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Contingency Fees v. Legal Ethics |
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Copyright © 2001 by Dave Badtke |
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A story that appeared in the June 15 New York Times began as follows: “Lawyers who represent Nazi-era slave laborers split more than $52 million in legal fees yesterday for work on a case that will bring Holocaust victims $5,000 to $7,500 each. “Eleven lawyers were awarded more than $1 million each, with the biggest share, $6.3 million, going to Melvyn I. Weiss of the Manhattan law firm Milberg Weiss Bershad Hynes & Lerach. Michael D. Hausfeld of Washington was given $5 million, and Burt Neuborne, a professor at New York University Law School, was awarded $4.4 million.” The story went on to explain that lawyers’ payments would be drawn from a separately negotiated fund, different from the funds that are expected to be paid out to more than one million survivors, including those who were in German concentration camps and ghettos, who are eligible to receive the maximum payment of $7500, and those who were forced to work for German companies, who are eligible to receive $2,500. E. Stuart Eizenstat, the American government’s chief negotiator, stated that it was “grossly untrue,” as some believe, that “the [51] lawyers in these cases made out like bandits at the expense of the Holocaust victims.” They were critical to the negotiations, he said. As if to prove the correctness of the remuneration, various attorneys readily attested to their own industriousness. Professor Neuborne, who will receive $4.4 million, said that since 1997, “I worked as hard as I could. There wasn’t a day in the last four years that I haven’t worked hard on this case.” (Nights? Weekends? Perhaps, though one can assume that Professor Neuborne also found time to teach, attend seminars, etc., etc..) Another lawyer, who will receive $3.1 million, Lawrence Kill of Anderson Kill & Olick, said, “The lawyers sacrificed greatly here.” Since when is doing a for-profit desk job that’s not life-threatening a sacrifice? Kill may mean that the attorneys sacrificed because they did not claim their “traditional” commission. As Eizenstat explained, one-third of the money would have been unseemly so attorneys agreed to share a fund that was from 1 to 1.5 percent of the total. Traditional? Unseemly? Consulting the “Rules of Professional Conduct” in the 2000 edition of the California Rules of Court, I found the following excerpt from rule 4-200, Fees for Legal Services, to be particularly interesting: “Among the factors to be considered … in determining the conscionability of a fee are: (1) The amount … in proportion to the value of the services performed. (2) The relative sophistication of the member and the client. (3) The novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly…. (5) The amount involved and the results obtained…. (8) The experience, reputation, and ability of the member or members performing the services. (9) Whether the fee is fixed or contingent. (10) The time and labor required. (11) The informed consent of the client to the fee.” Rule 2, linking a fee to the sophistication of those involved, is bizarre. Charge a rube less, or is it more? Is this the reasoning behind Texas’ low compensation for attorneys representing death-penalty defendants? And time and labor are not addressed until rule 10. Of course, that’s okay, because rule 11 indicates that if the client’s consent is “informed,” whatever rules 1 through 10 mean is just fine. Could you imagine a surgeon using these rules? “Tell you what,” the surgeon says to the coronary client lying on the gurney, his face turning blue, his vital signs waning, “I’ll take one-third of your assets if I keep you alive, but if you’re dead in the morning, you don’t have to pay me a thing.” “One-third of my assets?” the client gasps. “Why so much? What about my family? My children?” “Yeah, yeah,” the surgeon says, checking his watch, thinking of billable hours. “We all have our problems. I’ve lost too many cases like yours in the past, so it’s either my contingency fee or we can wrap you up and send you home.” Unlikely, you say. Let’s hope so. What about the quality of the result? Rule 5 mentions results obtained, but what if the results are in fact inequitable or unjust. Compare, for example, Germany’s maximum payment of $7,500 to the $20,000 paid by the US to Japanese-Americans interned during WWII. While the internment of Japanese-Americans was horrible and unconstitutional, and while many might consider the $20,000 to be too low, their experience pales in comparison with the horrors experienced by Holocaust victims who managed to live through the Nazi inferno. Considering Germany’s ridiculously low payments, did the 51 attorneys receiving compensation serve themselves more than their clients? The egregious disparity in compensation between those who suffered and those who represented them make it impossible for us to believe that justice was served. We are blinded by the disparity because no price could be put on Holocaust suffering, yet one was, and it was absurdly small. Contingency payments, whether they’re 33 percent or 1 percent, cast a pall over legal ethics in the US. Some argue that without contingency fees lawsuits would not be filed by those unable to pay, but I doubt that truly meritorious grievances would be ignored. Most attorneys, even attorneys who may have become greedy, want to be Atticus Finch in To Kill a Mockingbird, helping others, ensuring that justice is done. Payments incommensurate with work performed and services rendered pollute this idealism by turning the legal profession into a lottery which, at its worst, is no more beneficial to our society than slot machines in a casino. |
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- Dave Badtke can be contacted at: www.CarquinezReview.com; Dave@Badtke.com; PO Box 763, Benicia, CA 94510; or by calling 707-745-5540.
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