{"id":5255,"date":"2006-04-08T14:34:04","date_gmt":"2006-04-08T18:34:04","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/formerlyknownas\/contingency-fees-pt-3-do-standard-fees-e"},"modified":"2011-10-01T21:34:58","modified_gmt":"2011-10-02T01:34:58","slug":"contingency-fees-pt-3-do-standard-fees-exist","status":"publish","type":"page","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/contingency-fees-pt-3-do-standard-fees-exist\/","title":{"rendered":"contingency fees (pt. 3): do &#8220;standard&#8221; fees exist?"},"content":{"rendered":"<blockquote>\n<blockquote><p><span style=\"font-family: Arial\"><em><span style=\"font-family: Times New Roman;font-size: x-small\">&#8211; <\/span><\/em><\/span><em> This is Part III of a four-part series on the use of Contingency Fees (also called &#8220;contingent fees&#8221;) in personal injury (&#8220;p\/i&#8221;) cases.\u00a0 When properly used, contingency fees can be a beneficial option for the client.\u00a0 However, this series focuses on the ethical and competitive issues raised by the common practice of using a &#8220;standard&#8221; contingency fee (often one-third or 40% of moneys received) for virtually all clients &#8212; without regard to the risk the lawyer is taking in each particular case of doing the work without receiving adequate compensation.\u00a0 The standard contingency fee results in many clients paying unfairly high fees that are not warranted by either the work performed or the risk taken by the lawyer.<\/em><em> <\/em><\/p>\n<p><span style=\"font-size: x-small\"><em>&#8211; Click for <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-1-of-4-market-failures\/\">Part I <\/a><\/em><em> (Market failures); <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-2-risk-matters\/\">Part II<\/a><\/em><em> (risk matters)<\/em>;\u00a0<a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-3-do-standard-fees-exist\/\"><em>Part III<\/em><\/a><em> (do <\/em><\/span><span style=\"font-size: x-small\"><em>&#8220;standard&#8221; fees still exist?); and <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-4-ethical-duties\/\">Part IV<\/a><\/em><em> (ethical duties) &#8211;<\/em><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p><\/blockquote>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Times New Roman,Times,Serif;font-size: xx-small\"><img decoding=\"async\" src=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/SlicingThePie.gif\" alt=\"SlicingThePie\" \/> <\/span><span style=\"font-family: Arial;font-size: x-small\"> <em><strong>P<\/strong><\/em>ity the poor personal injury lawyer &#8212; he just doesn&#8217;t have enough<\/span><span style=\"font-family: Arial;font-size: x-small\"> hands. In addition to a perennial gladhand, plus the one needed<\/span><span style=\"font-family: Arial;font-size: x-small\"> for <\/span><span style=\"font-family: Arial;font-size: x-small\">patting <\/span><span style=\"font-family: Arial;font-size: x-small\">his\/her own back (over <em>free<\/em> services, selflessness, and<\/span><span style=\"font-family: Arial;font-size: x-small\"> gladiatorial courage), the p\/i lawyer has had to weigh just how to<\/span><span style=\"font-family: Arial;font-size: x-small\"> talk about the contingency fee that gets presented to <\/span><span style=\"font-family: Arial;font-size: x-small\">virtually every client, in p\/i cases all over town. Thus:<\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/tinycheck.gif\" alt=\"tiny check\" \/> <\/span><span style=\"font-family: Arial;font-size: x-small\">On the one hand, the p\/i bar in each State spent decades<\/span><span style=\"font-family: Arial;font-size: x-small\"> convincing <\/span><span style=\"font-family: Arial;font-size: x-small\">the public (and eachother) that they charged<\/span><span style=\"font-family: Arial;font-size: x-small\"> a &#8220;standard contingency fee,&#8221; with connotations both<\/span><span style=\"font-family: Arial;font-size: x-small\"> that everyone used the same rate for all personal injury<\/span><span style=\"font-family: Arial;font-size: x-small\"> clients and that they sort of <em>had<\/em> to. For a long time, this<\/span><span style=\"font-family: Arial;font-size: x-small\"> &#8220;standard&#8221; was one-third of moneys recovered for the client.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/tinycheck.gif\" alt=\"tiny check\" \/> <\/span><span style=\"font-family: Arial;font-size: x-small\">On the other hand, some economists, legal ethicists and<\/span><span style=\"font-family: Arial;font-size: x-small\"> other observers, started talking about how unnatural and<\/span><span style=\"font-family: Arial;font-size: x-small\"> even unethical it was to charge the same &#8220;standard&#8221; fee,<\/span><span style=\"font-family: Arial;font-size: x-small\"> no matter how little risk a particular case presented of<\/span><span style=\"font-family: Arial;font-size: x-small\"> being unpaid or underpaid for hours worked and resources<\/span><span style=\"font-family: Arial;font-size: x-small\"> spent. This left self-anointed, good-guy &#8220;Consumer Attorneys&#8221;<\/span><span style=\"font-family: Arial;font-size: x-small\"> with a public relations problem, so some started <\/span><a href=\"http:\/\/www.thepracticeblog.com\/2006\/03\/the_contingency.html\"><span style=\"font-family: Arial;color: #000000;font-size: x-small\">insisting<\/span><\/a><span style=\"font-family: Arial;font-size: x-small\"> that there was no such thing as a &#8220;standard&#8221; contingency<\/span><span style=\"font-family: Arial;font-size: x-small\"> fee. Others, who actually thought one-third was just<\/span><span style=\"font-family: Arial;font-size: x-small\"> not quite enough, and wanted to start charging<\/span><span style=\"font-family: Arial;font-size: x-small\"> 40 to 50%, sort of liked the idea that there