{"id":3597,"date":"2003-07-16T03:04:27","date_gmt":"2003-07-16T07:04:27","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/formerlyknownas\/2003\/07\/16\/challenge-to-public-citizen-h"},"modified":"2011-08-05T15:00:50","modified_gmt":"2011-08-05T19:00:50","slug":"challenge-to-public-citizen-help-fix-the-contingency-fee-system-get","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2003\/07\/16\/challenge-to-public-citizen-help-fix-the-contingency-fee-system-get\/","title":{"rendered":"Challenge to Public Citizen: Help Fix the Contingency Fee System (get the current rules enforced and clients informed)"},"content":{"rendered":"

<\/a><\/p>\n

In a <\/span>press release<\/span><\/a> issued yesterday evening, Public Citizen<\/strong> announced that it had submitted comments to the Utah Bar<\/strong>, opposing\u00a0the Common Good<\/strong> proposal that would limit contingency fees when personal injury cases are settled early.\u00a0 [The proposals were discussed here in postings<\/em> made on <\/span>May 30<\/a><\/span>, <\/span>June 3<\/a><\/span>, and <\/span>June 12, 2003<\/span><\/a>.] <\/span>Public Citizen’s\u00a010-page Comments\/ Critique<\/a><\/span><\/strong> (dated July 14th) is available online in pdf. <\/span>The PC press release is\u00a0headlined: “Proposal to Undermine Contingency Fee System for Personal Injury Lawyers Should Be Rejected: Changes Would Put Injured Parties at a Disadvantage, National Public Interest Group Tells Utah Bar.” <\/strong><\/em> (dated 7\/15\/03) <\/span><\/p>\n

Despite several decades admiring much of the work of Ralph Nader and Public Citizen, I find myself once again wondering how this band of “consumer advocates” can so consistently parrot<\/strong> the arguments of the p\/i plaintiff’s bar<\/strong> when it comes to the topic of contingency fees.\u00a0 [Actually, “parrot” isn’t quite the right word, because it implies that Public Citizen does not understand the trial lawyers’ position or its consequences.\u00a0 Maybe “zealously advocate” is more appropriate, as it captures the\u00a0frequently over-the-top, one-sided\u00a0and often misleading nature of PC’s arguments in support of current contingency fee practices.]<\/span><\/p>\n

Frankly, many of the points made in the PC Critique of Common Good’s proposal have some merit — the proposal is<\/em> highly regulatory, complicated and experimental.\u00a0\u00a0 What I find inexplicable, however,\u00a0is that this\u00a0self-proclaimed consumer-rights champion\u00a0makes no arguments beyond those of the trial lawyers’ bar and makes no recommendations to help eliminate the acknowldeged injustice<\/strong> created by the use of “standard” contingency fees in p\/i cases, with the accompanying failure to take the risk factor in each case into account<\/em> when setting the fee level.\u00a0 P\/i clients have a lot of interests in common with their lawyers, but clearly not all <\/em>interests are consistent, especially those having to do with splitting the award pie.<\/span><\/p>\n

In fact, there\u00a0are only\u00a0two sentences in the entire 10-page submittal that might <\/em>depart from the party-line position of the plaintiffs’ trial lawyers.\u00a0 At the bottom of page 5, the PC Critique asserts: “The stated goal of the proposal is uncontroversial.\u00a0 It is widely accepted that contingency fees should vary<\/strong> depending on the<\/strong> riskiness and complexity<\/strong> of the individual case; indeed, that is what the ethical rules currently require (even though almost universally honored in the breach<\/strong>).”\u00a0 [emphases added] <\/span><\/p>\n

