

So, as I read it, only four factors of eight (2, 3, 4, and 8) arguably support a non-negotiable, standard contingent rate in cases large enough to significantly impact the lawyer’s ability to perform other work.

Why are the other factors ignored, especially in class actions, when the fees are so often grossly disproportionate both to the results obtained for individual class members (the coupon or small cash amount) and to time and effort expended?

So, I don’t see risk as the only issue.

And, though I’m quite ignorant of antitrust law, it would seem that proof that there is tacit, industrywide agreement on a standard percentage, presented to consumers as such, would be tantamount to unlawful price fixing.

As you surely know, I do not ascribe to the notion of a contingency fee arrangement being fine as long as “fairly agreed to by the client,” unless “fairly” means that the client has been fully informed of all the factors outlined in ABA Op. 94-389, and listed in this Bill of Rights.

Unless the client knows he or she is allowed to negotiate over the fee, and that the fee should depend on the likelihood of success (which the lawyer truthfully discusses with the prospective client), it means little to say “they can hire someone else” from the same cartel that insists on a standard percentage rate. Each lawyer has the ethical obligation to offer a percentage rate that reflects the perceived riskiness of the case.

However, one starting point is the amount, or percentage, the client nets out of the case. For 36 years now it has been my policy to never charge a percentage fee that would pay me more than the client puts in his or her pocket and takes home, after medical bills and expenses.

If my standard contract would pay me more than the client nets, I reduce my fee. I frequently get far less than the client, but never more than the client.

There are other reasons for reducing a contingent fee, but please remember that the original contract was fairly agreed to by the client. If potential clients don’t like my fee, they can hire someone else. Remember also that if a case turns out to require much more work than anticipated, we can’t go back and raise our fee.

Bob Kraft

Just to be clear, I’m only guessing at what the top end might be, not what will actually happen.

And it was my impression from skimming the opinion that the $18M in prior fees was for other matters related to $350M in distributions. The estate was apparently much larger than the $105M at issue here.

But I confess that I didn’t find the topic of estate work sufficiently interesting to get to the details, if they were all there. Of course, if I were a beneficiary, my interest level would likely change.

I sure hope you’re wrong about a court allowing GM to take 40% of the $45 million, for the extra four months of work, when GM had a guarantee of $1.2 in billable hours fees, and therefore only a tiny risk, if any.

p.s. If the first $60 million on the table is not appropriate in computing any additional fee (and it surely should not be for numerous reasons, including the fact that GM had already been paid $18 million in billed hourly fees up to the point of that offer), then your fig-leaf math leading to the 17% figure is rather meaningless and misleading.

I didn’t write up the story for several reasons.

First, I am not only a practicing attorney, but have two small kids at home. My time is limited.

Second, this is a complicated Surrogates Court matter, not PI. While I do venture outside my field sometimes, it is not where I prefer to be unless the topic has particular interest to me. Estate work is not the field I prefer to be in.

Third, the only thing the court really did was note that there were disputed facts, and it isn’t appropriate to decide either a motion to dismiss or summary judgment when you have disputed facts. The court certainly didn’t find that 40% is appropriate, only that a fact finder should resolve the factual disputes before the issue gets addressed. I therefore didn’t find the case particularly interesting, even though others did.

Finally, while I only skimmed the facts and therefore shouldn’t render an opinion (much less one in public that will stick around forever), I think that a fact finder is unlikely to award a legal fee of any kind on the $60M offer, but only on the $40M+ extra that the firm was able to obtain. If the court finds a retainer entered into at an arms length transaction, you would therefore see a top fee of 40% on the extra $45M, a total of $18M. That comes out to 17%.

The reason I think that is because of this recent holding from the same court:
http://www.nycourts.gov/reporter/3dseries/2007/2007_05655.htm

My silence on this issue is for three reasons:

1. Too busy with other stuff;
2. This happened in New York, not my jurisdiction, and;
3. This is an estate law matter, not an injury or disability case.

From my read of your post it’s hard to disagree with your opinion that this fee is unconscionable. That said, I really am not familiar with the underlying case. I definitely do not think that every contingent fee is fair.

Keep up the good work David. I may not always agree with you, but I do appreciate your hard work.

Bob Kraft

Of course, I’m also hoping a few members of the public — or even bar counsel — will get some useful information and act on it.

Great, great post – it’s a classic like “The Graying of the Bar.” However, perhaps you might be happier with silence on the topic, than the alternative – lockstep support for the majority view. That’s what I encountered when I posted about this case on a listserve. Not a single lawyer (and there are 3000!) would agree that the fee was outrageous, and many chimed in with comments like “lawyers deserve to be paid” or (the worst, in my view) – “What’s the harm. The client wasn’t any worse off after the renegotiated fee – she still got $60 million?”