wasn&#8217;t<\/span><span style=\"font-family: Arial;font-size: x-small\"> &#8220;really&#8221; a standard &#8212; or, at least, that it was not<\/span><span style=\"font-family: Arial;font-size: x-small\"> a mere 33.3%. (see our prior <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2003\/07\/16#a115\">post<\/a>)<\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/tinycheck.gif\" alt=\"tiny check\" \/> <\/span><span style=\"font-family: Arial;font-size: x-small\">Yet (and this may require one&#8217;s using a <\/span><a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2006\/03\/27#a6370\"><span style=\"font-family: Arial;color: #000000;font-size: x-small\">Scalian<\/span><\/a><span style=\"font-family: Arial;font-size: x-small\"> set of fingers, in conjunction with a raised chin or two),<\/span><span style=\"font-family: Arial;font-size: x-small\"> the typical p\/i lawyer <em>still wanted<\/em> to be able to use a<\/span><span style=\"font-family: Arial;font-size: x-small\"> standard rate (or standard tier of rates &#8212; such as 25%, 33.3%,<\/span><span style=\"font-family: Arial;font-size: x-small\"> and 40% &#8212; that depended on the stage at which the<\/span><span style=\"font-family: Arial;font-size: x-small\"> case was won). This would allow him or her to proffer<\/span><span style=\"font-family: Arial;font-size: x-small\"> the same rate (often pre-printed in the firm&#8217;s fee form)<\/span><span style=\"font-family: Arial;font-size: x-small\"> to virtually every client. It would also allow the firm to<\/span><span style=\"font-family: Arial;font-size: x-small\"> say that the rate must be reasonable, because it was<\/span><span style=\"font-family: Arial;font-size: x-small\"> what <\/span><span style=\"font-family: Arial;font-size: x-small\">other clients accepted and all the other &#8220;quality&#8221;<\/span><span style=\"font-family: Arial;font-size: x-small\"> firms <\/span><span style=\"font-family: Arial;font-size: x-small\">in town <\/span><span style=\"font-family: Arial;font-size: x-small\">were also using.<\/span><\/p>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\">&#8211; Any hypothetical firm that might<span style=\"font-family: Geneva,Arial,Sans-Serif\"> offer below-<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\">Standard fees is thus<\/span><\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> characterized as <em>sub-standard<\/em><\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> &#8212; surely too inexperienced or less skilled, and<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> therefore less able to get the client the highest<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> possible recovery. (Consumer Attorneys [formerly Trial Lawyers] of California&#8217;s <\/span><a href=\"http:\/\/www.caoc.com\/CA\/index.cfm?event=showPage&amp;pg=selectlawyer\"><em><span style=\"font-family: Geneva,Arial,Sans-Serif;color: #000000;font-size: x-small\">Selecting a Lawyer<\/span><\/em><\/a><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"> makes this specious argument.<\/span>)<\/span><\/p><\/blockquote>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/questionDudeSN.gif\" alt=\"questionDudeSN\" \/><\/span><span style=\"font-family: Arial;font-size: x-small\"> It almost makes you want to throw your hands up in confusion, or maybe <\/span><span style=\"font-family: Arial;font-size: x-small\">join your hands in prayer for the plight of the misguided p\/i<\/span><span style=\"font-family: Arial;font-size: x-small\"> bar &#8212; if not offer a sympathetic hug. Instead, <\/span><span style=\"font-family: Arial;font-size: x-small\">though, <\/span><span style=\"font-family: Arial;font-size: x-small\">I thought &#8212;<\/span><span style=\"font-family: Arial;font-size: x-small\"> with the help of an online thesaurus <\/span><span style=\"font-family: Arial;font-size: x-small\">&#8212; that I <\/span><span style=\"font-family: Arial;font-size: x-small\">would help <\/span><span style=\"font-family: Arial;font-size: x-small\">clarify the<\/span><span style=\"font-family: Arial;font-size: x-small\"> actual situation out in the real world:<\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\">The vast majority of p\/i lawyers who are <\/span><span style=\"font-family: Arial;font-size: x-small\">seeking your<\/span><span style=\"font-family: Arial;font-size: x-small\"> business for <a href=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/gems\/ethicalesq\/HeavyHittersCover.JPG\">typical<\/a> personal injury cases (not <\/span><span style=\"font-family: Arial;font-size: x-small\">class-action<\/span><span style=\"font-family: Arial;font-size: x-small\"> suits, <\/span><span style=\"font-family: Arial;font-size: x-small\">where <\/span><span style=\"font-family: Arial;font-size: x-small\">fees are reviewed by a court before being doled<\/span><span style=\"font-family: Arial;font-size: x-small\"> out to the <\/span><span style=\"font-family: Arial;font-size: x-small\">lawyers) continue to offer a single percentage fee<\/span><span style=\"font-family: Arial;font-size: x-small\"> or, as stated above, <\/span><span style=\"font-family: Arial;font-size: x-small\">a tiered or stepped &#8220;varied&#8221; fee, that is <\/span><\/p>\n<blockquote>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\">(a) &#8220;standard&#8221; <\/span><span style=\"font-family: Arial;font-size: x-small\">within their partic<\/span><span style=\"font-family: Arial;font-size: x-small\">ular firm, and therefore<\/span><span style=\"font-family: Arial;font-size: x-small\"> offered to virtually every client (with that hope and expec<\/span><span style=\"font-family: Arial;font-size: x-small\">tation that it will be meekly accepted);<\/span><\/p><\/blockquote>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\">(b) &#8220;standard&#8221; across