f/k/a . . . the archives

June 7, 2003

___ Fees

Filed under: — David Giacalone @ 5:59 pm

Below are ethicalEsq-f/k/a postings and annotated web resources on this topic. Find our full list of annotated ethics links by clicking the Client Rights & Legal Ethics link on the Navigation Bar.

ABA Model Rule 1.5 (fees) and Comments thereto.

Intro to ABA Statement on Principles in Billing (American Bar Association; The Task Force on Lawyer Business Ethics, 1996). Plaintalk on the ethical use of the billable hour, and on charging for costs. In a nutshell, you can comply with Model Rule 1.5 by (a) basing the fee on the experience and capabilities of the lawyer, and complexity of the matter; (b) performing in an efficient and competent manner; and (c) keeping the client well-informed. See Rule 1.5 and the Task Force Report for more details.

Fiduciary Duty to Disclose:  Prof. Lester Brickman has explained: “The principal fiduciary obligations imposed on the lawyer include the duties of confidentiality, loyalty, safeguarding property, giving disinterested advice, and acting fairly towards the client. The duties to act fairly and in a non-self-interested fashion, in particular, relate to the financial relationship between the lawyer and client. ” (The Continuing Assault on the Citadel of Fiduciary Protection, University of Illinois Law Review, 2003, at 1185-86; available at SSRN).  Learn more about fiduciary duties in f/k/a postings such as “Fees and the Lawyer Fiduciary” (02/12/04).

The Objective of Professional Licensing In “What is the Objective of Professional Licensing? Evidence from the US Market for Lawyers” (Nov 2004), Turin Univ. Profesoor Mario Pagliero finds that the objective of such regulation in the USA is explained by capture theory, rather than public interest theory, and that “licensing increases annual entry salaries by more than $20,000, ” with a total welfare loss of over $6 billion. This link accesses an abstract, but the entire study is available with a free registration.

Brickman Testimony on Contingency Fees Cardozo Law professor Lester Brickman presented these comments to the ABA’s Ethics 2000 Commission, stressing the need for explicit rules that would help prevent excessive contingency fees by linking fees to risk, and by informing clients of their right to choose other fee options, such as hourly or flat fees, and to negotiate the level of a contingency fee.

FTC and class action fees In a Washington Post article (9/30/02), staff writer Caroline Mayer describes steps taken by the FTC to keep class action fees in line with the risk taken by the lawyers involved.

Florida Bar Continency Fee Rules Through Rule 4-1.5 of the Rules Regulating the Florida Bar, clients entering into contingency fee arrangements have greater protection than in any other state, including a Statement of Client’s Rights for Contingency Fees (stating, among other things, that there is no set percentage fee and that the client has the right to negotiate the fee level), a 3-day “cooling off” period to reconsider after signing an agreement, and step-down maximum fee levels as the amount awarded increases.

Sue City: The Case Against the Contingency Fee (Policy Review, Winter 1991) . This article by Walter Olson is excerpted from “The Litigation Explosion: What Happened When America Unleashed the Lawsuit,” with some new material added.

Pricey Contingency Fees : In this June 2000 article from Prairielaw.com, David Giacalone, ethicalEsq‘s Editor, shows (quite persuasively) how the use of a “standard” contingency fee violates existing codes of ethics and ethical opinions, while enriching lawyers at the expense of their clients.

Common Good: Early-Offer Settlement Proposal In May 2003, a national coalition led by Common Good filed legal petitions in 13 states proposing to change the rules governing the contingency fees charged by lawyers in “early offer” settlements in personal injury cases. In addition to reducing the fees received by lawyers in these situations, Common Good believes the proposed change would reduce court congestion, and increase the incentive to settle rather than litigate certain liability claims. “Most importantly, the change will increase the settlement proceeds going directly to accident victims.” See our posting “P/I Lawyers v. Common Good” (May 30, 2003)

A New York Times article (5/25/03) has a balanced discussion of the issues. And see Miami Herald coverage of the proposal (Jan. 3, 2004)

The ABA and the Standard Contingency Fee: Protecting Fees Rather than Injured Clients. In this Open Letter to the FTC on the ABA and Contingency Fees (dated April 11, 2002, and published at HALT), your Editor, David Giacalone, details bar association actions to prevent competition over personal injury fees, by removing existing (although ignored) ethical restrictions on the use of the “standard contingency fee.”

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