{"id":8609,"date":"2007-12-11T15:26:44","date_gmt":"2007-12-11T20:26:44","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/ethicalesq\/2007\/12\/11\/unconscionable-silence-over-grauba"},"modified":"2011-08-05T14:53:36","modified_gmt":"2011-08-05T18:53:36","slug":"unconscionable-silence-over-graubards-42-million-contingency-fee","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2007\/12\/11\/unconscionable-silence-over-graubards-42-million-contingency-fee\/","title":{"rendered":"unconscionable silence over Graubard’s $42 million contingency fee"},"content":{"rendered":"

..\"SlicingThePie\" ……. <\/em><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>Alice Lawrence v. Graubard Miller<\/a><\/strong> <\/em>…….. <\/em><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>\"\"<\/p>\n

Note<\/em><\/strong>: For a comprehensive look at the “standard contingency fee”, see our 4-part<\/a> essay on the ethics of contingencies fees, including the importance of risk<\/a> and the lawyer’s ethical duties<\/a>; and our post on related fiduciary duties<\/a>.<\/p>\n

T<\/strong><\/em>wo weeks ago, a New York appeals court issued its 4-to-1 decision in Lawrence v. Miller<\/a><\/em> (2007 NY Slip. Op. 09348; Nov. 27, 2007). In an opinion by presiding judge Richard T. Andrias, the First Department’s Appellate Division refused to declare a 40% contingent fee “unconscionable on its face.”<\/p>\n

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In a general dictionary, unconscionable<\/a> means “Not restrained by conscience.” In legal terms, a contract or bargain is “unconscionable<\/a>” when it is “so unfair to a party that no reasonable or informed person would agree to it.”<\/p><\/blockquote>\n<\/blockquote>\n

In Lawrence v. Miller<\/a><\/em>, the appeals court held that a trial would be needed, in this probate case dating back to the death of real estate mogul Sylvan Lawrence in 1981, to determine whether the $42 million fee charged by the law firm Graubard Miller to 80-year-old widow Alice Lawrence in 2005 — for about four months’ work, and on top of $18 million in hourly fees and $5 million in \u201cgifts” already paid, and a retainer for an added $1.2 million in hourly billing for that year — was unconscionable under the circumstances, or otherwise met criteria needed to be deemed fair and reasonable under ethical standards for lawyers.<\/p>\n

\"\" In a lengthy, thoughtful dissenting opinion, Justice James Catterson dissented explained why he concluded that the fee was unconscionable as a matter of law, the agreement should be voided, and the defendants should be referred to the Department Disciplinary Committee.<\/p>\n

update<\/strong><\/em>: See “N.Y. High Court Skeptical of $40 Million Payoff From Contingency Fee Deal<\/a>” (New York Law Journal<\/em>, Oct. 24, 2008), a lengthy news article, which describes oral argument in this case at the New York Court of Appeals on Oct. 23, 2008.\u00a0 It notes that “Members of the court appeared skeptical during an hour of oral arguments about the size of the fee and several questioned the propriety of Graubard Miller seeking to collect the entire amount.” And, that “Judge Robert S. Smith echoed several of his colleagues when he wondered whether a legitimate contingency agreement, ‘where it works out so favorably to the lawyer, where it is so much money for so little work,’ could be considered unconscionable.” (via Overlawyered.com<\/a><\/em>)<\/p><\/blockquote>\n

With greedy lawyers as villains, an octogenarian widow as victim, and sharply disagreeing jurists, it’s the kind of story that you’d expect to get lots of press — especially after the New York Times<\/em> featured it in the article, “Court Calls a 40% Fee to Lawyers Defensible<\/a>” (NYT<\/em>, Nov. 29, 2007). Online, the Daily Brief column at the Conde Nast Portfolio <\/em>noted “It’s Been a Bleak House Kind of Week in Court<\/a>” (Nov. 30, 2007). The ABAJournal News<\/em><\/a> quickly posted a nice summary, in the piece “Court Doesn\u2019t Void $42M Contingency Deal Reached Before Settlement” (Nov. 29, 2007). And Law.com<\/em> republished Anthony Lin’s excellent discussion of the case from the New York Law Journal<\/em>, in “Late 40 Percent Retainer Pact Survives Widow’s Dismissal Bid<\/a>” (Nov. 29, 2007).<\/p>\n

Even more than a good story for the mainstream and legal press, Lawrence v. Miller<\/em> would seem to be a perfect topic for the blawgisphere — the world of weblogs by and for lawyers, where attorneys, law professors and students, plus various ideologues, “reformists” and pundits, love to show their expertise and biases, engage in both scholarly and unruly debate, and boast of the important role of blawgs in educating the public about law and lawyers. As Allison Shields at Legal Ease<\/em><\/a> noted, in “High Legal Fees May Not Be Unconscionable” (Nov. 29, 2007), the case involves “an issue near and dear to lawyers’ hearts – their fees.”<\/p>\n

\"questionDude\" Lawrence v. Miller<\/em> does indeed raise some very interesting questions to discuss and debate, preach and pontificate over, or educate and entertain with. Mark Zauderer, who represented the Grauber Miller law firm, told the NYT<\/em>: \u201cWhat the courts recognize is that a fee agreement is not unconscionable simply because it can produce a big fee. You have to look at the value rendered to the client.\u201d Others involved in the case were a bit more specific:<\/p>\n

In his opinion for the Lawrence<\/em> majority, Judge Andrias noted that:<\/p><\/blockquote>\n

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