f/k/a archives . . . real opinions & real haiku

January 24, 2004

Undergrounder Feels Under Attack by ethicalEsq

Filed under: pre-06-2006 — David Giacalone @ 8:01 pm

I’ve spent way too much of my Saturday leaving Comments to a posting this morning by Evan Schaeffer of Notes from the (Legal) Underground.  Evan seems surprised that I could respond yesterday to a humorous “riposte” by him, with both a little humor and a little serious ethics discussion.   

 

Evan say he refuses to address the ethical issue concerning contingency fees, because its “not the focus” of his website.  Nonetheless, he states:


treasure hunter  “Call me a coward, but I’m not going to take Mr. Giacalone’s bait, at least not right now, except to say the contingency fee system isn’t broken and doesn’t need to be fixed. In the real world, injured people who need a voice to speak for them often don’t have the means to pay that voice by the hour. So some of them agree to pay when the case is over, happy to allow their lawyer (that is, me) to assume the risk that the case might yield nothing at all, in which case I’ll be paying the costs. All things considered, I usually charge a third, sometimes more, sometimes less. (With that said, I recognize the benefits of Mr. Giacalone’s weblog and his commentary on legal ethics, and look forward to reading it. However, I’m not going to direct my clients to his site, as he suggests in his post, before they sign with me. Sorry.)”

I’ve never attacked the basic concept or use of contingency fees, and instead support it.  (see the many listings on our Fees resources page).  My gripe is with the use of a standard contingency fee — with a firm offering virtually all of its clients the same fee, with no offer to negotiate the level, regardless of the merits of their case — rather than tailoring the fee to the risk involved to the lawyer in each case.   At best, Evan’s argument above explains why a contingency fee can be good for many clients.  Well, sure.

 

As Public Citizen said last year in a filing opposed to the Common Good “early offer” proposal: 


“It is widely accepted that contingency fees should vary depending on the riskiness and complexity of the individual case; indeed, that is what the ethical rules currently require (even though almost universally honored in the breach).”  [emphases added] 

As we then replied, decrying Public Citizen’s lack of action to help p/i clients (as opposed to p/i lawyers):


complaint bill . . .



The meaning of Public Citizen’s admission is clear:  Although the percentage rate of a contingency fee is ethically required to relate to the riskiness of each particular case, they “almost universally” do not.  Since p/i lawyers customarily reject the most risky cases and almost always charge the maximum percentage allowed in their jurisdiction for the cases they do take, a large percentage of contingency fees are greater than can be justified by the risk taken by the lawyer of working without adequate compensation.  Put another way, in a significant percentage of p/i cases, plaintiff’s lawyer is paid an excessive amount of the client’s award and the client is cheated out of a portion of his or her fair share.  In those cases, the lawyers receive unreasonably high fees, in violation of their ethical obligations.    


ABA Formal Ethics Opinion 389 (described and discussed at length here and here) lays all this out clearly, interpreting the same ethical rule on fees that exists in Illinois and Missouri, where Evan Schaeffer practices.

The entire plaintifff’s tort-p/i bar appears to be afraid to address those ethical issues directly.  Evan uses much of the space at his weblog to defend p/i lawyers and the contingency fee system.  Yet he claims that the ethics of contingency fees is not his focus.  That is exactly what’s wrong with the way p/i lawyers use contingency fees: they want to automatically apply their percentages, without any concern for whether the results unfairly and unethically take money from their clients.  I guess Denial runs Underground in the world of tort law.




  • boxers One final issue:  Evan tells his readers that I only wrote my post about Enthusiasm/Machismo as an excuse to lambast him over contingency fees. Those are fighting words (which got my blood roiled).  You can see my response(s) at his site’s thread.

fireman hose . .


P.S.  Evan has wisely suggested this evening that we bring this tiff to an end. [I’ve done I all can to increase his page hits on a slow weekend.]   I would sincerely like to hear his thoughts on the ethical issues raised concerning standard contingency fees.   I also really wish that haikuEsq had been in residence today, to impose better priorities and more brevity on this humble weblog. 

