- Calling it “oppressive”, committee chair in Mississippi legislature vows to defeat proposal to ban restaurants from serving obese patrons [AP/Picayune-Item; earlier]
- Latest in whales vs. sub sonar: judge deep-sixes Bush’s attempt to exempt Navy from rules against bothering marine mammals [CNN; earlier]
- Much-criticized opener of ABC’s new series Eli Stone aired last Thursday, and Orac takes a scalpel to the vaccine-scare script [Respectful Insolence, which also covers new autism studies]
- Scary proposal approved by California assembly would strong-arm larger private foundations — and businesses that deal with them — into “diversity” numbers game [Lehrer/Hicks @ L.A. Times]
- New Dutch study finds thin people and nonsmokers cost health system more in long run than obese and smokers — theories behind Medicaid-recoupment litigation are looking more fraudulent every day, aren’t they? [AP]
- Late, but worth noting: blogger nails John Edwards’s demagoguery on Nataline Sarkisyan case [Matthew Holt @ Spot-On, via KevinMD; more here, here, and from Ted here]
- Puff piece on food-poisoning lawyer William Marler [AP/KOMO]
- Ready, set, all take offense: Sen. McCain likes to tell lawyer jokes [WSJ law blog]
- In suit charging UFCW with “racketeering”, Smithfield cites as an underlying offense union’s having lobbied city councils to pass resolutions condemning the meatpacker; company has hired Prof. G. Robert Blakey, who denies the RICO law he drafted is a menace to liberty [Liptak, NYT; some earlier parallels in federal tobacco suit]
- Golden age of comic books was 1930s-1950s, but golden age of comic book litigation is now [NLJ]
- New at Point of Law: Hillary’s “disastrous” mortgage scheme; Qualcomm sanctions ruling could curb discovery abuse; if Mel Weiss has been kind to you, why drop him down memory hole?; new academic theory on uniformity of contingency fees; the trouble with patenting tax avoidance strategies; and much more [visit][bumped Wed. a.m.]
Posts Tagged ‘contingent fee’
Scruggs indictment, days 3-4
Speculation continues to mount that central bribery-scandal figure Timothy Balducci may be cooperating with prosecutors, and perhaps has been doing so for some time; Balducci had not yet been arraigned as of this weekend, and the indictment quotes extensively from conversations he held with other defendants, in addition to those that took place in Judge Lackey’s bugged chambers. (Peter Lattman and Ashby Jones, “In Scruggs Probe, Focus Turns to Another Lawyer”, WSJ, Dec. 1)(sub-only). In the latest of his extensive posts on the case, David Rossmiller adds to the picture: “From the verbatim quotes by Balducci given in the indictment, one logically can surmise that investigators had substantial recorded evidence that would have given them tremendous leverage over Balducci in obtaining his cooperation against the others.” In addition, certain elements in the indictment’s description of Balducci’s actions suggest that by mid-October, presumably flipped by investigators, he had begun taking steps that could be used to document targets’ knowing participation in the conspiracy (in particular, his return to Dickie Scruggs to finance a purported second-round bribe, and his statement in the presence of Zach Scruggs and Sidney Backstrom that “we paid for this ruling”).
Rossmiller also analyzes the underlying Jones v. Scruggs dispute over legal fees, in which the Jones firm, formerly one of the five participants in the Scruggs Katrina Group (SKG), alleges that it was “frozen out” and ejected by the remaining four firms, allotted only token fees after shouldering the substantial work of case briefing. Why would it have been advantageous to the Scruggs firm to have Judge Lackey shunt this dispute into arbitration? One key reason is that proceeding with a court battle, even if successful, might have risked exposing to the public many of the internal workings of SKG and perhaps also of Scruggs’s own firm. (Having read the Jones complaint, I would note that Jones was alleging that Scruggs had made a common practice of squeezing collaborating lawyers out of their fee shares in earlier, unrelated litigation during his career. The evidence put forth to support such an allegation, apart from whether it turned out to support a claim for punitive damages, might result in public airing of all sorts of messy and embarrassing episodes from the past.)
