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

April 6, 2004

98% Win Rate: Where’s the Risk?

Filed under: pre-06-2006 — David Giacalone @ 4:28 pm

I was driving a few blocks from my home two nights ago, when I noticed the new message on a giant billboard used by a small, local personal injury law firm. It reads:

 

Over 98% Win Rate!

Put the odds in your favor.

 

Capasso & Massaroni, LLP

 

Includes settlements and awards. Prior results do not guarantee future outcomes.

 

At its website, Capasso & Massaroni says that “Very few cases actually go to trial. In our practice, more than 90% of the cases settle without going to court,” and explains that it only takes cases that it determines to have a “qualifying injury.”

 

I’m not questioning their statistics. Instead, I’m marveling at the lack of risk in their p/i law practice (how many other lawyer specialties collect their full fee from 98% of their clients?), and wondering how this jibes with the FAQ explaining they charge a fee of 1/3 of the settlement “in most cases” — that is, they charge the local “standard” rate. Why does C&M. or any p/i law firm, believe they have a right to one-third of a client’s damages, no matter the perceived or actual level of risk in taking the case on a contingency basis?

As I’ve argued elsewhere, and more fully here, explaining ABA Formal Ethical Opinion 94-389:

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

According to Op. 389, a long list of relevant factors needs to be discussed with every client 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.” In short, the choice to use a contingency fee belongs to the client and any percentage fee charged should reflect how likely the client is to win, how much money is likely to be rewarded and collected, and how much work the lawyer is likely to have to do (that is, the apparent risk taken by the lawyer).

The three partners in this 5-lawyer firm are well-respected in our community as lawyers and individuals. I know two of them from Family Court and think highly of them and their work. One is currently president of our county bar association, and another is a past-president. I do not believe that they would knowingly violate the ban on excessive fees in the NYS Code of legal ethics.

 

But, I also believe that — like most personal injury lawyers — they may have developed an ethical blind spot when it comes to use of the standard contingency fee. Applying the one-third formula becomes what my father would call their “racket” — their way of making very good money for relatively little work. “Everyone” is doing it and nobody wants to rock the boat (including NY bar counsel, who have cited Opinion 94-389 to me favorably, but have never challenged the use of the standard fee).

 

%key neg As we have discussed, while they were opposing Common Good’s proposals last year to modify contingency fee rules in “early offer” situations, both the Trial Lawyers Association and Public Citizen acknowledged:

“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).”

Isn’t it time that the p/i bar stop honoring this risk-rate principle only in the breach? I’m hoping that the lawyers at Capasso & Massaroni, or my weblog colleague Evan Schaeffer (who keeps threatening to do so), or any other p/i lawyer will explain their side of these issues for our readers.

  • Brickman shows that “tort lawyers prevail in approximately 90% of the cases they accept and obtain repayment of substantially all litigation expenses they advance, including expenses advanced in the cases where they do not prevail.” And,

  • If a case is too risky, it is rejected. If it is lucrative, it is accepted, and a standard contingency fee is charged irrespective of whether there is any meaningful litigation risk and even though the cost of production of the service in no way justifies the enormous projected return on investment.”

  See our version of The Injured Consumers Bill of Rights for Contingency Fees, which is based on the requirement set forth in ABA Formal Ethics Opinion 94-389 and in the Florida Bar’s fee rules.

 

prof yabut small Postscript: Capasso & Massaroni‘s advertising got some attention at Overlawyered.com, in September, 2002, when this same sign featured a patriotic background, and the proclamation “We Will Win,” along with the firm’s name. Walter noted that the sign “isn’t going to win prizes for either taste or subtlety.”

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