10 Comments

  1. I have been following this discussion and wanted to share my two cents. I agree with the basic premise that contingency fees serve as an important tool for helping injured persons gain access to the legal system as a means of recovering for their injuries. I also agree with the principle that an attorney may permissibly charge only a reasonable fee.

    The problem I have with this discussion is that it is often very difficult to assess not only the risk, but the amount of work needed to obtain a recovery for the client.

    In my firm, we offer clients several fee choices, including a blended fee. This type of fee is attractive to some clients as a form of risk-sharing and lowering their costs for legal services.

    When we do take cases on a “standard contingency fee,” it has also been our practice to adjust that fee downward if the timing or other circumstances associated with the settlement would make the agreed-upon fee excessive in our opinion.

    In other words, using a “standard contingent fee” gives our clients the benefit of knowing the upper limits of the fee they will pay if they recover. It also gives us the opportunity to adjust that fee with the benefit of hindsight.

    Our clients seldom express dissatisfaction with this arrangement because many of them realize that they would not recover anything without our assistance.

    I am uncomfortable with the assertion that a “standard contingency fee” cheats clients out of some of their recovery. Undoubtedly, there are some situations where that assertion is true. How accurrate is that assertion when the client would recover nothing but for the effort of their lawyers? To me, obtaining a recovery for a client on a contingent fee basis is not cheating the client out of part of his or her recovery, but the cost for obtaining that recovery.

    As to the point that many attorneys don’t take “risky” cases on a contingent fee basis, isn’t that really a measure of economics more so than ethics? What ethical obligations do attorneys have to take “risky” cases? None of which I am aware.

    The reward for taking “risky” cases is economic. Simply put, you earn more. Is that unethical? I don’t think so if the lawyer and the client have agreed that the lawyer will bear that risk.

    The greater economic return on a risky case evens out the losses on other cases. Is that unethical? In a general sense, I don’t think so, assuming that the lawyer and the client have decided that the lawyer is the one to bear the risk. An attorney who obtains a recovery in a risky case is rewarded with a large fee. That fee may be larger than the amount of effort it took to generate it. The “premium” (if you will) is the economic value of the risk taken and the reward for successfully taking that risk. If the attorney takes the risk and is rewarded when successful, then the client is not cheated.

    I recognize that a large fee in a risky case may be unethical under certain cocircumstances. Ethical lawyers will recognize those cases and adjust their fees accordingly. If that doesn’t happen, then there are other avenues for addressing that problem.

    I think it is also important to consider a couple of other factors in contingent fee cases. First, the recovery must be collected. Sometimes that’s not a problem. At other times, collection requires significant effort on the part of the lawyer. A risky case may be classified as such simply because of the difficulty in collecting the recovery from the wrongdoer.

    Second, an understanding of the legal climate is essential. In Michigan where I practice, most personal injury cases would qualify as risky cases. For example, slip and fall cases are routinely tossed out on summary disposition under the open and obvious doctrine, which essentially holds that injuries occurring on the land are not compensable if the condition is open and obvious and has no special features giving rise to the risk of serious harm. Medical malpractice and products liability cases must navigate a very complicated and risky civil procedure fraught with traps for the unwary before even getting to trial. No-fault auto insurance confers tort immunity on insured owners and only permits recovery if there is a death or an injury that constitutes a serious impairment of an important body function.

    Third, contingent fees are used in other types of cases besides personal injury cases. Insurance subrogation cases, for example, are usually contingent fee cases. Each type of contingent fee case has its own risks and rewards and must be analyzed on that basis. Blanket statements about contingent fees are not particularly insightful in analyzing what is a reasonable fee in any given case.

    Comment by Ann M. Byrne — January 25, 2004 @ 1:53 pm

  2. I have been following this discussion and wanted to share my two cents. I agree with the basic premise that contingency fees serve as an important tool for helping injured persons gain access to the legal system as a means of recovering for their injuries. I also agree with the principle that an attorney may permissibly charge only a reasonable fee.

    The problem I have with this discussion is that it is often very difficult to assess not only the risk, but the amount of work needed to obtain a recovery for the client.

    In my firm, we offer clients several fee choices, including a blended fee. This type of fee is attractive to some clients as a form of risk-sharing and lowering their costs for legal services.