The meaning of Public Citizen’s admission is clear:\u00a0 Although the percentage rate of a contingency fee\u00a0is ethically\u00a0required to\u00a0relate to the riskiness of\u00a0each particular\u00a0case, they “almost universally” do not.\u00a0 Since p\/i lawyers customarily reject the most risky cases and\u00a0almost always charge the maximum percentage allowed in their jurisdiction for the cases they do take, a\u00a0large percentage of contingency fees are greater than can be justified<\/strong> by the risk taken by the lawyer of working without adequate compensation.\u00a0 Put another way, in a\u00a0significant percentage of p\/i cases, plaintiff’s lawyer is paid an excessive amount of the client’s award\u00a0and the client is cheated<\/strong> out of a portion of his or her fair share.\u00a0 In those cases, the lawyers\u00a0receive unreasonably high fees, in violation of their ethical obligations. <\/span><\/p>\n

Public Citizen offers not one word of outrage or concern<\/strong> about this anti-consumer outcome and unjustified enrichment of the plaintiffs’ lawyers.\u00a0 The only concern mentioned is that consumers might not be able to attract adequate numbers of lawyers, if the lawyers are not allowed to continue to charge such excessive fees in a significant number of cases.\u00a0Although it has\u00a0written frequently on the issue of contingent fee levels,\u00a0and it is now appearing in front of a body considering the regulation of contingency fees, Public Citizen offers no recommendations for preventing excessive fees, righting the balance of information,\u00a0or policing the over-reaching p\/i bar.\u00a0 For another example, see the Public Citizen <\/span>Fact Sheet<\/span><\/a>, <\/span>Capping Attorneys Fees: A Way To Keep Injured People Out Of Court <\/em>(6\/21\/01).<\/em><\/span><\/span><\/p>\n

Independent Voice?<\/em> <\/strong><\/span>Why is Public Citizen so reticent, despite it customary outspoken insistence on consumer rights?\u00a0 On its website, PC trumpets that it “is an independent voice for citizens in the halls of power. We take NO government or corporate money.”\u00a0\u00a0 What it does not say, of course, is “we take no trial lawyer money.”\u00a0 Has PC been co-opted, like the Democratic Party and much of the liberal not-for-profit sector, which are addicted to the funds received from generous trial lawyers and their PACS?\u00a0 Are unethically high contingency fees an important part of Public Citizen’s own resources for carrying on its mission?<\/span><\/p>\n

Given the initially one-side approach of Public Citizen in its opposition to the Common Good proposal, ethicalEsq <\/strong><\/em>challenges Public Citizen<\/strong> to supplement its statement to the Utah State Bar and any other state considering the Common Good Petition, by outlining and supporting policies that will preserve what is good<\/strong> about the contingency fee system, while helping to avoid the unfair enrichment<\/strong> of lawyers at the expense of their suffering, injured and often twice-victimized clients. <\/span><\/span><\/span><\/p>\n


\nIn our\u00a0Posting<\/a> <\/strong><\/span>dated 6\/12\/03,<\/span> called <\/strong>UnCommonly Good Advice on Contingency <\/em>Fees, we modestly stated that: <\/span>
\nethicalEsq<\/em> has the perfect plan to avoid adoption of the Common Good proposal <\/strong>in the 13 states where petitions are pending, or anywhere else. \u00a0If p\/i lawyers, bar associations, disciplinary committees, the courts, and the entire legal profession simply follow these suggestions, there will be no reason to make the changes proposed by Common Good to the existing rules of ethics. \u00a0Indeed, this blawg will be the first to say just that. It’s easy:<\/span>
\n(1) Start to follow and enforce the current <\/em>rules <\/strong>concerning the proper use of contingency fees. Stop\u00a0the denial or flouting of these obligations, which were clearly spelled out in the American Bar Association’s Formal Ethics Opinion 94-389<\/em>, based on long-established principles, Rules and Commentary.\u00a0 Opinion 94-389 isn’t available online from the ABA, but I have summarized it quite fairly in a Prairielaw.com column<\/span><\/a><\/strong> and here: <\/span><\/p>\n

The Ethics Opinion states that a contingency fee “does not violate ethical standards as long as the fee is appropriate<\/strong> in the circumstances and reasonable<\/strong> in amount, and as long as the <\/strong>client has been fully advised<\/strong> of the availability of alternative fee arrangements.”<\/em> <\/span><\/span><\/p>\n