their locale, jurisdiction or State, so <\/span><span style=\"font-family: Arial;font-size: x-small\">that the vast majority of firms can be relied upon to also<\/span><span style=\"font-family: Arial;font-size: x-small\"> proffer and use that rate &#8212; or, at the very least, refrain from<\/span><span style=\"font-family: Arial;font-size: x-small\"> any advertising <\/span><span style=\"font-family: Arial;font-size: x-small\">that might suggest otherwise. Or, <\/span><\/p><\/blockquote>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">(c) a &#8220;standard&#8221; rate that is in fact the maximum rate set by<\/span><span style=\"font-family: Arial;font-size: x-small\"> statute or regulation for a particular kind <\/span><span style=\"font-family: Arial;font-size: x-small\">of case (i.e., medical<\/span><span style=\"font-family: Arial;font-size: x-small\"> malpractice), or the maximum allowed without specific<\/span><span style=\"font-family: Arial;font-size: x-small\"> authorization from a court or specific proof of special circum<\/span><span style=\"font-family: Arial;font-size: x-small\">stances.<\/span><\/p>\n<\/blockquote>\n<\/blockquote>\n<p><span style=\"font-family: Arial;font-size: x-small\">In coming to these conclusions, I have done significantly more than<\/span><span style=\"font-family: Arial;font-size: x-small\"> talk with p\/i lawyers and consumer advocates across the nation. I have<\/span><span style=\"font-family: Arial;font-size: x-small\"> also engaged in considerable internet research<\/span><span style=\"font-family: Arial;font-size: x-small\"> &#8212; <\/span><span style=\"font-family: Arial;font-size: x-small\">including a quick check<\/span><span><span style=\"font-family: Arial;font-size: x-small\"> at the <\/span><a href=\"http:\/\/www.wordsmyth.net\/live\/home.php?script=search&amp;matchent=standard&amp;matchtype=exact#POS2\"><em><span style=\"font-family: Arial;color: #000000;font-size: x-small\">Wordsmyth Thesaurus<\/span><\/em><\/a><span style=\"font-family: Arial;font-size: x-small\">, where I learned that the adjective &#8220;<\/span><a href=\"http:\/\/www.wordsmyth.net\/live\/home.php?script=search&amp;matchent=standard&amp;matchtype=exact#POS2\"><span style=\"font-family: Arial;font-size: x-small\">standard<\/span><\/a><span style=\"font-family: Arial;font-size: x-small\">&#8220;<\/span><\/span><span><span style=\"font-family: Arial;font-size: x-small\"> means &#8220;<span>serving as a model for measurement or comparison or as an<\/span><\/span><\/span><span><span style=\"font-family: Arial;font-size: x-small\"><span> accepted authority<\/span>&#8221; or &#8220;normal, routine, usual,&#8221; and is also synonymous<\/span><\/span><span><span style=\"font-family: Arial;font-size: x-small\"> with &#8220;prevailing&#8221; and &#8220;common&#8221;.<\/span><\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">Here&#8217;s some of our evidence (emphases added by Editor):<\/span><\/p>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\"><strong><em>ATLA<\/em><\/strong>: In its <a href=\"http:\/\/www.atlanet.org\/courts\/victory\/cclpetition.pdf\"><span style=\"color: black\">submittal<\/span><\/a> to the Utah Supreme Court, in 2003, which<\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\"> we discussed <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2006\/04\/03#a6396\">here<\/a>, the <a href=\"http:\/\/www.atlanet.org\/\">American Trial Lawyers Association<\/a> [which now calls itself the American Association for Justice] the stated<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\">: &#8220;Indeed, it is <span style=\"font-family: Arial;font-size: x-small\">convenient to refer to one-third as the usual <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">rate <\/span><span style=\"font-family: Arial;font-size: x-small\">when explaining <\/span><span style=\"font-family: Arial;font-size: x-small\">how contingency fees work.&#8221; That repeats <\/span><\/span><span style=\"font-family: Arial\"><span style=\"font-size: x-small\">ATLA discussion in both its &#8220;<a href=\"http:\/\/www.civiljustice.org\/Pages\/05-ContingentFeeSystem.html\"><em>Keys to the Courthouse<\/em><\/a>&#8221; and more-<\/span><\/span><span style=\"font-family: Arial\"><span style=\"font-size: x-small\">recent &#8220;<a href=\"http:\/\/www.atlanet.org\/pressroom\/FACTS\/tortreform\/glossarytortterms.aspx#c\"><span style=\"color: black\"><em>Glossary <\/em><\/span><\/a><\/span><\/span><span style=\"font-family: Arial\"><span style=\"font-size: x-small\"><a href=\"http:\/\/www.atlanet.org\/consumermediaresources\/tier3\/press_room\/facts\/tortreform\/glossarytortterms.aspx\"><span style=\"color: black\"><em>of Tort &#8216;Reform&#8217; [Civil Justice] Terms<\/em><\/span><\/a><span style=\"color: black\">,&#8221;<\/span> that:<\/span><\/span><\/p>\n<blockquote><p><span style=\"font-family: Arial\"><span style=\"font-size: x-small\"><span style=\"text-decoration: underline\">&#8220;Contingency Fee<\/span>: The contingent fee system is the<\/span><\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> &#8216;key to the courtroom&#8217; for thousands of Americans. It<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> allows people who suffered an injury to bring a suit without having to have the money up front to pay their attorney.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">Rather than charging for legal services by the hour, an attorney agrees to accept a portion of any recovery in the case, &#8220;usually one-third.&#8221; <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">Further, in footnote 2 of an ATLA <\/span><a href=\"http:\/\/www.atlanet.org\/courts\/amicus\/barnhart.pdf\"><span style=\"color: #000000\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\"><em>amicus <\/em>brief<\/span><\/span><\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> to the U.S.