John Jones and Steve Funderberg, the lawyers whose firm sued Scruggs et al in the underlying Jones v. Scruggs suit, have given an interview to the Mississippi press; Jones says he knows Scruggs well and has represented him in court, but that the relationship changed drastically “when the money hit the table”; of go-between Balducci, Funderberg said, “Knowing Tim Balducci as I do, I am utterly flabbergasted that he would ever be a part of something like that or believe he could ever get away with something like that”. (Jon Kalahar, “Former Scruggs Colleague Says Money Changed Him”, WTOK, Nov. 30).
At Y’AllPolitics, Alan Lange traces many of the recurring connections between the dramatis personae and notes that the “whole crowd” was deeply involved in the much-criticized MCI contingency-fee back taxes negotiation, which we posted on at the time at Point of Law. “Attorney General Jim Hood allowed his largest campaign contributor, Joey Langston, to be the plaintiff lawyer and also appointed Tim Balducci as a Special Assistant Attorney General in that case”. Langston, for whom Balducci used to work, is now among lawyers representing Scruggs.
Some noteworthy reactions to the indictments: “This is maybe the worst day of my life,” says longtime Scruggs friend Don Barrett, quoted in an Associated Press piece that also rounds up some of the high points of Scruggs’ career (Michael Kunzelman, “Scruggs’ career in jeopardy”, AP/Hattiesburg American, Dec. 1). “I’m disappointed in him,” Katrina client Lyman Cumbest of Pascagoula, who’s suing State Farm, said of Scruggs. “With all the money he had, he didn’t have to bribe a judge. He’s got more money than he could ever spend.” (“FBI probe in judicial bribe case to continue”, Jackson Clarion-Ledger, Nov. 30). Byron Steir at Mass Tort Litigation Blog comments (Nov. 30):
If true, all of these allegations suggest remarkable hubris in at least some of the top plaintiffs’ lawyers. One wonders about the effect of a lifestyle of private jets and multiple wins of multiple millions (or tens of millions) in fees. One also wonders about the effect of high-risk, winner-take-all, contingency fee litigation. Brash and aggressive personalities seem to thrive in such an environment — but they too must keep in mind that lawyers ultimately serve the client (not the other way around) and that no one (especially not the lawyer) is above the law.
And more: “It just boggles the mind,” said Biloxi trial lawyer Jack Denton. “Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys’ fees?” David Rossmiller, quoted in the same story, has one possible reply, which is that people may begin reevaluating “how this amazingly successful man got to be so amazingly successful.” (Richard Fausset and Jenny Jarvie, “Katrina lawyer at the eye of a storm”, Los Angeles Times, Nov. 30)(& welcome Tom Kirkendall readers).
Lawrence v. Graubard Miller
Alice Lawrence had timely paid $18 million over 22 years to Graubard Miller in a lengthy dispute over her husband’s estate. The law firm had billed her on an hourly basis—until there was a $60 million settlement offer on the table, at which point it suddenly renegotiated its retainer agreement to be a 40% “contingent fee”, though there was obviously nothing contingent about the award, and the firm wasn’t offering to repay the money it had already billed. Five months later, there was a $105 million settlement—and Graubard Miller claimed as its fee for the five months of work $42 million of the $45 million additional money that it had negotiated, for a total of $60 million for the case. Lawrence asked the New York courts to protect her, but a 4-1 majority of the Appellate Division upheld the decision (via Lattman). The New York Times article (not to mention Bizarro-Overlawyered, which unsurprisingly doesn’t care much about fraud and rip-offs when they’re occasioned by attorneys against widows) doesn’t even begin to mention the fact that the “contingent fee” didn’t provide any risk for the law firm: the retainer agreement had a floor whereby Graubard Miller got to charge an hourly rate for the first year of trial even if it didn’t collect anything, guaranteeing it another $1.2 million on top of the $18 million it had already collected. The best coverage in the New York Law Journal, which notes that Graubard Miller schnorred another $7.8 million in gifts and gift taxes from Lawrence, whose total payment thus totaled nearly $68 million. (Anthony Lin, “Late 40 Percent Retainer Pact Survives Widow’s Dismissal Bid”, Nov. 29; Anthony Lin, “Widow’s Suit Seeks Return of $50M in ‘Excessive’ Fees and Gifts”, Sep. 16, 2005).
