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1Chapter 3 Finding and Billing ClientsPart 2 Fees & BillingGeorge W. ConkAdjunct Professor & Senior Fellow, Stein Center for Law & Ethicsgconk@law.fordham.eduRoom 8-122Ch. 3 fees and billing12New York Code of Professional ResponsibilityPREAMBLEThe continued existence of a free and democratic society depends upon recognition of the concept that justice is based upon the rule of law grounded in respect for the dignity of the individual and the capacity of the individual through reason for enlightened self-government. Ch. 3 fees and billing23ETHICAL CONSIDERATIONS EC 2-1The need of members of the public for legal services is met only if they recognize their legal problems, appreciate the importance of seeking assistance, and are able to obtain the services of acceptable legal counsel. Ch. 3 fees and billing34ETHICAL CONSIDERATIONS EC 2-1The legal profession should educate people to recognize their problemsfacilitate the process of intelligent selection of lawyers andassist in making legal services fully available.Ch. 3 fees and billing45New York Code of Professional ResponsibilityPREAMBLECanon 2A Lawyer Should Assist The Legal Profession in Fulfilling Its Duty to Make Legal Counsel AvailableCh. 3 fees and billing5* Legal professions broad support for legal services, public defender, IOLTA programsFinancing legal representation of the indigentDirect government funding- Legal Services Corporation- Public DefendersCharity/non-profitsPro bonoAssigned counselInterest on lawyers trust accountsCh. 3 fees and billing6Legal Services Reversal of a Reagan-era assault on Legal Services: the bar on recovering attorneys fees when a federally funded legal services organizations wins a case asserting citizens's rights.The Congress has passed and President Obama signed on December 16 a repeal of that punitive statutory bar. The measure also increasedLegal Services'federal funds from $390 to $420 million. It is not the $750 million proposed by Senator Tom Harkin [D. Iowa] - the 1981 pre-Reagan funding level - but it is a step forward.

Legal Services programs continue to suffer from the collapse in the markets which deprives them of interst on lawyers trust accounts.

6Interest on Lawyers Trust AccountsA taking?Rule of thumb: if administrative costs exceed gain `taking is permissibleThe current crisis in the Legal Services programsCh. 3 fees and billing7Brown v. Washington Legal Foundation (538 U.S. 216 2003) Facts of the Case:Every state uses interest on lawyers' trust accounts (IOLTA) to pay for legal services for the needy. Among it rules, Washington's program requires that funds that cannot earn net interest for the client be deposited in an IOLTA account. The Supreme Court of Washington extended its IOLTA rules to cover Limited Practice Officers (LPOs), nonlawyers who are licensed to act as escrowees in real estate closings. Allen Brown and Greg Hayes alleged that they regularly purchase and sell real estate, in the course of such transactions they deliver funds to LPOs who are required to deposit them in IOLTA accounts, and the taking of the interest earned on their funds in IOLTA accounts violates the Just Compensation Clause of the Fifth Amendment. The District Court found, among other things, that Brown and Hayes had lost nothing. Sitting en banc, the Court of Appeals reasoned that there was no taking because Brown and Hayes had suffered neither an actual loss nor an interference with any investment-backed expectations.Question:Does the use of interest on lawyers' trust accounts to pay for legal services provided to the needy constitute a state taking in violation of the Just Compensation Clause of the Fifth Amendment?Conclusion:No. In a 5-4 opinion delivered by Justice John Paul Stevens, the Court held that state law that requires client funds that could not otherwise generate net earnings for the client to be deposited in an IOLTA account is not a regulatory taking. Moreover, the Court reasoned that, because compensation is measured by the owner's pecuniary loss, which is zero whenever the Washington law is obeyed, there is no violation of the Just Compensation Clause of the Fifth Amendment. Justice Antonin Scalia, joined by Chief Justice William H. Rehnquist and Justices Anthony M. Kennedy and Clarence Thomas, dissented, arguing that the Court's decision created an exception to its general rule that the just compensation owed to former owners of confiscated property is the fair market value of the property taken. Justice Kennedy also filed a separate dissent.

78M.R. 6.1 Voluntary Pro Bono Publico ServiceEvery lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least (50) hours of pro bono publico legal services per year.Ch. 3 fees and billing89Rule 6.1 Voluntary Pro Bono Publico ServiceA lawyer should:(a) provide a substantial majority of the (50) hours of legal services without fee or expectation of fee to:(1) persons of limited means or(2) charitable, religious, civic, community, governmental and educational organizations in matters that are designed primarily to address the needs of persons of limited means; andCh. 3 fees and billing910Rule 6.1 (b) Additional Services(1) delivery of legal services at no fee or substantially reduced fee to individuals, groups or organizations seeking to secure or protect civil rights, civil liberties or public rights, or charitable, religious, civic, community, governmental and educational organizations in matters in furtherance of their organizational purposes, where the payment of standard legal fees would significantly deplete the organization's economic resources or would be otherwise inappropriate

(2) delivery of legal services at a substantially reduced fee to persons of limited means; orCh. 3 fees and billing1011Rule 6.1 Voluntary Pro Bono Publico Service(3) participation in activities for improving the law, the legal system or the legal profession.In addition, a lawyer should voluntarily contribute financial support to organizations that provide legal services to persons of limited means.Ch. 3 fees and billing1112Rule 6.2 Accepting AppointmentsA lawyer shall not seek to avoid appointment by a tribunal to represent a person except for good cause, such as:(a) representing the client is likely to result in violation of the Rules of Professional Conduct or other law(b) representing the client is likely to result in an unreasonable financial burden on the lawyer; or(c) the client or the cause is so repugnant to the lawyer as to be likely to impair the client-lawyer relationship or the lawyer's ability to represent the client.