<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> Supreme Court, in 2002, it argued against the notion that<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> &#8220;those clients who win subsidize the losers.&#8221; Instead, they<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> amicus brief argues: &#8220;If it were the attorney&#8217;s only case, he<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> or she would charge the <em>same prevailing contingency fee<\/em>.&#8221;<\/span><\/p>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\"><strong><em>Georgia<\/em><\/strong>: Offering personal injury information to the public, Georgia&#8217;s<\/span><\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> trial lawyer foundation borrowed ATLA&#8217;s &#8220;<\/span><a href=\"http:\/\/www.civiljustice.org\/Pages\/05-ContingentFeeSystem.html\"><span style=\"font-family: Geneva,Arial,Sans-Serif;color: #000000;font-size: x-small\">Keys to the Courthouse<\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">: Quick <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">Facts on the Contingency Fee System&#8221; (1994), including the statement<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> that contingency fees are &#8220;usually one-third.&#8221; (and see their &#8220;<a href=\"http:\/\/www.gtla.org\/public\/contingency\/whatis.html\">What Is a Contingent Fee?<\/a>,&#8221; which says &#8220;usually in the amount of one-third&#8221;.)<br \/>\n<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\"><strong><em>Tennessee<\/em><\/strong>: Here&#8217;s what the <\/span><\/span><a href=\"http:\/\/www.tba.org\/LawBytes\/T1_1005.html\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">Tennessee Bar says<\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> about contingency fee<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> rates:<\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">&#8220;In some cases such as social security and worker&#8217;s compensation, there is usually a cap or limit on the percentage or the dollar amount that <\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-size: x-small\">an attorney is permitted to charge. You should ask the attorney<\/span> if there is such a limit and what it is. In most personal injury cases,<\/span><span style=\"font-family: Arial;font-size: x-small\"> there is not a limit on what the attorney can charge. However, gen<\/span><span style=\"font-family: Arial;font-size: x-small\">erally speaking, a <em>one-third contingency fee is the customarily<\/em><\/span><span style=\"font-family: Arial;font-size: x-small\"><em> accepted percentage<\/em> that a lawyer will be paid from your award.&#8221;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">[<em>Ed question<\/em>: If there&#8217;s a statutory limit, why does the client<\/span><span style=\"font-family: Arial;font-size: x-small\"> have to ask the lawyer? Is that to remind counsel not to cheat,<\/span><span style=\"font-family: Arial;font-size: x-small\"> or to reas<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">sure the client that one-third is otherwise standard?]<\/span><\/p>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\"><em><strong>New Hamphire<\/strong><\/em>: The <\/span><\/span><a href=\"http:\/\/www.nhbar.org\/for-the-public\/selecting-hiring-working-with-a-lawyer.asp\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">New Hampshire Bar<\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> says &#8220;Contingency fee percen<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">tages of <em>33% are common<\/em>. Any percentage in excess of 40% may be unethical.&#8221;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\"><em><strong>California<\/strong><\/em>: The <\/span><\/span><a href=\"http:\/\/www.caoc.com\/CA\/index.cfm?event=showPage&amp;pg=feekey\"><span style=\"font-family: Geneva,Arial,Sans-Serif;color: #000000;font-size: x-small\">Consumer Attorneys of California<\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> trial lawyer association<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> states: &#8220;Rather than charging for legal services by the hour, an attorney agrees<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> to accept a portion of any recovery in the case, <em>usually one-third.&#8221;<\/em><\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Times New Roman,Times,Serif;font-size: xx-small\"><img decoding=\"async\" src=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/SlicingThePie.gif\" alt=\"SlicingThePie\" \/><\/span><\/p>\n<\/blockquote>\n<\/blockquote>\n<p><span style=\"font-family: Geneva,Arial,Sans-Serif\"><span style=\"font-size: x-small\">Recently, your <span style=\"font-family: Geneva,Arial,Sans-Serif\">editor was <\/span><\/span><\/span><a href=\"http:\/\/www.thepracticeblog.com\/2006\/03\/a_thorough_resp.html\"><span style=\"color: #000000\"><span style=\"font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\">called<\/span><\/span><\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> both too old and &#8220;too lazy to analyze the contingency <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">fee in context.