    When we do take cases on a “standard contingency fee,” it has also been our practice to adjust that fee downward if the timing or other circumstances associated with the settlement would make the agreed-upon fee excessive in our opinion.

    In other words, using a “standard contingent fee” gives our clients the benefit of knowing the upper limits of the fee they will pay if they recover. It also gives us the opportunity to adjust that fee with the benefit of hindsight.

    Our clients seldom express dissatisfaction with this arrangement because many of them realize that they would not recover anything without our assistance.

    I am uncomfortable with the assertion that a “standard contingency fee” cheats clients out of some of their recovery. Undoubtedly, there are some situations where that assertion is true. How accurrate is that assertion when the client would recover nothing but for the effort of their lawyers? To me, obtaining a recovery for a client on a contingent fee basis is not cheating the client out of part of his or her recovery, but the cost for obtaining that recovery.

    As to the point that many attorneys don’t take “risky” cases on a contingent fee basis, isn’t that really a measure of economics more so than ethics? What ethical obligations do attorneys have to take “risky” cases? None of which I am aware.

    The reward for taking “risky” cases is economic. Simply put, you earn more. Is that unethical? I don’t think so if the lawyer and the client have agreed that the lawyer will bear that risk.

    The greater economic return on a risky case evens out the losses on other cases. Is that unethical? In a general sense, I don’t think so, assuming that the lawyer and the client have decided that the lawyer is the one to bear the risk. An attorney who obtains a recovery in a risky case is rewarded with a large fee. That fee may be larger than the amount of effort it took to generate it. The “premium” (if you will) is the economic value of the risk taken and the reward for successfully taking that risk. If the attorney takes the risk and is rewarded when successful, then the client is not cheated.

    I recognize that a large fee in a risky case may be unethical under certain cocircumstances. Ethical lawyers will recognize those cases and adjust their fees accordingly. If that doesn’t happen, then there are other avenues for addressing that problem.

    I think it is also important to consider a couple of other factors in contingent fee cases. First, the recovery must be collected. Sometimes that’s not a problem. At other times, collection requires significant effort on the part of the lawyer. A risky case may be classified as such simply because of the difficulty in collecting the recovery from the wrongdoer.

    Second, an understanding of the legal climate is essential. In Michigan where I practice, most personal injury cases would qualify as risky cases. For example, slip and fall cases are routinely tossed out on summary disposition under the open and obvious doctrine, which essentially holds that injuries occurring on the land are not compensable if the condition is open and obvious and has no special features giving rise to the risk of serious harm. Medical malpractice and products liability cases must navigate a very complicated and risky civil procedure fraught with traps for the unwary before even getting to trial. No-fault auto insurance confers tort immunity on insured owners and only permits recovery if there is a death or an injury that constitutes a serious impairment of an important body function.

    Third, contingent fees are used in other types of cases besides personal injury cases. Insurance subrogation cases, for example, are usually contingent fee cases. Each type of contingent fee case has its own risks and rewards and must be analyzed on that basis. Blanket statements about contingent fees are not particularly insightful in analyzing what is a reasonable fee in any given case.

    Comment by Ann M. Byrne — January 25, 2004 @ 1:53 pm

  3. Thank you, Ann, for your thoughtful addition to our Discussion.  My basic problem is with offering a client only the “standard contingency fee,” with no indication that negotiation is possible and charging that fee no matter the perceived risk.  Remember, in most places the standard rate is also the maximum permitted by court rules or statute.  Many firms take advantage of the belief held by much of the public that there is no choice other than the standard fee in their locale.  The total lack of advertising about the percentage charged reinforces the notion that the standard is the only lawful choice, and minimizes competition as to the percentage charged.   Thus, fiduciaries take advantage of their misinformed or uninformed clients for their own enrichment. 

    This weblog is most concerned with the Average Joe and Jane Client, and on this topic, with everday personal injury cases.  Sophisticates, especially large corporate clients, can often insist on better deals and get them.

