A federal jury has disapproved a $300,000 “success bonus” that a Greenwich, Ct. divorce lawyer tried to charge his client following a high-pressure five-day divorce mediation. Noted lawprof ethicist Geoffrey Hazard, testifying for dissatisfied client Gary Zimmerman, said the extra charge resembled a contingent fee on the lawyer’s part and that contingent fees are supposed to be disallowed in divorce litigation. (Thomas B. Scheffey, “$300,000 ‘Success Bonus’ for Five-Day Mediation? Not So Fast, Says Jury”, Connecticut Law Tribune, Mar. 29). David Giacalone has more (Mar. 29).
Posts Tagged ‘ethics’
Beach blanket bankruptcies, cont’d
Now it’s the $60 million in legal fees from the bankruptcy of Pacific Gas & Electric-affiliated energy companies that’s drawing criticism. (Tom Schoenberg, “$60M Bankruptcy Bonanza”, Legal Times, May 6). See Jan. 13, Sept. 22, 2004 (hundreds of millions in main PG&E bankruptcy), etc.
“Court: Man Can’t Take Both Sides of Same Case”
Massachusetts’ highest court has rebuffed John Otis III of Scituate, who first won a largely uncollectable $6.5 million verdict from a drunk driver and then tried to get that victory overturned so as to extract money from others. Otis, a pedestrian, was hit by inebriated motorist Todd Cusick, whose insurance policy limits were only $50,000. Here’s what happened next, according to reporter Sue Reinert of the Quincy Patriot-Ledger:
In a complicated legal maneuver, Otis agreed to free Cusick from his liability. In return, Otis got authority to sue Cusick’s attorneys and his insurer, Arbella Mutual Insurance of Quincy, on Cusick’s behalf. Otis would collect any winnings from the suit.
In this second lawsuit, Otis contended that Cusick got a raw deal from his lawyers, who were hired by Arbella. Cusick would have won the lawsuit if his attorneys had done a good job, Otis argued.
To make his case, Otis’ attorney, Driscoll, had to present the exact opposite arguments that he had made in winning the $6.5 million judgement, yesterday’s ruling said. He even contended that some crucial facts were different, the decision written by Justice Martha Sosman said.
“In short, Otis’ position in the present suit is that he should not have recovered anything in the first suit,” Sosman wrote.
Otis’s downfall proved to be the doctrine of judicial estoppel, which per Wikipedia “precludes a party from taking a position in a case which is contrary to a position they have taken in earlier legal proceedings”, at least if the position proved successful in the first round. (Sue Reinert, Quincy Patriot-Ledger, Mar. 15)(via Common Good Society Watch). For a 2004 case in which Judge Edith Jones of the Fifth Circuit invoked judicial estoppel to stymie the attempt of a bankrupt debtor to pursue a personal injury case not disclosed during his Chapter 13 bankruptcy proceedings, see In re Superior Crewboats (PDF), summarized at the Louisiana blawg Naked Ownership (Jun. 21, 2004).
Federal prosecutors probe silica/asbestos fraud
Major news on the asbestos front: the U.S. Attorney’s office for the Southern District of New York, one of the most powerful prosecutorial offices in the country, has convened a grand jury to probe allegations of fraud in the mass prosecution of silica and asbestos claims in Texas and elsewhere. In recent court proceedings in Corpus Christi, doctors admitted that they had never met or interviewed claimants for whom they had provided written diagnoses of silicosis, often after the same claimants had been accorded diagnoses of asbestosis. Federal judge Janis Graham Jack said one doctor’s testimony was raising “great red flags of fraud”. (Jonathan D. Glater, “Civil Suits Over Silica in Texas Become a Criminal Matter in New York”, New York Times, May 18). Ted Frank has been following the developing story in detail at Point of Law: Feb. 2, Feb. 17, Feb. 27, Mar. 2, Mar. 14, Mar. 16, Mar. 21, and other entries on that site’s asbestos page. This site’s product liability page has also extensively covered dubious litigation of this sort (examples: Jan. 21 and Aug. 5, 2004, Sept. 13 and Nov. 12, 2003 and earlier items).
Update: Miss. judge’s wife may cooperate with prosecutors
Jennifer Diaz, ex-wife of Mississippi Supreme Court Justice Oliver Diaz Jr., has struck a plea agreement with prosecutors and may become “a witness against him and others charged in a federal corruption probe”. “In 2000, Jennifer Diaz received a loan for campaign funds that was guaranteed by prominent trial lawyer Dickie Scruggs in the amount of $80,000,” but did not report the amount as income when Scruggs forgave the debt. Scruggs was not charged in the investigation, which led to indictments of the Diazes, prominent trial lawyer Paul Minor, and two former judges; trial on the charges “is set to begin May 9 in Jackson”. (Jerry Mitchell and Julie Goodman, “Judge’s ex-wife might be prosecution witness, officials say”, Jackson Clarion-Ledger, Apr. 26). See Feb. 22, 2004 and links from there.
