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April 1, 2005

ATLA Condemns Standard Contingency Fee

Filed under: pre-06-2006 — David Giacalone @ 11:48 pm

– an April 1st dream by Prof. Yabut

In a press release made available late this evening (April 1, 2005), the American Tort Lawyers Association announced the adoption of new ethical standards that should mean the end of the Standard Contingency Fee among its members.    The press release explained:

Jack Cliente, ATLA’s consumer rights ombudsman, said “We’re tired of being known as the “At-Least-a-Third Law Association.” A small but committed group of members were able to convince their colleagues that their ethical duties were inconsistent with the automatic application of a “standard” percentage fee.

one third gray Cliente explained that the percentage fee charged should reflect how likely the client is to win, how much money is likely to be rewarded and collected, and how much work and expense the lawyer is likely to put into the case.  At the press conference, Cliente frequently quoted trial lawyer and former Florida Bar president Rutledge R. Liles. For example:

“While it is easy to defend the philosophy of the contingent fee, it is impossible to defend its abuses.  . . . It has been accurately said, in justification of the contingent fee, that it is the ‘poor man’s key to the courthouse.’ Professionalism, however, demands that we be ever mindful that keys are made of brass — not solid gold.”

As of today, April 1, 2005, all ATLA members must give to each client, and thoroughly explain and implement, an Injured Consumers’ Bill of Rights for Contingency Fees, which lawyer and client must sign.  At the core of the Bill of Rights is the requirement that a lawyer take a list of enumerated factors into account in evaluating each client’s case, and discuss each factor with the prospective client, before they negotiate and agree upon the percentage fee to be charged in a contingency fee agreement.

Cliente noted that this position (although now mostly “honored in the breach”) is the profession’s traditional approach to the use of contingency fees.

    • Your editor believes the new ATLA requirements are a great start toward fulfilling the admonition in ABA Ethics Opinion 94-389 that “any lapse from the applicable requirements by some members of the profession simply suggests that the profession should redouble its efforts to assure that the ethical obligations associated with entering into a contingent fee arrangement are fully understood and observed.”

complaint billFN The Bill of Rights appears to draw heavily on the requirements set forth in ABA Formal Ethics Opinion 94-389, while also using concepts found in Rule 4-1.5 of Florida’s Bar Code and in the Bill of Rights that appeared in HALT‘s The Legal Reformer (Dec. 1997).  [Ethics Opinion 94-389 is not available online without a subscription, but is discussed here.] Cliente stressed that ATLA is not affiliated with another bar group using the same acronym, which has yet to condemn standard contingency fees, although it has publically asserted — when faced with reform proposals — that such fees should vary depending on the riskiness and complexity of the individual case.

Editor emeritus of this weblog, ethicalEsq, was certain the Press Release must be an April Fool’s joke, but ombudsman Cliente has assured us that the entire leadership of his organization is now strongly behind the reform measure.   skepticalEsq concluded ATLA had discovered plans to clone Judge Preska and put her in charge of regulating contingency fees. [for more, see ethicalEsq posts such as here and here, and especially our four-part essay on the ethics and economics of the standard contingency fee.]

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