    I’ll respond here to your most important points, starting with your very last sentence:
     
    “Blanket statements about contingent fees are not particularly insightful in analyzing what is a reasonable fee in any given case.”  — My exact point — every case must be looked at on its own merits, in its own context, to determine whether the outcome is reasonable.   That’s why I do not condemn contingent fees in general (as you see, my discussions are never bumper-sticker size), but also why lawyers who use such fee arrangements cannot justify their usage in a particular case by pointing to the appropriateness of the general concept of contingent fees.  My main message, however, is that use of a “standard contingency fee” — either by a particular lawyer or by most of the lawyers in a region — is far more likely to result in unethical results than a system that treats each case on its merits.
     
    “often very difficult to assess not only the risk but the amount of work” — Yes, but lawyers do it all the time in rejecting cases, and in telling their partners what a great case just walked in the door.   If there were no risk at all, of course, no contingency fee bonus above normal hourly rates would be appropriate.  If a p/i lawyer can’t make fairly good estimates of whether a risk is high, medium or low, he or she probably should be in another line of work.  If you can differentiate those levels, then why not charge three different rates (e.g., 13%, 23%, 33%)?   To act as if the only “risk” factor is whether the case goes to trial or appeal (thus never going below 25% or 33% for settled cases, no matter how “easy” the case looks) is not fair to the client, either —  when the chance of recovery is high, the percentage fee should be significantly below 33%.
     
    “In my firm, we offer clients several fee choices, including a blended fee.”   Blended rates can often be quite good for clients.  Do you “offer” the rates to all clients, or only if asked about alternatives to the standard fee?  The details of each arrangement are important to determine whether the overall fee is reasonable.   Part of the process, however, must be giving the client the lawyer’s best estimate of risk (including chance of winning, likely hours needed in various scenarios, ability to be collect), which is important to the choice of paying some or all fees on an hourly basis and to how high the contingency percentage should be.
     
    “it has also been our practice to adjust that fee downward . . . Our clients seldom express dissatisfaction with this arrangement because many of them realize that they would not recover anything without our assistance”  — Lawyers who act ethically or do the right thing by their clients assume that most other do so, too.  I’m not so sure.   This again raises the issue of the informed client.  A client who didn’t know the original percentage could have been negotiated and should be set based on risk, feels like the downward adjustment is a wonderful gift from the lawyer – no matter how small the amount is.   If a case looks like a likely winner, with not-insignificant damages due, the lawyer is not doing the client a favor taking the case at the standard rate, even if the client feels that he or she has no choice but to agree to making the lawyer a one-third partner (or more) in order to receive justice.  
     
    “I am uncomfortable with the assertion that a “standard contingency fee” cheats clients out of some of their recovery.”   A standard contingency fee must, by definition, take too much from quite a lot of clients (would it be okay to take too much from only 10% of clients? from 20?).  Predominantly charging the maximum fee permitted must mean often getting more for the work than any risk-calculus or reasonableness test would approve.  You might like not the word, but I think that is “cheating” the client for the benefit of the lawyer.  By creating the myth of the “standard” contingency fee, the bar has made the public believe that the lawyer deserves to (some think “must”) receive one-third of every recovery for any personal injury — “give up a third or get nothing,” is what we tell the injury client.   Ethics Rule 1.5 makes it clear that the amount of time, effort and skill is always relevant to reasonableness of the fee agreed to or collected, even when a fee is contingent.  To act as if it is not will “cheat” many clients. 
     
    “using a ‘standard contingent fee’ gives our clients the benefit of knowing the upper limits” — They client does not know the dollar limit.   The system says: “Dear client, we promise not to charge any more than the law would permit us to charge in the very riskiest cases.”   Does that sound like a great approach by professionals with ethical and fiduciary obligations to the client? 
     
    “To me, obtaining a recovery for a client on a contingent fee basis is not cheating the client out of part of his or her recovery, but the cost for obtaining that recovery.” —  Yes, the lawyer should be paid for helping to recover a fee, the question is how much is reasonable — and how much value the lawyer acutally adds to the client’s position before walking in the door.  Again, my beef is not with using contingent fees, it’s with using a percentage that is unreasonable in a particular case.  I am not one of the extremists who wants to take away the choice of using contingent fees from clients.  However, that choice must be a fully-informed choice to be meaningful.
     
