Having represented patent-holding company NTP Inc. in its lengthy and much-criticized suit against BlackBerry maker Research in Motion (Mar. 4, etc.), the 250-lawyer Washington, D.C. law firm of Wiley, Rein & Fielding is going to be pocketing a contingency fee of roughly a third of the $612.5 million settlement, or $200 million plus. That exceeds the entire 2004 revenue of WR&F, which has heretofore been better known for its Washington regulatory practice than for plaintiff’s contingency-fee work. (“NTP lawyers laughing all the way to the bank”, Mobile Magazine, Mar. 17; Ashby Jones, Wall Street Journal law blog, Mar. 17).
Posts Tagged ‘contingent fee’
Publicity roundup; Joseph Goulden, “The Money Lawyers”
In the Washington Post, Brandt Goldstein gives me a mention in the course of reviewing The Money Lawyers, the new book by Joseph Goulden profiling some of the country’s most powerful attorneys (“Legal vultures”, Washington Post, Jan. 18). I gave this book a blurb, which can be seen on its back jacket (“Eye-opening and timely. Goulden gives us a close look at some of the nation’s most powerful lawyers. Both friends and foes will learn a great deal.”)
On Dec. 18 the Chicago Sun-Times took note of Ted’s entry about the cautionary wording on a Milky Way chocolate bar, “Warning: contains milk”. (Zay N. Smith, “An intelligent look at who knew what”, Chicago Sun-Times, not online). I’m quoted in an editorial (I think that’s what it is) on punitive damages in the Fredericksburg, Va. paper (“Punitive-damage reform takes a big step in the General Assembly”, Fredericksburg Free Lance-Star, Jan. 20). Aileen Cho of the Engineering News Record quoted me in an article on a New York jury’s ruling that the city’s Port Authority was largely responsible for the 1993 WTC bombing (“Jury Says Agency Liable in Bombing”, Nov. 7, not online). And in the ABA Journal eReport, G.M. Filisko quotes me airing some of my differences with AEI’s Alex Tabarrok concerning the workings of the lawyer’s contingency fee (“Fee Caps Won’t Solve Liability Crisis, Study Says”, Sept. 23).
Annals of overreaching legal fees
An appeals court in Missouri has ruled (Susan Mello v. Anita Davis and McDonnell-Douglas) that a lawyer who represented a client in an employment claim is not entitled to collect 35% of her client’s future salary and benefits by way of a claimed contingent fee. Best (if somewhat unsettling) quote from the court’s caustic opinion:
if it was Mello’s intent to have her client surrender 35 to 45% of all future earnings until the welcome hand of death freed her from this servitude, the contract needed to say as much.
(Via George Lenard, Dec. 9, who says the case “would be funny if it weren’t so sad”).
Teacher’s pet barracuda
Via Lyle Roberts at 10b-5 Daily (Aug. 29), we learn of the latest advance in methods guaranteed to bring us a more ruthless legal profession: “Christopher Waddell, general counsel of the California State Teachers’ Retirement System, said that he uses both bounty and sliding-scale fees in order to ‘incentivize’ his outside counsel to go after personal assets. CalSTRS, the nation’s third-largest public pension fund, has promised its lawyers a 2.5 percent bounty, plus an undisclosed fee, in a pending suit against the former directors of WorldCom.” (Sue Reisinger, “Securities Fraud: Attorneys Are Receiving Bounties for Pursuing Officers and Directors”, Corporate Counsel, Aug. 24). For the reasons most other countries’ legal systems consider contingency fees for lawyers to be unethical, see Chapter 2 (“A Piece of the Action”) of The Litigation Explosion (PDF).
Oz: regulation of litigation finance eyed
The government of Australia’s biggest state, New South Wales, “has moved to rein in litigation-funding companies and will ask other states this week to regulate a practice which they say offers few consumer protections. The Attorney-General, Bob Debus, says the firms — which fund court cases in return for a share of any payout — are not policed in the same way as lawyers and could undermine national laws governing the profession.” Among other concerns advanced by Mr. Debus, litigation funders could be in a position to “initiate, manage and influence the running of court cases” without submitting themselves to the consumer recourse available against lawyers themselves, and “could circumvent the prohibition on lawyers charging contingency fees.” (Michael Pelly, “State seeks greater control of firms funding litigation”, Sydney Morning Herald, Jul. 26). For more on litigation finance, see Aug. 4, 2003.
Mississippi lawyer squabble
A reader characterizes:
I admit I get a perverse pleasure when I see the sharks feeding on each other. But this is just too good. Lawyer Luckey gets caught altering dates on asbestos claims, gets fired by Scruggs for altering the dates but then has the chutzpah to demand his cut of the contingency fee loot… and the judge gives it to him! I guess no one ever thought any disciplinary actions on anyone’s part was needed or indicated.