&#8221; Despite my apparent intellectual infirmities, I seem to have detected <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">a pattern. Of course, I&#8217;d be pleased to hear there are exceptions to this constant <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">barrage, which has tried to make one-third seem like the prevailing, customary, standard <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">fee level in personal injury cases for several decades. <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">Perhaps more interesting, as I pointed out in 2003 in <\/span><a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2003\/09\/05#a248\"><span style=\"font-family: Geneva,Arial,Sans-Serif;color: #000000;font-size: x-small\">It&#8217;s Not Unusual (to take one-third)<\/span><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">,<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> is the analysis of the U.S. Supreme Court when faced with a contingency fee case in <\/span><a href=\"http:\/\/caselaw.lp.findlaw.com\/scripts\/getcase.pl?court=US&amp;vol=000&amp;invol=01-131\"><em><span style=\"font-family: Geneva,Arial,Sans-Serif;color: #000000;font-size: x-small\">Gisbrecht v. Barnhart<\/span><\/em><\/a><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">, 535 U.S. 789 (2002). The Court concluded that attorneys success<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">fully representing Social Security disability claimants in court may be awarded fees based <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">on contingent fee agreements with their clients. Note that, by statute, contingency fees in<\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"> Social<\/span> Security cases are limited to 25%. <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">Justice Ginsberg wrote the majority opinion, joined by seven other justices, and Justice<\/span><span style=\"font-family: Arial;font-size: x-small\"> Scalia dissented. Here&#8217;s a little of what the <em>Gisbrecht<\/em> Court had to say: <\/span><\/p>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\">&#8220;Characteristically in cases of the kind we confront, attorneys and clients enter <\/span><span style=\"font-family: Arial;font-size: x-small\">into contingent-fee agreements &#8220;specifying that the fee will be 25 percent of any <\/span><span style=\"font-family: Arial;font-size: x-small\">past-due benefits to which the claimant becomes entitled.&#8221; Brief for National <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">Organization of Social Security Claimants&#8217; Representatives as <em>Amicus Curiae<\/em> 2;<\/span><span style=\"font-family: Arial;font-size: x-small\"> see Brief for Washington Legal Foundation et al. as <em>Amicus Curiae<\/em> 9, n. 6 <\/span><span style=\"font-family: Arial;font-size: x-small\"> (&#8220;There is no serious dispute among the parties that virtually every attorney repre<\/span><span style=\"font-family: Arial;font-size: x-small\">senting Title II disability claimants includes in his\/her retainer agreement a provision <\/span><span style=\"font-family: Arial;font-size: x-small\">calling for a fee equal to 25% of the past-due benefits awarded by the courts.&#8221;). <\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-family: Arial;font-size: x-small\">In antitrust jargon, we&#8217;d say that the maximum price has become the floor &#8212; no price com<\/span><span style=\"font-family: Arial;font-size: x-small\">petition. Please note that <\/span><span style=\"font-family: Arial;font-size: x-small\">Justice Scalia did not dissent because he came to a different <\/span><span style=\"font-family: Arial;font-size: x-small\">understanding on the existence of a standard contingency fee in SSD cases:<\/span><\/p>\n<blockquote><p><span style=\"font-family: Arial;font-size: x-small\">&#8220;The fee agreements in these Social-Security cases are hardly negotiated; <\/span><span style=\"font-family: Arial;font-size: x-small\">they are akin to adherence contracts. It is uncontested that the specialized <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">Social-Security bar charges uniform contingent fees (the statutory maximum<\/span><span style=\"font-family: Arial;font-size: x-small\"> of 25%), which are presumably presented to the typically unsophisticated client <\/span><span style=\"font-family: Arial;font-size: x-small\">on a take-it-or-leave-it basis.&#8221;<\/span><\/p>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/checkedBoxS.gif\" alt=\"checkedBoxS\" \/><\/span><span style=\"font-family: Arial;font-size: x-small\"> My conclusion from 2003 still stands: It seems perfectly fair to call a contingency fee <\/span><span style=\"font-family: Arial;font-size: x-small\">&#8220;standard,&#8221; <\/span><span style=\"font-family: Arial;font-size: x-small\">when it is &#8220;prevailing&#8221; and is &#8220;usually&#8221; offered to clients. Ditto when the<\/span><span style=\"font-family: Arial;font-size: x-small\"> statutory maximum is used &#8220;characteristically&#8221; and &#8220;in virtually every case&#8221; for Social <\/span><span style=\"font-family: Arial;font-size: x-small\">Security claims. <\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\">There has, however, been one much-cited study that purports to show that no standard <\/span><span style=\"font-family: Arial;font-size: x-small\">fee exists (in Wisconsin). It is <\/span><a href=\"http:\/\/polisci.wisc.edu\/~kritzer\/research\/contfee\/wulq2002.htm\"><span style=\"font-family: Arial;color: #000000;font-size: x-small\"><em>Seven Dogged Myths Concerning Contingency Fees<\/em><\/span><\/a><span style=\"font-family: Arial;font-size: x-small\"> (Wash.<\/span><span style=\"font-family: Arial;font-size: x-small\">U. <\/span><span style=\"font-family: Arial;font-size: x-small\">Law Q, Fall 2000), by Prof. Herbert M. Kritzer, of U. Wisconsin-Madison. The Study <\/span><span style=\"font-family: Arial;font-size: x-small\">is discussed and <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2003\/07\/30#a157\">debunked at length<\/a> in a prior post.<\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/tinycheck.gif\" alt=\"tiny check\" \/> Kritzer used a small sample of cases, supplied by volunteer participants who had a <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">vested interest in helping Kritzer &#8220;debunk contingency fee myths&#8221;, and who also selected which cases they reported. Nonetheless, Kritzer concluded that &#8220;on the order<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> of 60% of the cases employed the standard one-third contingency fee.