    “What ethical obligations do attorneys have to take “risky” cases?”  I agree, none.  But, when there is no risk, there is no reason to receive a risk bonus from the client.  When there is great risk, and the lawyer produces a great settlement, making a hefty fee is fine.  As you suggest, in some cases, just applying a percentage to the final damage figure yields more than any lawyer should be taking from an award that is supposed to make the client whole.   I mostly bring up the issue of taking riskier cases, because that is often the excuse for charging more than seems appropriate in cases that are very likely to be successful.   In my experience and research, most p/i lawyers weed out the truly risky cases — unless there is a huge jackpot potential.
     
    “Ethical lawyers will recognize those cases and adjust their fees accordingly. If that doesn’t happen, then there are other avenues for addressing that problem.” –   I’m not very optimistic that adjustments get made often enough <i>or</i> that there are any real remedies for most clients who feel cheated.  First, most don’t know they have a right to more than two-thirds or 60% of a recovery.  Second, the courts have mostly bowed out of the arena of reviewing contingency fee amounts (in non-class-action cases), and bar counsel do not want to rock the boat. 
     
    “The greater economic return on a risky case evens out the losses on other cases. Is that unethical? In a general sense, I don’t think so, assuming that the lawyer and the client have decided that the lawyer is the one to bear the risk.”    The idea of subsidizing risky cases with the less risky ones is, I believe, totally inappropriate.  The lawyer owes his or her eithcal and fudiciary duty to each individual client.   [I don’t think many lawyers would tell the client the truth:  “Yes, your case will take very little effort and I’ll almost certainly get a lot of money because of your injuries, but this allows me to take a gamble on other cases, where I might even get to be a billionaire.  Thanks for the subsidy.  No, you won’t share in the big jackpots, this partnership works only one way.”]   Equally important, for most p/i clients there is no joint “decision” — it is a take it or leave it situation, where the client believes there are no choices.  And, of course, “bearing the risk” tells us nothing about how much the lawyer should get paid.  Lawyers — and people with absolutely no fiduiciary duties to their customers — bear risk of inadequate compensation all the time, whether they use hourly, flat, blended, or contingent fees.
     
    “Each type of contingent fee case has its own risks and rewards and must be analyzed on that basis.”  — Absolutely.  Each risk factor needs to be considered in each context (including collectibility, judical temperatment, etc.).   That’s why a standard rate system is equally untenable in any situation where contingency fee arrangements are sought by lawyers or clients.  
     
    Thanks again, Ann, for your comments, and (I hope) for reading this far.   Please take a look at ABA Formal Ethics Opinion 389, which has much wisdom on the topic of contingency fees, but has unfortunately run up against the guild wall that has been erected around the use of the standard contingency fee. 

    My belief is that many lawyers who use the standard contingency fee like the good thing they have going and — despite their general commitment to ethical lawyering — have been unwilling to look at this practice from the perspective of their ethical and fiduciary duty to the client.  The resulting ethical blindspot, with all the resulting rationalizations, is my target when writing on this topic.  

    Comment by David Giacalone — January 25, 2004 @ 4:38 pm

  4. Thank you, Ann, for your thoughtful addition to our Discussion.  My basic problem is with offering a client only the “standard contingency fee,” with no indication that negotiation is possible and charging that fee no matter the perceived risk.  Remember, in most places the standard rate is also the maximum permitted by court rules or statute.  Many firms take advantage of the belief held by much of the public that there is no choice other than the standard fee in their locale.  The total lack of advertising about the percentage charged reinforces the notion that the standard is the only lawful choice, and minimizes competition as to the percentage charged.   Thus, fiduciaries take advantage of their misinformed or uninformed clients for their own enrichment. 

    This weblog is most concerned with the Average Joe and Jane Client, and on this topic, with everday personal injury cases.  Sophisticates, especially large corporate clients, can often insist on better deals and get them.