Ch. 3 fees and billing126th Amendment, Constitution of the United StatesThe assistance of counselCh. 3 fees and billing13That in all capital or criminal prosecutions a man hath a right to demand the cause and nature of his accusation, to be confronted with the accusers and witnesses, to call for evidence in his favor, and to a speedy trial by an impartial jury of twelve men of his vicinage, without whose unanimous consent he cannot be found guilty; nor can he be compelled to give evidence against himself; that no man be deprived of his liberty, except by the law of the land or the judgment of his peers. 8 The Bill of Rights, Constitution of the Commonwealth of Virginia, June 12, 1776

13The right to counselThe right to counsel may well be the most basic constitutional right of allNew York has "consistently exercised the highest degree of vigilance in safeguarding the right of an accused to have the assistance of an attorney at every stage of the legal proceedings against him [or her]Dissent: Hurell-Harring v. NY (3rd Dept. 2009)Ch. 3 fees and billing14 (People v Cunningham, 49 NY2d at 207 [emphasis added]; seePeople v Ramos, 99 NY2d at 32-33; People v West, 81 NY2d at 373;People v Hodge, 53 NY2d 313, 317-318 [1981]).14COMMISSION ON THE FUTURE OFINDIGENT DEFENSE SERVICESFINAL REPORT TO THE CHIEF JUDGEof the State of New York (2006)"[t]he amount of monies currently allocated within the State ofNew York for the provision of constitutionally-mandatedindigent defense is grossly inadequate.Ch. 3 fees and billing15http://blackstonetoday.blogspot.com/2010/03/nyclu-challenge-to-public-defender.html$50,000 for Albany County for the year!15Findings(a) excessive caseloads (b) inability to hire full-time defenders (c) lack of adequate support services (d) lack of adequate training (e) minimal client contact and investigationCh. 3 fees and billing16* average misdemeanor caseloads of 1,000 cases per attorney and 175 felony cases per attorney per year, the chief public defender annually isrequired to submit to the county a proposal as to how he would operate his office with a 10 to 12 percentbudget cut.* 8(b) January 1, 2004, (a) increased assigned counsel fees to $60 per hour for misdemeanors (with a per case cap of $2,400) and $75 per hour for felonies and all other eligible cases (with a per case cap of $4,400); (b) raised the caps on expert andinvestigative services to $1,000 per provider;16Ch. 3 fees and billingGideon v. WainwrightThe civil Gideon movementWho can afford a lawyer?171718WagesSource: U.S. Department of Labor, Bureau of Labor Statistics 2010Maids and housekeeping workersMedian hourly wage$10.17Median annual earnings $21,150Ch. 3 fees and billing1819WagesSource: U.S. Department of Labor, Bureau of Labor Statistics 2010Food Prep and Serving WorkersNational Mean hourly wage$10.21

Mean annual wage $ 21, 240Ch. 3 fees and billing1920WagesSource: U.S. Department of Labor, Bureau of Labor Statistics 2010Family & general practitionersNational Mean hourly wage$83.93Mean annual wage $ 173,860

Registered nursesNational mean hourly wage$ 32.56Mean annual wages$ 67,720

Ch. 3 fees and billing20Ch. 3 fees and billingFree market and attorney advertisingThe end of the GuildMonopoly pricing2121Overworked?Overpaid?The Lot of LawyersCh. 3 fees and billing222223Self employmentAbout 27 percent of lawyers are self-employed, either as partners in law firms or in solo practices.Ch. 3 fees and billing23Lawyers mean earnings BLS 2010Local Government Hourly: $44.34 Annual: $92,220State Government Hourly: $39.51 Annual: $82,190Federal Executive Branch Hourly: $62.60 Annual: $130,210Management of Companies Hourly $76.12 Annual $158,340Ch. 3 fees and billing242425Some data on Lawyers incomeUS Dept of Labor 2010http://www.bls.gov/oes/current/oes231011.htm#stCalifornia Hourly $74.87Annual $155,740New York Hourly $72.36 Annual: $150,510Florida Hourly $56.75 Annual $118,040Texas Hourly $61.85 Annual $128,650Ch. 3 fees and billing2526Some data on Lawyers incomeUS Dept of Labor 2013http://www.bls.gov/oes/current/oes231011.htm#stCalifornia Hourly $74.87Annual $155,740New York Hourly $73.79 Annual: $153,490Florida Hourly $59.10 Annual $123,040Texas Hourly $64.52 Annual $134,200Ch. 3 fees and billing26California68,7004.671.04$74.88$155,750New York68,6407.951.78$73.79$153,490Florida40,9605.501.23$59.15$123,040Texas39,1903.590.80$64.52$134,200DDistrict of Columbia31,81047.7810.69$78.27$162,800