Law Day
David Giacalone has some reflections (Apr. 24). Irresistible first paragraph:
Sherman Adams, chief of staff to President Eisenhower, almost prevented the creation of Law Day, in 1958. Adams burst into the President’s office yelling “Do not sign that paper praising lawyers!”
Update: S.F. client-bilker
A judge has sentenced once-prominent San Francisco attorney Nikolai Tehin to 14 years in jail for stealing $2 million in settlement money from clients he represented, including impoverished tenants and brain-damaged infants on whose behalf malpractice suits had been filed (see Jul. 16, 2003). (Jeff Chorney, “Lawyer Who Stole $2M From Clients Draws 14-Year Sentence”, The Recorder, Apr. 20).
Update: Judge in Batra swivel-chair case censured
The New York State Commission on Judicial Conduct has censured Acting Supreme Court Justice Diane A. Lebedeff “for presiding over a case in which she had a ‘significant social and professional relationship’ with the plaintiff, attorney Ravi Batra”. The case in question was none other than the one described in our Nov. 11, 2003 entry, in which Batra, a noted judicial kingmaker in city politics, was demanding $80 million in damages for a fall off a swivel chair in his office, eventually settling with the furniture store for $225,000. Reports the New York Law Journal:
One of the aggravating factors the commission’s unanimous decision pointed to was that during the five years Lebedeff handled Batra’s case, she excused the defense lawyers on approximately five occasions, saying she wanted to “engage in ‘gossip’ or other social conversation not related to the case, with Mr. Batra.”
…Batra said, “The fact that the judge and I were friendly is a stipulated fact in the determination and was contemporaneously known to defense counsel, who never objected.”
An attorney with Gair, Gair, Conason, Steigman & Mackauf, representing the judge, “said that Lebedeff accepts the censure because she recognizes that there was an appearance of impropriety. He stressed, however, that there was no claim that any of her actions were improper.” (Daniel Wise, “Presiding Over Friend’s Trial Results in Censure”, New York Law Journal, Apr. 11). Norm Pattis (Apr. 12) finds defense mistakes in part to blame.
Lawsuit cash advances
The mushrooming “legal finance” industry offers to advance injury claimants cash on the barrel, to be repaid only if their suits are successful. Some firms have charged effective interest rates exceeding 100 percent a year, but the business generally operates beyond the reach of moneylending laws and has mostly escaped the sort of hostile attention that has been directed at say, the payday loan industry and its alleged “predatory lending“. That may be changing, however. New York Attorney General Eliot Spitzer (who says he gets only unflattering attention in this space?) has reached settlements calling for clearer disclosure of fees from at least ten litigation-cash-advance firms, including one based in New Jersey which billed a client $19,000 for a cash advance of $3,000 two and a half years earlier, later accepting a smaller sum. (Joseph P. Fried, “Waiting To Settle a Lawsuit? Beware of Cash Advances”, New York Times, Apr. 4). For a glimpse of how the business sometimes works, see Barbara Ross, “Costly trip for Zongo family”, New York Daily News, Feb. 14.
More: Financial Rounds (Apr. 5) points out that we shouldn’t assume the legal finance company is actually pocketing an extraordinarily high overall return on its cash advances since in cases where client/plaintiffs obtain neither a verdict nor a settlement it will lose the money. Fair enough; but once again suggestive of the near-parallel with subprime lenders, many of which also must write off a nontrivial share of debt holdings as uncollectable. Do legal finance companies (which of course can screen for case “collateral” based on quality) in fact suffer a rate of nonpayment that much exceeds that of so-called predatory lenders? It would be interesting to find out.
Fieger Update: Gilbert v. Ferry
You may recall the $21 million verdict thrown out by the Michigan Supreme Court last year (Jul. 24) because of misconduct by Geoffrey Fieger at trial. (Gilbert v. DaimlerChrysler (Mich. 2004); parties’ briefs; Brian Dickerson, “Judges use Fieger tactics to rebuke him”, Detroit Free Press, Jul. 26; yclipse blog). Fieger had had a buddy “expert” social worker testify that the alleged harassment caused Gilbert’s pancreatitis, and told the jury that Gilbert was like a “Holocaust victim.”
After losing, Fieger responded by filing ethics complaints against the four justices who ruled against him, and, when that didn’t work, filed a civil rights lawsuit in federal court against the justices. This tactic, far more often seen performed by unstable pro se litigants than by prominent trial attorneys, was, as could have been expected, rejected by the trial court and then by the federal court of appeals. (Gilbert v. Ferry (6th Cir. Mar. 10, 2005), affirming 298 F. Supp. 2d 606 (E.D. Mich. 2004)) (via yclipse).