    I’ll respond here to your most important points, starting with your very last sentence:
     
    “Blanket statements about contingent fees are not particularly insightful in analyzing what is a reasonable fee in any given case.”  — My exact point — every case must be looked at on its own merits, in its own context, to determine whether the outcome is reasonable.   That’s why I do not condemn contingent fees in general (as you see, my discussions are never bumper-sticker size), but also why lawyers who use such fee arrangements cannot justify their usage in a particular case by pointing to the appropriateness of the general concept of contingent fees.  My main message, however, is that use of a “standard contingency fee” — either by a particular lawyer or by most of the lawyers in a region — is far more likely to result in unethical results than a system that treats each case on its merits.
     
    “often very difficult to assess not only the risk but the amount of work” — Yes, but lawyers do it all the time in rejecting cases, and in telling their partners what a great case just walked in the door.   If there were no risk at all, of course, no contingency fee bonus above normal hourly rates would be appropriate.  If a p/i lawyer can’t make fairly good estimates of whether a risk is high, medium or low, he or she probably should be in another line of work.  If you can differentiate those levels, then why not charge three different rates (e.g., 13%, 23%, 33%)?   To act as if the only “risk” factor is whether the case goes to trial or appeal (thus never going below 25% or 33% for settled cases, no matter how “easy” the case looks) is not fair to the client, either —  when the chance of recovery is high, the percentage fee should be significantly below 33%.
     
    “In my firm, we offer clients several fee choices, including a blended fee.”   Blended rates can often be quite good for clients.  Do you “offer” the rates to all clients, or only if asked about alternatives to the standard fee?  The details of each arrangement are important to determine whether the overall fee is reasonable.   Part of the process, however, must be giving the client the lawyer’s best estimate of risk (including chance of winning, likely hours needed in various scenarios, ability to be collect), which is important to the choice of paying some or all fees on an hourly basis and to how high the contingency percentage should be.
     
    “it has also been our practice to adjust that fee downward . . . Our clients seldom express dissatisfaction with this arrangement because many of them realize that they would not recover anything without our assistance”  — Lawyers who act ethically or do the right thing by their clients assume that most other do so, too.  I’m not so sure.   This again raises the issue of the informed client.  A client who didn’t know the original percentage could have been negotiated and should be set based on risk, feels like the downward adjustment is a wonderful gift from the lawyer – no matter how small the amount is.   If a case looks like a likely winner, with not-insignificant damages due, the lawyer is not doing the client a favor taking the case at the standard rate, even if the client feels that he or she has no choice but to agree to making the lawyer a one-third partner (or more) in order to receive justice.  
     
    “I am uncomfortable with the assertion that a “standard contingency fee” cheats clients out of some of their recovery.”   A standard contingency fee must, by definition, take too much from quite a lot of clients (would it be okay to take too much from only 10% of clients? from 20?).  Predominantly charging the maximum fee permitted must mean often getting more for the work than any risk-calculus or reasonableness test would approve.  You might like not the word, but I think that is “cheating” the client for the benefit of the lawyer.  By creating the myth of the “standard” contingency fee, the bar has made the public believe that the lawyer deserves to (some think “must”) receive one-third of every recovery for any personal injury — “give up a third or get nothing,” is what we tell the injury client.   Ethics Rule 1.5 makes it clear that the amount of time, effort and skill is always relevant to reasonableness of the fee agreed to or collected, even when a fee is contingent.  To act as if it is not will “cheat” many clients. 
     
    “using a ‘standard contingent fee’ gives our clients the benefit of knowing the upper limits” — They client does not know the dollar limit.   The system says: “Dear client, we promise not to charge any more than the law would permit us to charge in the very riskiest cases.”   Does that sound like a great approach by professionals with ethical and fiduciary obligations to the client? 
     
    “To me, obtaining a recovery for a client on a contingent fee basis is not cheating the client out of part of his or her recovery, but the cost for obtaining that recovery.” —  Yes, the lawyer should be paid for helping to recover a fee, the question is how much is reasonable — and how much value the lawyer acutally adds to the client’s position before walking in the door.  Again, my beef is not with using contingent fees, it’s with using a percentage that is unreasonable in a particular case.  I am not one of the extremists who wants to take away the choice of using contingent fees from clients.  However, that choice must be a fully-informed choice to be meaningful.
     