27Some data on Lawyers incomeUS Dept of Labor http://www.bls.gov/oco/ocos053.htmMedian annual earnings - all wage-and-salaried lawyers $102,470 75%/25%$69,910 to $145,600 Median annual earnings in the industries employing the largest numbers of lawyers in May 2006 were:Management of companies$128,610 Federal Government: $119,240 Legal services: $108,100 Local government: $78,810 State government: $75,840Ch. 3 fees and billing2728Some data on Lawyers incomeUS Dept of Labor http://www.bls.gov/oco/ocos053.htmMedian salaries of lawyers 9 months after graduation, 2005by Type of work All graduates $60,000 Private practice$ 85,000 Business$60,000 Government$46,158 Academic/judicial clerkships $45,000Source: National Association of Law Placement Ch. 3 fees and billing28Lawyers mean earnings BLS 2010Local Government Hourly: $44.34 Annual: $92,220State Government Hourly: $39.51 Annual: $82,190Federal Executive Branch Hourly: $62.60 Annual: $130,210Management of Companies Hourly $76.12 Annual $158,340Ch. 3 fees and billing292930Some data on Lawyers incomeUS Dept of Labor 2005Median annual earnings - all wage-and-salaried lawyers $102,470 75%/25%$69,910 to $145,600 Median annual earnings in the industries employing the largest numbers of lawyers in May 2006 were:Management of companies$128,610 Federal Government: $119,240 Legal services: $108,100 Local government: $78,810 State government: $75,840Ch. 3 fees and billing30http://www.bls.gov/oco/ocos053.htm31Some data on Lawyers incomeUS Dept of Labor http://www.bls.gov/oco/ocos053.htmMedian salaries of lawyers 9 months after graduation, 2005by Type of work All graduates $60,000 Private practice$ 85,000 Business$60,000 Government$46,158 Academic/judicial clerkships $45,000Source: National Association of Law Placement Ch. 3 fees and billing3132The American RuleFree market pricing Each party bears its own costsCh. 3 fees and billing32Fee shifting:42 USC 1988 and state analogsEqual access to Justice ActCopyright and patent infringement (discretionary)Common fund cases class actions, bankruptcy, probateStatutes: e.g. fees barred in Veterans claims, limited (e.g. $200 in UI appeals), Pool attorneys fees, 14B NY, Federal panel fees, appointments by courts per Gideon v. WainwrightCap and review: Social security disabilityAwarded by court: e.g. workers compensationAs an element of damageBy court decree: malpractice in new Jersey

Counsel fees as an element of damagesQuiet title Legal malpractice (NY v. NJ)`First party claims on liability insurance policyLitigation misconductContractual

Ch. 3 fees and billing33e.g. lease in event of breach counsel fees are part of the rent!3334Court Awarded Fees state lawChancery casesCommon FundsStatutory feesStatutory Discrimination CasesSanctions

Ch. 3 fees and billing34Fee shifting statutes* Civil rights 42 USC 1988 (prevailing party)* Patent infringement 35 USC 285 (exceptional cases)Copyright 5 USC 505 (may to prevailing party)* ERISA 29 USC 1132: - by participant or beneficiary discretionarysome degree of success on the merits.- in collection action mandatory* EAJA 28 USC 2412 actions v. U.S. (non-tort)Shall award fees to prevailing party unless U.S. was substantially justifiedCAP - $125/hour + COLA

Ch. 3 fees and billing35ERISA Hardt v. Reliance Insurance need not obtain judgment

35EAJA 28 U.S.C. 2412Under the Equal Access to Justice Act, a court in a civil action against the United States shall award to a prevailing party other than the United States fees and other expenses . . . incurred by that party if the position of the United States was not substantially justified. Ch. 3 fees and billing3636Fee shifting: 42 USC 1988 Proceedings in vindication of civil rights(b) Attorney's fees. In any action or proceeding to enforce a provision of 42 USC 1981-1983, 1985, 1986, title IX of Public Law 92-318, the Religious Freedom Restoration Act of 1993, the Religious Land Use and Institutionalized Persons Act of 2000, title VI of the Civil Rights Act of 1964, section 40302 of the Violence Against Women Act of 1994, Ch. 3 fees and billing3737Fee shifting: 42 USC 1988 Proceedings in vindication of civil rightsthe court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs(c) Expert fees. the court, in its discretion, may include expert fees as part of the attorney's fee.Ch. 3 fees and billing38, except that in any action brought against a judicial officer for an act or omission taken in such officer's judicial capacity such officer shall not be held liable for any costs, including attorney's fees, unless such action was clearly in excess of such officer's jurisdiction.

38When fees are shiftedLodestarRisk enhancementFee shifting statutesCh. 3 fees and billing39OBannon v. NCAA

Ch. 3 fees and billing40OBannon v. NCAANice work if you can get it?Attorneys fees $46,856,319.46 Clayton Act recoverable costs $5,555,739.07 The lodestar: $985 - $250/hourCh. 3 fees and billing41Plaintiffs motion41Clayton Act fee shifting15 U.S.C. 26 provides that [a]ny person.. shall be entitled to sue for injunctive relief against threatened loss or damage by a violation of the antitrust laws . . . . In any action under this section in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorneys fee, to such plaintiff. Ch. 3 fees and billing4215 U.S.C. 26 provides that [a]ny person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including sections 13, 14, 18, and 19 of this title . . . . In any action under this section in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorneys fee, to such plaintiff. 42Plaintiffs counsels motion for fees OBannon v. NCAAReasonable fees and costs span every item of service which, at the time rendered, would have been undertaken by a reasonable and prudent lawyer to advance or protect his clients interest . . . .Ch. 3 fees and billing43Range;: $985 - $250/hourTotal sought:

43NCAA seeks steep cuts in plaintiffs counsel feesCh. 3 fees and billing44

NCAA objects to fees forwork prior to September 1, 2012 when Ps theory of the case changedwork done solely to advance claims upon which Ps did not substantially prevailclaims that were essentially abandonedunnecessary, redundant or inefficient workunsupported by plaintiffs billing records or did not reflect sound billing judgmentCh. 3 fees and billing4546R. 1.5 - A Reasonable Fee(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. Factors to be considered in determining the reasonableness:(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properlyCh. 3 fees and billing46Intro the reasonable feeHow do lawyers justify earning $55/hour compared to food service workers $8.86/hour?Law commune movement was an egalitarian impulseBut it is not character, it is the market which is the measure of entitlement, of reasonableness of fees47R. 1.5 - A Reasonable Fee(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer(3) the fee customarily charged in the locality for similar legal servicesCh. 3 fees and billing47Intro the reasonable feeHow do lawyers justify earning $55/hour compared to food service workers $8.86/hour?Law commune movement was an egalitarian impulseBut it is not character, it is the market which is the measure of entitlement, of reasonableness of fees48R. 1.5 - A Reasonable Fee(4) the amount involved and the results obtained;(5) the time limitations imposed by the client or by the circumstancesCh. 3 fees and billing48Intro the reasonable feeHow do lawyers justify earning $55/hour compared to food service workers $8.86/hour?Law commune movement was an egalitarian impulseBut it is not character, it is the market which is the measure of entitlement, of reasonableness of fees49R. 1.5 - A Reasonable Fee(6) the nature and length of the professional relationship with the client;(7) the experience, reputation, and ability of the lawyer or lawyers performing the servicesCh. 3 fees and billing49Intro the reasonable feeHow do lawyers justify earning $55/hour compared to food service workers $8.86/hour?Law commune movement was an egalitarian impulseBut it is not character, it is the market which is the measure of entitlement, of reasonableness of fees50R. 1.5 - A Reasonable Fee (8) whether the fee is fixed or contingent.Ch. 3 fees and billing50Intro the reasonable feeHow do lawyers justify earning $55/hour compared to food service workers $8.86/hour?Law commune movement was an egalitarian impulseBut it is not character, it is the market which is the measure of entitlement, of reasonableness of feesFeesThe writing requirementCh. 3 fees and billing515152R. 1. 5 Fees(b) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writingCh. 3 fees and billing52In February 2002 the House of Delegates deleted the requirement of a writing, stating that fee communications be "preferably in writing." As of 2002, five jurisdictions require a written fee agreement for all new clients: Connecticut, District of Columbia, New Jersey, Pennsylvania, and Utah. Two additional states require a written fee agreement in many representations: Alaska (fees in excess of $500), California (fees for all non-corporate clients in excess of $1,000).New York does not say preferably it just says where required by statute or court rule53R. 1. 5 Feesbefore or within a reasonable time after commencing the representation,except when the lawyer will charge a regularly represented client on the same basis or rate. Changes in the basis or rate of the fee or expenses shall also be communicated to the client.Ch. 3 fees and billing53* Anecdote Harry I dropped off a complaint, answer due Friday, Im going out of town, take care of it, Ill talk to you when I get back54Variations writing reqtThe ABA in 2002 rejected a writing requirement5 states require it for new clients onlyNY omits preferably NY reqs writing where required by rule or statute (e.g. contingent fees, domestic relations)Which is the better rule?Ch. 3 fees and billing54Contingent personal injury fees are often required to be in writingMatrimonial cases 55Remedial Devices re FeesReduce feesDeny fees entirelyArbitration/ADRAward fees quantum meruitSanction attorneysReferral to disciplinary authoritiesCriminal prosecutionCh. 3 fees and billing55Q. 3-11 p. 248 taking the call, getting to work subject to discipline?A) Yes - Must disclose fee basis before starting workB) Yes -Must confirm fee in writing C) No disclosed fee in reasonable timeD) No need only disclose fee on requestCh. 3 fees and billing56Correct Answer: (C) Rule 1.5 governs fees. Rule 1.5(a) forbids unreasonable fee[s] or an unreasonable amount for expenses and lists factors to be considered in determining reasonableness. Casebook p. 248. Relevant to this question, Rule 1.5(b) requires lawyers to communicate [t]he scope of the representation and the basis or rate of the fee and expenses . . . , preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Casebook p. 249. In the question, the client was not regularly represented and the attorney did not explain her billing rates until after she commenced the representation. However, she did provide the information within a reasonable time after commencing the representation. She later sent the client a confirming letter. The Rule prefers, but does not require, that fee information be in writing. 56Q.3-12; 3-13 p. 249 the 72 hour dayQ. 3-12 & 3-13 can I bill two clients for the same hour?YesNoCh. 3 fees and billing57Correct Answer: (B) This is the first of series of questions based on ABA Formal Op. 93-379 (1993), Casebook p. 250. The Opinion holds that under Rule 1.5, as well as other rules, such as Rule 7.1 forbidding false and misleading communications, the lawyer who has agreed to bill on the basis of hours expended does not fulfill her ethical duty if she bills the client for more time than she actually spent on the clients behalf. . . . [I]t is helpful to consider these questions, not from the perspective of what the client could be forced to pay, but rather from the perspective of what the lawyer has actually earned. Casebook, p. 255. The Opinion finds that [a] lawyer who flies for six hours for one client, while working for five hours on behalf of another, has not earned eleven billable hours, 3-1357Q. 3-14, Q. 3-15, Q. 3-16 p. 250Stock materialDisbursementsOutsourcingCh. 3 fees and billing58Correct Answer: (B) Again, keep in mind the framework set forth in Question 2. As the Opinion holds, [a] lawyer who is able to reuse old work product has not re-earned the hours previously billed and compensated when the work product was first generated. ABA Opinion 93-379