&#8221; Of those that didn&#8217;t use a flat 33%, many charged [what I would call the new or alternative stan<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">dard] a variable fee that started at 25% or 33% and went to 40% or 50%. It seems<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> clear then that a <em>very large<\/em> percentage and number of consumers in Wisconsin<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> are presented with <em>only<\/em> a contingency fee option and are forced to accept a flat rate <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">of one-third or a varied rate that result frequently in fees of one-third or more. <\/span><\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\">Beyond not disproving the existence of a standard fee, Kritzer in no way helps quantify the key <\/span><span style=\"font-family: Arial;font-size: x-small\">question in my suggested (traditionalist) approach <\/span><span style=\"font-family: Arial;font-size: x-small\">to contingency fees: How many lawyers <\/span><span style=\"font-family: Arial;font-size: x-small\">are willing to negotiate and tailor the fee arrangement <\/span><span style=\"font-family: Arial;font-size: x-small\">to the particular client&#8217;s situation, while <\/span><span style=\"font-family: Arial;font-size: x-small\">giving the client enough information and objective <\/span><span style=\"font-family: Arial;font-size: x-small\">advice to make an intelligent choice? <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">Furthermore, Kritzer actually helps support my position, because he argues against<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> the supposed myth that p\/i lawyers take every case <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">that walks into their doors. No sane <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">observer of the legal scene believes that myth or mouths <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">it. Quite the opposite is true: p\/i<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> lawyers sort through cases all the time, rejecting the poor <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">prospects (and advertising that <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">they only take &#8220;serious&#8221; injuries that could bring big jackpots). (Read about Schenectady,<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"> NY, lawyers who boast of a <\/span><a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2004\/04\/06#a1156\"><span style=\"font-family: Arial;color: #000000;font-size: x-small\">98% Win Rate<\/span><\/a><span style=\"font-family: Arial;font-size: x-small\">, &#8220;most often&#8221; charge one-third, and I bet reject <\/span><span style=\"font-family: Arial;font-size: x-small\">a lot of clients)<\/span><\/p>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">That&#8217;s why I believe that an experienced p\/i lawyer can and does make <em>intelligent<\/em> guesses<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> about the likely outcome of a case, greatly lowering the overall risk in his or her practice. <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">And, that&#8217;s why I&#8217;ve often suggested that one possible pricing strategy might be a three-tier<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> percentage system based on the lawyer&#8217;s perception of the risk: You give the client a good faith evaluation as to whether the case appears to be low, medium or high risk, and offer<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> corresponding percentages (e.g., 13-23-33%). Of course, you also let the client know that <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\">a hourly fee could be negotiated &#8212; just like in marital or commercial cases, where the client<\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Arial;font-size: x-small\"> often has no idea what the final outcome or bill will be. <\/span><\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">In his article <\/span><a href=\"http:\/\/law.wustl.edu\/WULQ\/81-3\/653Brickman.pdf\"><em><span style=\"font-family: Arial;font-size: x-small\">Effective Hourly Rates of Contingency-Fee Lawyers:<\/span><\/em><\/a><span style=\"font-size: x-small\"><span style=\"font-family: Arial\"><em> Competing Data and<\/em><\/span><\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\"><em> Non-<\/em><\/span><\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\"><em>Competitive Fees<\/em>, 81 Wash.U.L.Q. 653 (2003), Lester Brickman, Professor of Law, <\/span><\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\">Benjamin <\/span><\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\">N. Cardozo School of Law of Yeshiva University, recognizes that the existence<\/span><\/span><span style=\"font-size: x-small\"><span style=\"font-family: Arial\"> of a standard <\/span><\/span><span style=\"font-family: Arial;font-size: x-small\">fee system injures consumers and shows the existence of market failure <\/span><span style=\"font-family: Arial;font-size: x-small\">[at fn 160]:<\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">&#8220;Even the bar recognizes that reliance on competitive forces to drive down <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">inordinately high contingent fees is not an effective regulatory strategy. One <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">clear indicator of the inadequacy of reliance on market competition to exert downward pressure on contingent fees is the fact that contingency-fee