According to Op. 94-389, a long list of relevant factors<\/strong> needs to be discussed with every client<\/strong> in every case, and “a lawyer who always charges the same percentage of recovery regardless of the particulars of a case should consider whether he is charging a fee that is, in an ethical context, a reasonable one.”\u00a0 In short, the choice<\/strong> to use a contingency fee belongs to the client<\/strong> and any <\/em>percentage <\/strong>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 the lawyer is likely to have to do (that is, the apparent<\/strong> risk<\/strong> taken by the lawyer). <\/em><\/span><\/p><\/blockquote>\n

(2) Because the requirements are almost universally ignored<\/strong> by lawyers and their watchdogs, it’s time to follow this recommendation\u00a0from Op. 94-389:<\/span><\/p>\n

“[A]ny lapse from the applicable requirements by some members of the profession suggests that the profession should<\/strong> redouble its efforts<\/strong> to assure that the ethical obligations associated with entering into a contingent fee arrangement are fully understood and observed.”<\/span><\/p><\/blockquote>\n

This means creating CLE<\/em> seminars, articles and brochures, and<\/em> imposing some actual attorney discipline<\/em>.\u00a0 It should also mean going to the public to let consumers<\/em> know their rights, because that knowledge will allow clients to protect themselves and spur fee competition among p\/i lawyers. To show good faith and effort, mandatory statements of client rights <\/em>should be promulgated, to ensure that each prospective client has enough information to make a smart choice in bargaining for a fair contingency fee or for another arrangement, such as paying by the hour.\u00a0 And,<\/span>
\n(3) Publically reject the ABA’s recent changes to Rule 1.5<\/strong> of the Model Rules of Professional Responsibility that were clearly made to protect lawyers from the ethical and fiduciary obligations required in Op. 389. (See my <\/span>Open Letter to the FTC<\/a><\/span>)\u00a0\u00a0 Opt out of the Ethics 2000\u00a0conspiracy by specifically asking the ruling body in each local jurisdiction to keep the current version Rule 1.5. [see the article<\/strong><\/span><\/a>, The Continuing Assault on the Citadel of Fiduciary Protection: Ethics 2000’s Revision of Model Rule 1.5 <\/em>(2003 U.Ill.L.Rev. 1181 [Number 5]), by Cardozo Law Professor Lester Brickman, which is discussed in this post<\/span><\/a>,\u00a0dated Jan. 28, 2004.] <\/span><\/span><\/span><\/p>\n

<\/span>
\n<\/span><\/p>\n

I’ve laid down the gauntlet, Public Citizen.\u00a0 Let’s see whose side you’re really on.<\/span><\/span><\/p>\n

<\/span>\"\"<\/a>See\u00a0our version of The Injured Consumers\u2019 Bill of Rights for Contingency Fees<\/em><\/a>, which is based on the requirements set forth in ABA Ethics Op. 94-389 and in the Florida Bar’s fee rules.\u00a0 Also, see our 4-part essay on contingency fees<\/a> (economics and ethics).
\n<\/span><\/span><\/span><\/p>\n


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In a press release issued yesterday evening, Public Citizen announced that it had submitted comments to the Utah Bar, opposing\u00a0the Common Good proposal that would limit contingency fees when personal injury cases are settled early.\u00a0 [The proposals were discussed here in postings made on May 30, June 3, and June 12, 2003.] Public Citizen’s\u00a010-page Comments\/ […]<\/p>\n","protected":false},"author":94,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2926],"tags":[],"class_list":["post-3597","post","type-post","status-publish","format-standard","hentry","category-pre-06-2006"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p6kP1R-W1","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/types\/post"}],"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=3597"}],"version-history":[{"count":1,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3597\/revisions"}],"predecessor-version":[{"id":14237,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/3597\/revisions\/14237"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/media?parent=3597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/categories?post=3597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/tags?post=3597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}