3-15 Correct Answer: (B) Comment 1 to Rule 1.5 explains that [a] lawyer may seek reimbursement for the cost of services performed in-house, such as copying, or for other expenses incurred in-house, such as telephone charges, either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the lawyer. The Opinion, supra, conclude[s] that . . . the lawyer is obligated to charge the client no more than the direct cost associated with the service (i.e., the actual cost of making a copy on the photocopy machine) plus a reasonable allocation of overhead expenses directly associated with the provision of the service (e.g., the salary of a photocopy machine operator). MUST BE DISCLOSED IN ADVANCE

Correct Answer: (C) If the firm purchases the salaried attorneys services from an outside agency, their services fall within disbursements. The Opinion holds that in the absence of disclosure to the contrary, it would be improper if the lawyer assessed a surcharge on these disbursements over and above the amount actually incurred[.] Casebook p. 257. On the other hand, if the firm employees the salaried attorneys, the question becomes whether the charge is reasonable under Rule 1.5. 58Does hourly billing encourage inefficiency?Richmond:Hourly billing forces clients and their counsel to think carefully about strategy and the need to perform particular tasks when budgeting a project. In contrast, flat-fees . . . are a potential disincentive to zealous advocacy [because they] encourage attorneys to do as little work as possible. Ch. 3 fees and billing59Q. 3-17, p. 262 A piece of the action?Is it permissible to enter an agreement for 20% of the value of royalties?

Does that violate the RPC 1.8 bar on acquiring a proprietary interest in a cause of action or the subject matter of litigation?Would 50% be OK? 80%?Ch. 3 fees and billing60Rule 1.8(i) prohibits acquir[ing] a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, but permits a contract with a client for a reasonable contingent fee in a civil case.

RPC 1.5 reasonable fee60Rule 1.8 Conflict of Interest: Current Clients: Specific Rules(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the clientCh. 3 fees and billing6161Rule 1.8 Conflict of Interest: Current Clients: Specific Rules(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unlessCh. 3 fees and billing6262Rule 1.8 Conflict of Interest: Current Clients: Specific Rules(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transactionCh. 3 fees and billing6363Rule 1.8 Conflict of Interest: Current Clients: Specific Rules(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.Ch. 3 fees and billing6464MR.P.C. 1.8 Conflicts of interest(i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:(1) acquire a lien authorized by law to secure the lawyer's fee or expenses; and(2) contract with a client for a reasonable contingent fee in a civil case.

Ch. 3 fees and billing6565Ch. 3 fees and billing66IT WAS THE BEST OF TIMES, IT WAS THE WORST OF TIMES:THE PRECARIOUS NATURE OF THE PLAINTIFFS PRACTICE IN TEXASSTEPHEN DANIELS AND JOANNE MARTINTEXAS LAW REVIEW 1781 (200267The precarious nature of the plaintiffs practice in TexasThe one-shot nature of the practicePolitical riskContingent fees - sharedDivision of labor within the tradeHeavy hitters and bread & butter lawyersCh. 3 fees and billing6768Division of labor within the tradeBread & Butter 1 Auto 51.2%BB 2 Auto 40%Heavy hitters 1Auto 27% Med Mal 13%, Products 9%HH 2 Med Mal 20% Auto 15%, Comml 13%Ch. 3 fees and billing68Median case valueB&B 1 $7,250B&B 2 $25,000HH 1 $71,000HH 2 $750,000Ch. 3 fees and billing69Plaintiffs lawyers net income Texas 2000 in quartiles by # of practitionersB&B 1 - $100, 000 - $124,999B&B 2 $100,000 - $124,999HH 1 $125,000 - $149,999HH2 $150,000 - $199,999Ch. 3 fees and billing70Sources of business (Texas PI)% who advertise YP 70% +/- all four categoriesMail to other lawyers BB 1 2.9%, BB 2 6.5%, HH1 6.7%, HH 2 25.2%#1 source of cases by quartileBB 1Advertising (20%)BB 2 Clients (34%)HH 1 Lawyers (42.2%)HH 2 Lawyers (55%)Ch. 3 fees and billing71Q.3-18 Software v. High Tech LawRPC 1.8 p. 268A 2 % equity interest in the client start upIs it fair and reasonableNotice of desirability of outside counselInformed consent, in writingCh. 3 fees and billing72Correct Answer: (D) Comment 4 to Rule 1.5 notes that [a] lawyer may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8(i). Casebook p. 269. The Comment further explains that such a fee arrangement is subject to Rule 1.8(a) governing business transactions with clients. Here, the arrangements satisfied the requirements of Rule 1.8(a) the basic terms are reasonable and reduced to writing, the client provided informed consent, and the client received notice in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel. 72Changing in midstream (Q. 3-19, p. 278)Restatement 18(a) if the contract or modification is made beyond a reasonable time after the lawyer has begun to represent the client in the matter the client may avoid it unless the lawyer shows that the contract and the circumstances of its formation were fair and reasonable to the client