Unfortunately for Lawrence’s case, she did negotiate the Graubard Miller firm down from its original 50% (!) contingent-fee proposal, so in one sense she wasn’t completely the unwitting pawn of the firm, even though Graubard Miller failed to suggest that she consult independent counsel about the multi-million dollar negotiation. The question becomes whether the attorney-client relationship is at all fiduciary, or whether it’s purely contractual—in which case, one wonders why there is such an elaborate screening mechanism to permit prospective attorneys to participate in the guild in the first place.
It’s nice that the New York courts are so respectful of contracts that they dismiss cases at an early stage of the litigation. One hopes that they do that in situations other than those involving the fiduciary duties of attorneys.
Child support collection, for a percentage
Once again, the combination of contingency fees and law enforcement spells trouble: an article by Tresa Baldas in the National Law Journal reports that controversy is mounting over the activities of private firms that go after noncustodial parents’ child support obligations in exchange for a percentage share of the bounty (“Suits collecting around child support collectors”, Sept. 17, no free link). “Critics of the industry — many of them lawyers — claim that private collectors of child support are engaging in predatory practices, such as charging excessive contingency fees as high as 50%, and using aggressive collection tactics that run afoul of federal laws.” The private agencies escape the scrutiny of federal debt collection laws and have been operating effectively without regulation, but state lawmakers are now moving to fill the gap, with 13 states having passed laws intended to protect the services’ clients (if not always their adversaries) by capping fees, prohibiting the agencies from collaring state-directed payments, and giving clients more leeway to withdraw from contracts.
October 30 roundup
- Law firm of King & King in D.C. lost its chance at a contingency fee when its client elected not to pursue the case, so naturally it sued the client [Robert Loblaw @ eNotes; D.C. Circuit ruling for client, PDF]
- How hot is the sausage gravy at Bob Evans? $5,000 worth of hot, says wrist-burned West Virginian [W.V. Record]
- Kid on bicycle suffers catastrophic head injury, lawsuit blames road’s steepness and “dangerous wooden posts” alongside [St. Louis Post-Dispatch]
- Genarlow sprung [Volokh and everyone else; earlier]
- Better hope you make it to Chapel Hill: Fayetteville, N.C. loses 24-hour neurosurgery cover [F’ville Observer via KevinMD; trial lawyers’ response]
- Fans sue Aerosmith over canceled Maui concert [AP/IHT]
- Class action over poor-quality Kia brakes yields $5.6 million jury verdict, but do lawyers really deserve $4.1 million? [Legal Intelligencer] More: whoops, covered already just below;
- We don’t care what your wishes might be, we’re putting you on the ventilator to protect ourselves [RangelMD]
- Tawdry sex angles aside, this really sounds like a cautionary tale of the dangers of liberal amendment of pleadings [Lat]
- Observation on traffic-cams: “I’m sick of living in a world in which legal trouble can be generated by robots.” [Scheie via Reynolds]
- Read all about it: we side with Paul Krugman and Atrios [four years ago on Overlawyered]
Search engine index II
Seventeen months ago, I noted that the most expensive Google AdSearch term was “mesothelioma lawyers” topping the charts at C$54.33. I further noted that such rich referral costs suggested that lawyers were rent-seeking and unethically obtaining surplus from clients, and bidding it away to search for new clients instead of lowering their rates.
How have things changed since? Well, lawyers have gotten slightly more sophisticated: the most expensive Google AdSearch term as of July 9, 2007, is “mesothelioma treatment options“, and, aside from a couple of medical facilities, the vast majority of advertisers are for law firms or fronts for law firms. And the price for that search term is C$69.10, up about 27% in just over a year, demonstrating the rent-seeking involved. David Giacalone comments on the related issue of fixed contingency fees that take advantage of litigants.