lawyers<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> do not engage in competitive fee advertising.Moreover, even if a claimant were <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">to obtain &#8220;more information about fees,&#8221;he would simply discover that fees are<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> standard and not subject to bargaining. Though some claimants do shop around <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">for lower pricing, they quickly find out that lawyers are unwilling to bargain over<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> the fee percentage. As a consequence of these lawyers&#8217; practices, claimants are <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">discouraged from seeking lower prices by shopping and bargaining because they<\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\"> have learned what lawyers have intended for them to perceive: that there is a standard <\/span><span style=\"font-family: Geneva,Arial,Sans-Serif;font-size: x-small\">industry practice of maintaining uniform pricing, and price shopping is therefore futile.&#8221;<\/span><\/p>\n<\/blockquote>\n<\/blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"><img decoding=\"async\" src=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/podiumSN.gif\" alt=\"podiumSN\" \/><\/span><\/span><span style=\"font-family: Arial;font-size: x-small\"><span style=\"font-family: Geneva,Arial,Sans-Serif\"> As I stated in my<\/span> earlier post on Kritzer, the focus of my analysis of the &#8220;reasonable contingency fee&#8221; is the individual lawyer&#8217;s ethical, profes<\/span><span style=\"font-family: Arial;font-size: x-small\">sional and fiduciary obligations to the individual client. That&#8217;s what legal ethics are about. <\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">What&#8217;s happening or not happening on the macro-level can reinforce or deter anti-consumer<\/span><span style=\"font-family: Arial;font-size: x-small\"> and anticompetitive practices, but can&#8217;t justify a failure by the lawyer to give each client <\/span><span style=\"font-family: Arial;font-size: x-small\">undivided loyalty &#8212; even when it comes to fees or to pressure from partners to generate profits. <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">No client should be asked to subsidize other clients with riskier cases. And, no client should<\/span><span style=\"font-family: Arial;font-size: x-small\"> be forced to enter into a contingency fee arrangement without enough information to make an <\/span><span style=\"font-family: Arial;font-size: x-small\">intelligent choice about fee levels and options. Beyond its failure to present valid data, Kritzer&#8217;s<\/span><span style=\"font-family: Arial;font-size: x-small\"> study does not help us gauge the ethical significance of a system that consistently uses con<\/span><span style=\"font-family: Arial;font-size: x-small\">tingency fees bearing little or no relationship to the risk and work facing the lawyer.<\/span><\/p>\n<\/blockquote>\n<p dir=\"ltr\"><em><span style=\"font-family: Arial;font-size: x-small\">In fact, a typical personal injury client still faces a &#8220;standard&#8221; contingency fee. This means<\/span><span style=\"font-family: Arial;font-size: x-small\"> that trial lawyer talk about the ethical obligation to use risk-based fee agreements <\/span><span style=\"font-family: Arial;font-size: x-small\">&#8212; although <\/span><span style=\"font-family: Arial;font-size: x-small\">correct as to legal ethics &#8211; is hollow <\/span><span style=\"font-family: Arial;font-size: x-small\">public <\/span><span style=\"font-family: Arial;font-size: x-small\">relations posturing. <\/span><span style=\"font-family: Arial;font-size: x-small\">(see our prior post <\/span><a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2006\/04\/03#a6396\"><span style=\"font-family: Arial;color: #000000;font-size: x-small\">risk matters<\/span><\/a><\/em><span style=\"font-family: Arial;font-size: x-small\"><em>)<\/em> <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">From p\/i lawyers? Shocking. For their acting ability, however, we should perhaps give them a<\/span><span style=\"font-family: Arial;font-size: x-small\"> hand.<\/span><\/p>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><img decoding=\"async\" src=\"http:\/\/cyber.law.harvard.edu\/blogs\/static\/ethicalesq\/tinycheck.gif\" alt=\"tiny check\" \/> On April 1, 2005, our Prof. Yabut had a <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2005\/04\/01#a3587\">dream<\/a> in which an<\/span><span style=\"font-family: Arial;font-size: x-small\"> apocryphal &#8220;ATLA&#8221; declared the Standard Contingency<\/span><span style=\"font-family: Arial;font-size: x-small\"> Fee to be <a href=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/gems\/ethicalesq\/ATLApr.doc\">unethical<\/a>, and adopted <\/span><span style=\"font-family: Arial;font-size: x-small\"><span><a href=\"http:\/\/media-cyber.law.harvard.edu\/blogs\/gems\/ethicalesq\/BillofRightsforContingencyFe.doc\"><span style=\"color: black\">The Injured Consumers\u2019 Bill of Rights for Contingency Fees<\/span><\/a><\/span><\/span><span style=\"font-family: Arial;font-size: x-small\">. We can hope that it will someday soon be a dream that comes true. <\/span><\/p>\n<\/blockquote>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><em><strong>p.s.