Ch. 3 fees and billing73Correct Answer: (D) Restatement 18, Comment e provides that to justify a fee increase a lawyer must show that the client was not pressured to accede in order to avoid the problems of changing counsel, alienating the lawyer, missing a deadline or losing a significant opportunity in the matter, or because a new lawyer would have to repeat significant work for which the client owed or had paid the first lawyer. Basically, the lawyer must show that a reasonable client might have chosen to accept the late contract, typically because it benefited the client in some substantial way (other than by relieving the client from having to find a new lawyer). Casebook p. 279. Here, the circumstances do not warrant a fee increase. 73Lawrence v. Miller (NY 2008) p. 265$40 million for five months work!Motion on the pleadingsReasonable?Unconscionable?Enforceable?

Ch. 3 fees and billing7474Lawrence v. Miller (NY 2008) p. 280Given the courts' role in closely scrutinizing contingent fee agreements even if..an agreement is not determined to be unconscionable as of its inception [C]ircumstances arising after contract formation can render a contingent fee agreementunenforceable where the amount of the fee, combined with the large percentage of the recovery it represents, seems disproportionate to the value of the services renderedCh. 3 fees and billing7575Ethical Consideration 2-17Model Code of Prof. Resp.Determination of a proper fee requires consideration of the interests of both client and lawyer. A lawyer should not charge more than a reasonable fee, for excessive cost of legal service would deter laymen from utilizing the legal system in protection of their rights. An excessive charge abuses the professional relationship between lawyer and clientCh. 3 fees and billing767677UCC SECTION 2-302. UNCONSCIONABLE CONTRACT OR TERM1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made, the court may - refuse to enforce the contract- enforce the remainder of the contract without the unconscionable term- limit the application of any unconscionable termCh. 3 fees and billing77The more closely related the misconduct is to the claim asserted, the more likely it is that the court will refuse to enforce the claim.

Eg IN Strong v. Beydoun (CA 2008) the court refused to enforce an agreement between attorneys on fee division that was not approved by the clientsAn agreement no reasonable person would enter is a routine definition.Range of remedial optionsCalifornia appears to use a special meaning not the general meaning of unconscionableUCC contains no definition78California State Bar 4-200(A) Amembershall not enter into an agreement for, charge, or collect an illegal or unconscionable fee.(B) Unconscionability of a fee shall be determined on the basis of all the facts and circumstances existing at the time the agreement is entered into except where the parties contemplate that the fee will be affected by later events.Chapter 4 Counsel Fees78 Among the factors to be considered, where appropriate, in determining the unconscionability of a fee are the following:Same as Rule 1.5 factors!Q. 3-20 p. 284 Contingent fees in criminal casesWhy not permit it?If you keep me out of jailCh. 3 fees and billing79Correct Answer: (A) Rule 1.5(d)(2) prohibits contingent fees in criminal cases. Also note that Rule 1.5(d)(1) prohibits contingent fees in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof[.] Casebook p. 285. Nonetheless, the Comment explains that a lawyer may accept a contingent fee for recovery of post-judgment balances due under support, alimony or other financial orders[.] Id. 79The criminal defense banIn Commonwealth v. Facella, 679 N.E.2d 221, 226 (Mass. App. Ct. 1996) defendant was charged with armed assault with intent to murderthe retainer agreement provided that defense counsel Beatrice would be paid an additional $ 15,000 if he negotiated a sentence of no more than ten years. He did so.Should such contracts be barred? Ch. 3 fees and billing80When the defendant signed the agreement, he acknowledged that Beatrice's best efforts would be advanced if he negotiated an incarceration of less than eighteen to twenty years. This was accomplished. The defendant's sentences were well under the maximum terms provided for the offenses involved. In addition, the defendant avoided sentence on the most serious of the indictments returned against him. Beatrice did his job by negotiating an excellent outcome for his client in the circumstances. Although it does appear that the contingency aspect of the agreement violates ethical rules, it does not appear that the defendant suffered any adverse consequences. Accordingly, no substantial issue was raised with respect to the agreement. (Emph. Added)With respect to an indictment for armed assault with intent to murder, the judge sentenced the defendant to a term of from nine to fifteen years at M.C.I., Cedar Junction, and an additional from three to five year term concurrent with the governing sentence on an indictment for deriving support from earnings of a prostitute. On an indictment for kidnapping and on multiple indictments for assault and battery with a dangerous weapon, the judge imposed from three to five year terms concurrent with each other and consecutive to the governing sentence; then he suspended the sentences for five years and imposed probationary conditions.

Commonwealth v. Facella, 42 Mass. App. Ct. 354, 355 (Mass. App. Ct. 1996)

80Q. 3-21 p 286 Guaranteeing a noteIs the lawyer subject to discipline?(A) Yes, because Attorney is lending her credit to Client. (B) Yes, because Attorney is helping to finance litigation. (C) No, because the funds will be used for trial preparation. (D)No, because Attorney took the case on a contingent fee basis.