And it’s even sillier than that: the bulk of the damages appears to be for tobacco claims the partnership financed after Luckey was kicked out in 1993, triggering twelve years of litigation. Magistrate Judge Jerry Davis of the federal court in Oxford, Mississippi, awarded $13 million plus attorneys’ fees; the parties appear to have cut a deal so that there will be no appeal. (Leesha Faulkner (!), “Scruggs slapped with $13M settlement over partnership”, Northeast Mississippi Daily Journal, Jul. 22). More on Richard “Dickie” Scruggs: Jun. 15, Apr. 30. This appears to be the culmination of the fight that resulted in subpoenas to the Mississippi Supreme Court over Scruggs’s alleged influence there; at the time, Scruggs pooh-poohed the allegations, arguing that the dispute was only worth a few thousand dollars, and therefore not something worth risking improper influence over. (Jerry Mitchell, “Attorney testifies in justice probe”, Jackson Clarion-Ledger, May 17, 2003; “Lawyer, Former Colleagues Dispute Fees”, AP/Biloxi Herald, Mar. 27, 1998). Alwyn Luckey represents approximately 1500 Mississippi silicosis plaintiffs, so his troubles may not be over. (Updated from Jul. 23 post.)
Jury raises eyebrow at lawyer’s $300K “success bonus”
A federal jury has disapproved a $300,000 “success bonus” that a Greenwich, Ct. divorce lawyer tried to charge his client following a high-pressure five-day divorce mediation. Noted lawprof ethicist Geoffrey Hazard, testifying for dissatisfied client Gary Zimmerman, said the extra charge resembled a contingent fee on the lawyer’s part and that contingent fees are supposed to be disallowed in divorce litigation. (Thomas B. Scheffey, “$300,000 ‘Success Bonus’ for Five-Day Mediation? Not So Fast, Says Jury”, Connecticut Law Tribune, Mar. 29). David Giacalone has more (Mar. 29).
“The Fen-Phen Follies”
Comprehensive and damning coverage in the March American Lawyer by reporter Alison Frankel, who terms the annals of the diet-drug litigation a “veritable catalogue of ignominy”:
Law firms allegedly attempting to fleece a lawyer-built victims trust fund. Doctors working for contingency fees, filing questionable supporting reports. Corporate executives, facing the prospect of ruin, hurling money at claimants. The fen-phen class action approved in 2000 was supposed to be a new paradigm of how to resolve a mass tort equitably. Instead the iron law of unintended consequences has ruled. Misconduct has not been punished, but rewarded. Some uninjured people have been paid to go away while thousands of claimants alleging real injuries still wait for compensation.
Lawyer advertising and generous settlement standards drew claimants “like ants to a picnic”, and some law firms figured out how to game the system by arranging echocardiograms that would diagnose supposed heart troubles in entirely uninjured patients: “in one horrifying case, a patient whose condition was overstated for the sake of obtaining payment through the trust ended up having unnecessary heart valve replacement surgery.” Frankel quotes Michael Fishbein, a plaintiff’s attorney who helped negotiate the initial settlement:
“…We all believed it would be done in an honest way, that doctors would not endanger the health of their patients by making phony diagnoses.”
Says Fishbein: “I guess we were naive.”
Also see Jim Copland, Point of Law, Mar. 1. We’ve covered the fen-phen saga extensively, and nearly nine years ago I was sounding the alarm about the medical dangers that arise from litigation-driven diagnoses.
New at Point of Law
There are all sorts of new posts over at our sister website Point Of Law. Attorney Leah Lorber, who’s appeared on this site in the past, has just joined for a week’s worth of guestblogging contributions, including posts on a Mississippi Supreme Court case undoing the joinder of 264 asbestos cases and a Kentucky punitive award against Ford Motor (in a “park-to-reverse” transmission case). On medical malpractice, Ted Frank examines the benefits of the damage limits approved by Texas voters, Jim Copland discusses my WSJ op-ed on the Kerry campaign’s ideas for reform, and I link to an informative paper by Richard Anderson of the Doctor’s Company. Law professors Lester Brickman and Richard Painter, both experts on the ethics of contingency fees, have now completed their featured discussion of the issue.
Plus lots more, including posts by me on the ABA’s plans to push reform of jury trials; how contingency-fee litigation by the state of California is straining U.S. relations with France; Eliot Spitzer, the comparison-shopper’s friend; two posts (here and here) comparing the American way of litigation with that prevailing in other democracies; how liability law affects the way certain products smell; and who you can’t trust to explain the new overtime regulations.
New at Point of Law
Over at our sister website Point of Law there are new posts galore, including Jim Copland on “light” tobacco suits and Ted Frank on second-guessing of the FDA by liability actions; links to MedPundit on asbestos, Robert Samuelson on the AGs’ global warming lawsuit, David Bernstein on the “Friends” harassment suit, and a not notably favorable review of the new documentary “The Corporation”; and employment law topics ranging from Wal-Mart litigation to Sarbanes-Oxley whistleblowing to the Griggs disparate-impact standard. And, of course, the centerpiece is the featured discussion now underway between Profs. Lester Brickman and Richard Painter on contingency fee reform.