“…A possible vomit point for clients”
That’s one description of why some law firms have been reluctant to cross the psychological threshold of $1,000/hour fees for top lawyers’ services. That doesn’t mean they’re not going ahead with the increase, though. (Debra Cassens Weiss, “Top Lawyers Bill $1,000 an Hour”, Aug. 22; Althouse, Aug. 22; WSJ Law Blog, Aug. 22; Barry Leonardini, Aug. 22). It’s still fairly paltry compared with some contingency fees, of course, as with the tobacco-Medicaid caper, where the Litigation Lobby successfully defeated as too chintzy a $20,000/hour cap and some estimates of fees obtained ran five times that high.
Speaking in Austin June 20, and Houston June 21
I’ll be speaking at Federalist Society events Wednesday, June 20 in Austin and Thursday night, June 21 in Houston on the issue of contingent fees in class actions. Other speakers include the Charles Stuckey of State Farm, Brian Anderson of O’Melveny & Myers, and (one hopes) a plaintiffs’ attorney to be named later. I hope to see lots of Overlawyered readers there.
Roundup – June 4
Is it, or isn’t it?
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It is: “Hopefully this means a better life,” says the energy company employee who won a $40 million judgment (almost half of it punitives) against Qwest Communications after the telephone pole he was working on collapsed and injured him. He was lucky; had he worked for the phone company, he likely would have been barred from suing by worker’s comp laws.
“I could hear my heart pounding, pulsing faster and faster, and I tried keeping calm, but when they started reading the verdict I was in a state of shock,” he said. “It’s justice.”
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It isn’t: “The lawsuit wasn’t about money, he said.” That’s New Hampshire resident Joseph Hewett, the rejected applicant for The Apprentice who settled his age discrimination lawsuit against Donald Trump and the producers of the show.
“This was never about a disgruntled applicant trying to get back at (Trump’s) organization, it just gave me an opportunity to advocate on behalf of a protected class,” he said. “This was about the fact that I believe an entire class was aggrieved.”
His evidence that age was what kept him off the show was a slam dunk; after all, he “claimed he was qualified for the show because he graduated magna cum laude from college and because of his ‘many years of experience maintaining large commercial properties.'”
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Well, maybe it is: Human rights advocacy groups have been (mis)using the Alien Tort Claims Act for years to litigate foreign events in American courts, but those advocacy groups were motivated primarily by ideology. Now class action law firms, sensing an opportunity, are getting in on the action. Overlawyered repeat offender Motley Rice (many links) is suing officials of the United Arab Emirates on behalf of boys from South Asia and Africa who claim to have been kidnapped and enslaved as camel jockeys in the UAE; the case has no connection whatsoever to the U.S.
The human rights movement isn’t thrilled because they figure that these lawyers are really in it for the money and not the cause; conservative tort reformers aren’t thrilled because they see it as just another example of entrepreneurial lawyering by trial lawyers.
John M. Eubanks, a lawyer with Motley Rice who represents the former jockeys, disputed both points.
“We’re trying to right wrongs that have been committed,” Mr. Eubanks said. “It’s not about money. It’s about exacting some form of justice.”
Uh, yeah:
Pressed, Mr. Eubanks conceded that the case was at least partly about money. “There is a contingency fee,” he said. “These cases do cost a lot of money. We don’t get paid unless we collect.”
US government: no more hiring contingent fee lawyers
An executive order signed today bars United States government agencies from hiring contingent-fee attorneys or expert witnesses to litigate on behalf of the government. The Institute for Legal Reform applauded the decision, and called for state governments to follow suit. A California court recently struck down such arrangements in that state as an inherently unethical conflict of interest. See County of Santa Clara v. Atlantic Richfield Company, No. 1-00-CV-788657, slip op. at 2 (Cal. Super. Ct. Apr. 4, 2007) (via the increasingly indispensable Beck and Herrmann). (Cross-posted at Point of Law.)