Ch. 3 fees and billing81Correct Answer: (C) The Rules do not prohibit this arrangement. Indeed, although Rule 1.8(e) generally prohibits financial assistance to a client in connection pending or contemplated litigation, it permits the lawyer to advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the case81Q. 3-22 p. 287 the Barefoot childAre the corporal works of mercy barred?Ch. 3 fees and billing82Which is proper?(A) Gamma buys the shoes for the child. (B) Gamma gives Client money to buy the shoes for the child. (C) All of the above (D) None of the above Correct Answer: (D) Rule 1.8(e)(2) permits a lawyer representing an indigent client [to] pay court costs and expenses of litigation on behalf of the client[,] but does not exempt other financial assistance from the general prohibition. The Comment states

[l]awyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation. 82Q. 3-23 Easing the burden p. 288A) accept credit cardsB) arrange a bank loan for fee paymentC) take publication rights

What about the First Amendment?Arent royalties items in commerce?

Ch. 3 fees and billing83Correct Answer: (D) A lawyer may accept bank credit cards and arrange for bank loans consistent with the Rules, but Rule 1.8(d) prohibits a lawyer from making an agreement prior to the conclusion of the representation . . . giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation. The Comment explains that such an arrangement creates a conflict between the interests of the client and the personal interests of the lawyer. Measures suitable in the representation of the client may detract from the publication value of an account of the representation. Casebook p. 288. 83Referral fees and division of fees among law firms Dividing the moneyCh. 3 fees and billing8484Q. 3-24 Dividing the fees p.288Is the lawyer subject to discipline?(A) Yes, unless Clients consent is in writing. (B) Yes, because Alpha will not try the case. (C) No, if the division of the fee between Alpha and Beta is in proportion to actual work done by each. (D)No, because the total fee does not differ from that contracted for by Alpha with Client.

Ch. 3 fees and billing85Correct Answer: (C) Under Rule 1.5(e), lawyers who are not in the same firm may share fees only if: (1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable. Casebook pp. 288-89. Here, the total fee is reasonable and Client agreed in writing to the share each lawyer will receive. If, in addition, either the division is in proportion to the services performed or each lawyer assumes joint responsibility[,] the agreement would be permissible. Accordingly, if division of fees were proportional to actual work done pursuant to answer (C), the lawyers would not be subject to discipline. 8586Dividing fees among lawyersLawyers fees are not shared with non-lawyersWithin a firmLawyers can freely share feesOf counsel?Outside a firm Proportionate to work and expenseAssumption of joint legal responsibilityWith clients consent in writingWith a certified specialist (minority rule)Ch. 3 fees and billing8687R. 1.5 (e) Division of feesA division of a fee between lawyers who are not in the same firm may be made only if:(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representationCh. 3 fees and billing87This is why we have firms point systems for origination, etc.* joint responsibility you are on the pleadings you are involved else you cannot certify that there is good ground for the matters asserted therein88R. 1.5 (e) Division of fees(2) client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing and(3) the total fee is reasonable.

Ch. 3 fees and billing88* Reasonableness always is trump89New Jersey Rules of CourtRule 1:39 (d) Certification of attorneys Division of Fees. A certified attorney may divide a fee for legal services without regard to services performed or responsibility assumed by the referring attorneyIFthe total fee does not exceed reasonable compensationBUTMatrimonial law matters are excludedCh. 3 fees and billing89ABA Formal Opinion 464 (2013)Lawyers subject to the Model Rules may work with other lawyers or law firms practicing in jurisdictions with rules that permit sharing legal fees with nonlawyers [such as the U.K.]... provided that there is no interference with the lawyers independent professional judgment.

Ch. 3 fees and billing90Where there is a single billing to a client in such situations, a lawyer subject to the Model Rules may divide a legal fee with a lawyer or law firm in the other jurisdiction, even if the other lawyer or law firm might eventually distribute some portion of the fee to a nonlawyers, provided that there is no interference with the lawyers independent professional judgment. 90Q. 3-25 p. 89 Is it proper for the lawyer to accept the aunts check?(A) Yes, if Aunt does not attempt to influence Attorneys conduct of the case. (B) Yes, if Attorneys charges to Defendant are reduced accordingly. (C) No, because Aunt is attempting to finance litigation to which she is not a party. (D)No, unless Attorney first informs Defendant and obtains Defendants consent to retain the payment. Ch. 3 fees and billing91Correct Answer: (D) Under Rule 1.8(f), a lawyer may only accept compensation from a third-party where: (1) the client gives informed consent; (2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and (3) information relating to representation of a client is protected as required by Rule 1.6 R. 5.4 3rd party cannot direct or regulate the lawyers professional judgment.91Q. 3-26 Safeguarding property of others, p. 291Is the attorney subject to discipline? (A) Yes, because the attorney had a duty to promptly notify the client of the receipt of the $1,000,000. (B) Yes, because the attorney gave unsolicited advice about nonlegal matters. (C) No, because the client did not object to the withholding of the notice and funds. (D) No, because the attorney acted in the clients best interest.

Ch. 3 fees and billing92Correct Answer: (A) Rule 1.15(d) requires the lawyer to promptly notify the client upon receiving funds in which the client has an interest. Here, the attorney failed to comply with the Rule. Casebook p. 291.RPC 2.1 lawyer must exercise independent judgmentRPC 1.15 safeguarding funds92RPC 1.15 safekeeping property(e) When in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute.Ch. 3 fees and billing9393Q. 3-27 p. 291 Borrowing money from trustNo harm no foul?Is ratification by the client a defense?Relevant RulesRPC 1.15 (a)RPC 1.15 (c)

Ch. 3 fees and billing94John Marshall lived on such entrusted funds for years!

