Bill Gates’ little company has a world of expertise when it comes both to excessive prices and to taking advantage of the success of others. So, we hope San Francisco County Superior Court Judge Paul Alvarado will accept Microsoft’s advice and reject the claims of Townsend & Townsend & Crew for $258 million in legal fees in the California class action suit against Microsoft. (AP/New York Lawyer, Partner Defends $3,000 Hourly Billing Rate, 05-13-2004).
Lead attorney Eugene Crew of T&T&C, argued that he deserves about $3,000 for each of his 6,189.6 billable hours, “considering the enormity of this undertaking against the most powerful corporation in America.”
According to the AP report, the judge did not decide the fee issue on Wednesday, but instead, without hearing arguments, said he was “not prepared” to say “what I’m going to do.” Microsoft said the lawyers deserve no more than about $75 million combined. ethicalEsq argued against the fee request earlier this year at this site [Putting the Piggy in Piggy-Back].
A SFGate.com/AP article notes that the American Bar Association now has a task force investigating contingency fees, and that ABA rules require that a lawyer charge a reasonable fee. Steven Lesser, who chairs the task force, added this insight to the discussion of the California Microsoft case: “That’s a big question, what is reasonable.” The opinionated ethicalEsq also had some Suggestions for the ABA Contingency Fee Task Force.
The same article contained a far more astute quote from the California Supreme Court, which “two years ago upheld a lower court decision reducing fees from $88.5 million to $18.2 million for lawyers who won a class action accusing California of illegally charging out-of-state residents $300 extra for auto registration. The court called that request, for $8,000 an hour, ‘a testament to the unreal world of greed in which some attorneys practice law.'”
- Overlawyered.com has frequently covered this topic well, including yesterday.
My hope is that the capitalists will ultimately prevail in this battle. I am not in the least bit moved, not even a whisker, by the “reasonable fees” argument except when it comes to low income, individual consumers. Lawyers, whether some like it or not, are players in a capitalistic, free market economy just like everyone else. If you want to tell me that I can’t make $100 million by pursuing a certain kind of class action lawsuit, very well. I simply won’t pursue it then. Let someone else invest the money and risk to reputation for the reduced fees; or let no one do it at all… doesn’t matter to me. (I’m speaking as the Ultimate Mother of All Capitalistic Lawyers here, of course, which I am not in my real life).
Comment by UCL — May 14, 2004 @ 2:52 am
My hope is that the capitalists will ultimately prevail in this battle. I am not in the least bit moved, not even a whisker, by the “reasonable fees” argument except when it comes to low income, individual consumers. Lawyers, whether some like it or not, are players in a capitalistic, free market economy just like everyone else. If you want to tell me that I can’t make $100 million by pursuing a certain kind of class action lawsuit, very well. I simply won’t pursue it then. Let someone else invest the money and risk to reputation for the reduced fees; or let no one do it at all… doesn’t matter to me. (I’m speaking as the Ultimate Mother of All Capitalistic Lawyers here, of course, which I am not in my real life).
Comment by UCL — May 14, 2004 @ 2:52 am
I would have to disagree with the above comment. Leaving aside the broader question of whether the legal profession is purely capitalistic (given barriers to entry, monopoly on practice in courts in exchange for self-regulation, etc…), I don’t think the class action system is based on capitalist principles. In what other capitalist set up can lawyers make money from signing up a couple of clients, have minimal contact, agree to a settlement that the majority may not even learn about until well after the fact and make millions? In a truly capitalist system, companies have to market to attract customers and satisfy them to keep them. In class action suits, a handful of “customers” will suffice and ultimately, a judge – and not the “customers” makes the call on whether the job was well done.
Having said that, I don’t know whether $3000/hour is “per se” outrageous, though the figure does trouble me. Perhaps this was a case where the lawyers took a large risk and consumers received benefits such that the fee was justified. I simply don’t know enough here to comment.
But again, the growing size of hourly fees – both in contingency and class action matters as well as those charged by law firms trouble me. UCL says that he only cares about “reasonable fees” when it comes to individual consumers. Well, the trouble is that there’s a trickle down effect. As billing rates for large corporate clients increase, so do those for individual consumers. Many firms representing individuals in divorces or small matters are now billing close to $300/hour. Sometimes I wonder whether I could afford an attorney if I ever needed one. The trouble is that if we don’t try to enforce the “reasonable fee” proviso of the Code of Professional Responsibility across the board – and express some outrage over increasingly higher fees – we will find it difficult to enforce it in the cases where it matters the most.
Comment by Carolyn Elefant — May 14, 2004 @ 2:29 pm
I would have to disagree with the above comment. Leaving aside the broader question of whether the legal profession is purely capitalistic (given barriers to entry, monopoly on practice in courts in exchange for self-regulation, etc…), I don’t think the class action system is based on capitalist principles. In what other capitalist set up can lawyers make money from signing up a couple of clients, have minimal contact, agree to a settlement that the majority may not even learn about until well after the fact and make millions? In a truly capitalist system, companies have to market to attract customers and satisfy them to keep them. In class action suits, a handful of “customers” will suffice and ultimately, a judge – and not the “customers” makes the call on whether the job was well done.
Having said that, I don’t know whether $3000/hour is “per se” outrageous, though the figure does trouble me. Perhaps this was a case where the lawyers took a large risk and consumers received benefits such that the fee was justified. I simply don’t know enough here to comment.
But again, the growing size of hourly fees – both in contingency and class action matters as well as those charged by law firms trouble me. UCL says that he only cares about “reasonable fees” when it comes to individual consumers. Well, the trouble is that there’s a trickle down effect. As billing rates for large corporate clients increase, so do those for individual consumers. Many firms representing individuals in divorces or small matters are now billing close to $300/hour. Sometimes I wonder whether I could afford an attorney if I ever needed one. The trouble is that if we don’t try to enforce the “reasonable fee” proviso of the Code of Professional Responsibility across the board – and express some outrage over increasingly higher fees – we will find it difficult to enforce it in the cases where it matters the most.
Comment by Carolyn Elefant — May 14, 2004 @ 2:29 pm