    “What ethical obligations do attorneys have to take “risky” cases?”  I agree, none.  But, when there is no risk, there is no reason to receive a risk bonus from the client.  When there is great risk, and the lawyer produces a great settlement, making a hefty fee is fine.  As you suggest, in some cases, just applying a percentage to the final damage figure yields more than any lawyer should be taking from an award that is supposed to make the client whole.   I mostly bring up the issue of taking riskier cases, because that is often the excuse for charging more than seems appropriate in cases that are very likely to be successful.   In my experience and research, most p/i lawyers weed out the truly risky cases — unless there is a huge jackpot potential.
     
    “Ethical lawyers will recognize those cases and adjust their fees accordingly. If that doesn’t happen, then there are other avenues for addressing that problem.” –   I’m not very optimistic that adjustments get made often enough <i>or</i> that there are any real remedies for most clients who feel cheated.  First, most don’t know they have a right to more than two-thirds or 60% of a recovery.  Second, the courts have mostly bowed out of the arena of reviewing contingency fee amounts (in non-class-action cases), and bar counsel do not want to rock the boat. 
     
    “The greater economic return on a risky case evens out the losses on other cases. Is that unethical? In a general sense, I don’t think so, assuming that the lawyer and the client have decided that the lawyer is the one to bear the risk.”    The idea of subsidizing risky cases with the less risky ones is, I believe, totally inappropriate.  The lawyer owes his or her eithcal and fudiciary duty to each individual client.   [I don’t think many lawyers would tell the client the truth:  “Yes, your case will take very little effort and I’ll almost certainly get a lot of money because of your injuries, but this allows me to take a gamble on other cases, where I might even get to be a billionaire.  Thanks for the subsidy.  No, you won’t share in the big jackpots, this partnership works only one way.”]   Equally important, for most p/i clients there is no joint “decision” — it is a take it or leave it situation, where the client believes there are no choices.  And, of course, “bearing the risk” tells us nothing about how much the lawyer should get paid.  Lawyers — and people with absolutely no fiduiciary duties to their customers — bear risk of inadequate compensation all the time, whether they use hourly, flat, blended, or contingent fees.
     
    “Each type of contingent fee case has its own risks and rewards and must be analyzed on that basis.”  — Absolutely.  Each risk factor needs to be considered in each context (including collectibility, judical temperatment, etc.).   That’s why a standard rate system is equally untenable in any situation where contingency fee arrangements are sought by lawyers or clients.  
     
    Thanks again, Ann, for your comments, and (I hope) for reading this far.   Please take a look at ABA Formal Ethics Opinion 389, which has much wisdom on the topic of contingency fees, but has unfortunately run up against the guild wall that has been erected around the use of the standard contingency fee. 

    My belief is that many lawyers who use the standard contingency fee like the good thing they have going and — despite their general commitment to ethical lawyering — have been unwilling to look at this practice from the perspective of their ethical and fiduciary duty to the client.  The resulting ethical blindspot, with all the resulting rationalizations, is my target when writing on this topic.  

    Comment by David Giacalone — January 25, 2004 @ 4:38 pm

  5. The text was good, but i stil cant find the play ipdates. looking for it dude.

    Comment by Joe Fuentes — July 23, 2005 @ 2:00 am

  6. The text was good, but i stil cant find the play ipdates. looking for it dude.

    Comment by Joe Fuentes — July 23, 2005 @ 2:00 am

  7. A heap of wheat, says the Song of Songs
    but I’ve never seen wheat in a pile :)
    did you like it?

    Comment by Peter Jackson — July 23, 2005 @ 8:51 pm

  8. A heap of wheat, says the Song of Songs
    but I’ve never seen wheat in a pile :)
    did you like it?

    Comment by Peter Jackson — July 23, 2005 @ 8:51 pm

  9. Nice one, but what about der weg ? anywya, congrats from me.

    Comment by Richard Davis — July 24, 2005 @ 10:26 pm

  10. Nice one, but what about der weg ? anywya, congrats from me.

    Comment by Richard Davis — July 24, 2005 @ 10:26 pm

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