<\/strong><\/em> It appears that there is no shortage of p\/i lawyers in <\/span><span style=\"font-family: Arial;font-size: x-small\">cases that have<\/span><span style=\"font-family: Arial;font-size: x-small\"> statutory limits of 25%. Are medical malpractice suits really less risky than <\/span><span style=\"font-family: Arial;font-size: x-small\">typical auto accidents? Whey are auto accident plaintiffs forced to pay one-<\/span><span style=\"font-family: Arial;font-size: x-small\">third or more so often? In California, lawyers are re<\/span><span style=\"font-family: Arial;font-size: x-small\">quired to tell medical mal<\/span><span style=\"font-family: Arial;font-size: x-small\">practice clients (in their fee agreements, though not orally), that the 25% figure<\/span><span style=\"font-family: Arial;font-size: x-small\"> is a statutory maximum and they have the right to negotiate for a lower <\/span><span style=\"font-family: Arial;font-size: x-small\">amount. <\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\">Do any California lawyers negotiate? Do any fill in a number <\/span><span style=\"font-family: Arial;font-size: x-small\">lower than 25%<\/span><span style=\"font-family: Arial;font-size: x-small\"> before handing the Agreement to the client (now, <em>I<\/em> must be hallucinating)?<\/span><\/p>\n<\/blockquote>\n<blockquote>\n<blockquote>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><em><strong><span style=\"color: red\">afterthought<\/span><\/strong><\/em> (April 6): If you are a p\/i lawyer who offers potential clients<\/span><span style=\"font-family: Arial;font-size: x-small\"> Contingency Fee Agreements that are based on a sliding scale of perceived <\/span><span style=\"font-family: Arial;font-size: x-small\">risk (based on your experience and good judgment), w<\/span><span style=\"font-family: Arial;font-size: x-small\">e&#8217;d be happy to create<\/span><span style=\"font-family: Arial;font-size: x-small\"> a page listing details about your practice and contingency fee <\/span><span style=\"font-family: Arial;font-size: x-small\">policy.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: #ff0000\"><strong><em>more afterthought<\/em><\/strong> <\/span><span style=\"color: black\">(April 7, 2006):(April 7, 2006): For years (and as recently as <a href=\"http:\/\/www.greedytriallawyer.com\/seeing-clearly-now\/how-standard-is-the-contingency-fee.php\">this week<\/a>), I&#8217;ve heard p\/i lawyers insist that they can and do make up for the deficiencies of the standard contingency fee by rebating or discounting the fee at the backend of a case. From the economic\/competitive perspective, this &#8220;secret&#8221; or hidden discounting, while publically upholding a no-price-competition position across the industry, deprives consumers of the benefits of price competition, and strengthens market failure, keeping overall contingent fees artificially high.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\">Such &#8220;rebates&#8221; are also ethically insufficient, even if we could believe that they are widespread and large enough to make the client whole. The ABA&#8217;s Formal Ethics Opinion 94-389 (influenced by Model Rule 1.5(a), which says &#8220;A lawyer shall not make an agreement for, charge, or collect an unreasonable fee&#8221;), correctly assumes that the fee will be structured to be reasonable when the contingency arrangement is entered. No client should have to hope or beg for a discount, attack a signed retainer contract, or be at the mercy of the lawyer&#8217;s notion of post-recovery fairness in order to achieve a reasonable fee.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\">&#8211; That does <em>not<\/em> mean that a p\/i lawyer whose case is successfully concluded much sooner than anticipated, or for a lot more money, shouldn&#8217;t use his or her own standard of ethics or fairness in deciding to take a smaller fee than called for in a retainer contract.Codes and Rules are minimums, they never stop any lawyer from treating the client better than is required to avoid discipline or a guilty conscience.<\/span><\/span><\/span><\/span><\/p>\n<blockquote><p><em>&#8211; Click for <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-1-of-4-market-failures\/\">Part I <\/a><\/em><em> (Market failures); <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-2-risk-matters\/\">Part II<\/a><\/em><em> (risk matters)<\/em>;\u00a0<a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-3-do-standard-fees-exist\/\"><em>Part III<\/em><\/a><em> (do <\/em><em>&#8220;standard&#8221; fees still exist?); and <a href=\"http:\/\/blogs.law.harvard.edu\/ethicalesq\/contingency-fees-pt-4-ethical-duties\/\">Part IV<\/a><\/em><em> (ethical duties) &#8211;<\/em><\/p>\n<p style=\"text-align: center\"><span style=\"font-family: Arial;font-size: x-small\"><span style=\"color: black\"><span style=\"font-family: Arial;font-size: x-small\"><br \/>\n<\/span><\/span><\/span><\/p>\n<\/blockquote>\n<\/blockquote>\n<p dir=\"ltr\">\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>&#8211; This is Part III of a four-part series on the use of Contingency Fees (also called &#8220;contingent fees&#8221;) in personal injury (&#8220;p\/i&#8221;) cases.\u00a0 When properly used, contingency fees can be a beneficial option for the client.\u00a0 However, this series focuses on the ethical and competitive issues raised by the common practice of using a [&hellip;]<\/p>\n","protected":false},"author":94,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_jetpack_hide_featured_image":false,"_jetpack_featured_image_duplicate_dismissed":0,"footnotes":""},"class_list":["post-5255","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/P6kP1R-1mL","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/pages\/5255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/users\/94"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/comments?post=5255"}],"version-history":[{"count":7,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/pages\/5255\/revisions"}],"predecessor-version":[{"id":10729,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/pages\/5255\/revisions\/10729"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/media?parent=5255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}