Lawyers' Fees Come Under Fire Patrick Danner
The Miami Herald, January 3, 2004 In Massachusetts, lawyers want a $2.1 billion paycheck for winning an $8.3 billion
tobacco settlement. They argue that the $775 million they received was too little.
In a similar tobacco settlement in Florida, lawyers won a massive $3.4 billion
payment for a $13.6 billion payout to the state. Gov. Jeb Bush called the fee
amount ``obscene.''
Guidelines prescribe that such payments, called contingency fees, should be reasonable.
But how much is reasonable?
Opponents of the current system are attempting to rein in attorneys' contingency
fees in Florida and at least 13 other states. The critics contend that contingency
fees lead to overpaid lawyers, who can get thousands of dollars per hour in some
cases.
''Law is supposed to serve people, not lawyers,'' says Nancy Udell, general counsel
of Common Good, a Washington group that wants to limit contingency fees in cases
that haven't progressed far in the legal process. ``The rules about reasonable
fees based on time expended and risk undertaken have almost universally been disregarded.''
Trial lawyers counter that contingency fees -- called contingent fees by the
legal profession -- are the ''poor man's key to the courthouse.'' Without the
fees, most people wouldn't have the assets to take on deep-pocket corporations,
they say.
'It levels the playing field,'' says Neal Roth, a Miami lawyer and a past president
of the Academy of Florida Trial Lawyers.
Under a contingency-fee agreement, a lawyer is only compensated if the client
succeeds in recovering money damages. Lawyers run the risk of not being paid if
they lose. Therefore, the attorneys working on a contingency-fee basis generally
receive a larger percentage of the settlement or verdict. That can range anywhere
from 25 percent to as much as 50 percent, depending on whether the case is settled,
goes to trial or is appealed. Contingency fees are common in class-action suits
and personal-injury cases.
The American Bar Association says charging a contingency fee "does not violate
ethical standards as long as the fee is appropriate in the circumstances and reasonable
in amount.''
Just what is reasonable depends on the time and labor required, the difficulty
of the case, the risk involved and the results obtained, among other factors.
Recent proposals to cap contingency fees led the ABA's Tort Trial and Insurance
Practice Section to create a task force to review and evaluate the fees. The 11-member
task force is chaired by Steven B. Lesser of Hollywood's Becker & Poliakoff.
''We're all looking to get the facts out in the open, to find out if contingent
fees are really out of control and whether there is a need for some regulation
and why,'' Lesser explains.
The task force includes well-versed lawyers on both sides of the subject of contingency
fees. Besides trial lawyers and academics, there are attorneys representing insurance
and tobacco companies. There's even a lawyer for McDonald's Corp., involved in
one of the most notorious personal-injury cases, when a New Mexico woman spilled
hot coffee on herself. She was awarded $2.9 million in 1994, which was reduced
on appeal to $480,000. The sides later settled out of court.
A SCHOLARLY GOAL
The task force will study data compiled from court cases, state supreme court
rulings, media reports and public hearings. It will prepare a report by the end
of this year, Lesser says.
''The goal is to have a scholarly, well-reasoned piece of work that can be used
by legislators, decision makers and the public,'' says Edward Blumberg, the other
member of the task force from South Florida and a partner with Miami's Deutsch
& Blumberg.
Lesser says Common Good's steps to cap contingency fees in 13 states prompted
the task force's formation. Common Good's legal petitions seek to limit the amount
lawyers can charge in personal-injury cases where the victim accepts an ''early
offer'' settlement.
Common Good's Udell says the group generally believes contingency fees are warranted.
However, it doesn't believe lawyers deserve a contingency fee of 25 to 40 percent
when a case is settled early on.
The bipartisan group argues that its proposal would lead to more settlement proceeds
going to the victims, create more incentive to settle and reduce court congestion.
As an example, Udell says someone she knows slipped on a patch of ice on the
property of a business and sought to have the company pay for unpaid medical bills.
Unable to reach a settlement, he hired a lawyer.
''The lawyer literally wrote two letters and took a third'' of the settlement,
she says. ``We think taking a third, where there's no question of liability and
very little work done, is unethical.''
Under Common Good's plan, a lawyer would collect a fee not to exceed 10 percent
of a settlement reached within the first 60 days of the dispute.
Already, state supreme courts in Alabama and Arizona have rejected Common Good's
proposals, says Robert Peck, a Washington lawyer opposed to the petitions.
''I think these are a naked attempt to try to prevent people from bringing cases,''
Peck says.
He adds that Common Good's proposal was rejected by the ABA when it reworked
its ethical rules in 1999.
Common Good didn't float its proposal in Florida, but Udell believes it would
be received favorably here.
Others aren't so sure.
''No bipartisan group would advance such drastic limitations on contingency fees
that would make it impossible for the average person to retain good lawyers to
do battle with the healthcare industry and corporate America,'' says Roth, the
Miami trial lawyer.
Leonard Light says he's also opposed to limiting contingency fees. Light's wife,
Joan, was among the plaintiffs who reached a $100 million settlement with a funeral-home
operator over the mishandling or desecration of graves at two South Florida cemeteries.
''I think there would be a whole lot of people who would not go to lawyers if
there were not contingency fees,'' Light says.
NO QUALMS
Light adds that he has no qualms about the $25 million that the lawyers reportedly
stand to make in the case. The court has to approve the fees.
''I feel they put in the time and they [took] the risk,'' he says. ``We really
didn't have a risk monetarily. So they should be paid.''
Florida may soon be a battleground for contingency fees. The Florida Medical
Association is backing a constitutional amendment addressing contingency fees
solely in medical-liability cases. And Citizens for a Fair Share, a political-action
committee, is collecting signatures to get the measure on the November ballot.
Under the doctors' proposed amendment, lawyers would receive 30 percent, or $75,000,
of the first $250,000 awarded and 10 percent of anything above that amount plus
lawsuit costs.
''We just want to make sure the patient gets the money,'' says Dr. Rick Lentz,
the association's president. ``I think the public realizes $75,000 is a lot of money.''
Roth doesn't buy that argument.
''It's all done in subterfuge,'' Roth says. 'They don't give a damn about the
people they kill and maim. It has everything to do with stopping the filing of
lawsuits. It has nothing to do with the victims' receiving more money.''
NEW LIMITS
The measure follows a new state law that limits doctors' liability for noneconomic
damages in most medical-malpractice cases to $500,000. A medical facility's liability
will be limited to $750,000 in most cases.
A supporter of tort reform, Associated Industries of Florida, which calls itself
the voice of business in the state, isn't backing the constitutional amendment,
however.
'First and foremost, we don't think the Constitution is the appropriate place
to have any provision that fixes attorneys' fees or doctors' fees or anybody else's
fees,'' says Art Simon, Associated Industries' senior vice president for governmental
affairs.
Simon adds that guidelines on contingency fees adopted by the Florida Supreme
Court already are among the most restrictive in the country.
The fee schedule is on a sliding scale, with percentages varying by the size
of the award. For example, in cases where a lawsuit is settled early on, the lawyer
receives a third of the recovery up to $1 million.
That drops to 30 percent between $1 million and $2 million. Above $2 million,
the fee drops to 20 percent.
''Florida is way advanced,'' Blumberg says. | 