Correct Answer: (B) Under Rule 1.15(c), [a] lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred. A lawyer may not withdraw the funds for personal use. 94RPC 1.15 safekeeping property(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Other property shall be identified as such and appropriately safeguarded.Ch. 3 fees and billing9595Q. 3-28, p. 292 What should the attorney do with the $1,600?

(A) Take it(B) Put the $600 in the fee account and leave $1,000 in the clients trust account until the attorney's fee for the final appeal is determined. (C) Transfer $600 to the fee account and send the client a $1,000 check on the clients' trust account. (D) Send the client a $1,000 check and leave $600 in trust

Ch. 3 fees and billing96Correct Answer: (D) Rule 1.15(e) provides that [w]hen in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. Casebook p. 291. This provision applies to the $600 for attorneys fees. With regard to the $1,000 for bail costs that was never used for that purpose, the 86

lawyer must return those funds. Rule 1.15(e) states that [t]he lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute. Id. 96Q. 3-29, p. 293 Where to put the money?Is the attorney subject to discipline for putting the estimated fees to be earned in the attorney fee account?

Ch. 3 fees and billing97Correct Answer: (B) As discussed in the response to Question 3-27 above, Rule 1.15(c) only permits the lawyer to transfer funds for fees earned and expenses paid. 97RPC 1.15 safekeeping property(c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paidin advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.Ch. 3 fees and billing9898RPC 1.15 safekeeping property(d) Upon receiving funds or other property in which a client or third person has an interest, alawyer shall promptly notify the client or third person. Ch. 3 fees and billing9999100R. 1.5 FeesException to Prohibited Contingent Fees[6] ... - recovery of post-judgment balances due under support, alimony or other financial ordersCh. 3 fees and billing100Q. 3-30 - p. 305 May the State demand as a condition of settlement that plaintiff give up fees to which it may be entitled as a prevailing party under 42 USC 1988?Ch. 3 fees and billing101Correct Answer: (A) In EVANS v. JEFF D., 475 U.S. 717 (1986), Casebook p. 305, the Supreme Court (Stevens, J.) held that the Fees Act [does not] embody a general rule prohibiting settlements conditioned on the waiver of fees 101Evans v. Jeff D [1986] p. 291Brennan dissentingby awarding attorney's fees Congress sought to attract competent counsel to represent victims of civil rights violations.Congress' primary purpose was to enable "private attorneys general" to protect the public interest by creating economic incentives for lawyers to represent them.Ch. 3 fees and billing102102Lawyers working on specContingent feesCh. 3 fees and billing103103104Contingent Fees RPC. 1.5 Generally permitted (except if prohibited)Must be written retention agreementBasis of calculation must be statedLitigation expenses deducted or notWritten accounting reqdCh. 3 fees and billing104105Contingent Fees - generallyThe norm for plaintiffs in PI cases, workers compensation, SS disability, subrogation claims, debt collectionClosely regulated in PI cases by statute and ruleBarred in- criminal defense- marriage dissolution & child support casesCh. 3 fees and billing105Restatement LGL 35, cmt b (p. 249)Contingent-fee arrangements perform three valuable functions. 1) enable persons who could not otherwise afford counsel to assert their rights, paying their lawyers only if the assertion succeeds

Ch. 3 fees and billing106106Restatement LGL 35, cmt b2) give lawyers an additional incentive to seek their clients' success and to encourage only those clients with claims having a substantial likelihood of succeeding. Ch. 3 fees and billing107107Restatement LGL 35, cmt b3) enable a client to share the risk of losing with a lawyer, who is usually better able to assess the risk and to bear it by undertaking similar arrangements in other casesCh. 3 fees and billing108108MRPC 1.5 (d) A lawyer shall not Enter into an arrangement for, charge or collect:1) any fee in a domestic relations matter, the payment of which is contingent on divorce or the amount of alimony or support or property settlement in lieu thereof2) a contingent fee for representing a defendant in a criminal case

Ch. 3 fees and billing109109110MRPC 1.5 Contingent Fees Permitted(c) in a writing signed by the client shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appealCh. 3 fees and billing110* State or local rules re govern fees for infants, settlements, trial, appeal111MRPC 1.5 Contingent Fees PermittedExpenses whether such expenses are to be deducted before or after the contingent fee is calculated

In the event of lossmust clearly notify the client of any expenses for which the client will be liable if the client does not prevailCh. 3 fees and billing111Mention NY rules to come* leverage value of right to recover from client in persuading client to settleMay also justify taking risk if client may reimburse costs in event of a loss112R. 1.5 Contingent Fees PermittedAccountingthe lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determinationCh. 3 fees and billing112* Fair trade and good commercial practice should yield this and the rules require113Contingent Fees - New York NY CLS Jud 474PI and wrongful death claim contingent fees are set by each of the four Judicial DepartmentsBUTMedical malpractice fees are set by 474 Infant and guardian fees set by courtCh. 3 fees and billing113[d]-- Attorney's fees.

Contingent fees of attorneys in actions for personal injury and wrongful death are regulated by the rules of each of the four Judicial Departments. In actions for medical, dental, or podiatric malpractice, the provisions of Judiciary Law 474-a govern the contingent fees for attorneys. Until 1985 the percentages provided for in Judiciary Law 474-a were identical to those set forth in the rules of each Department. However, by L. 1985, ch. 294, 15, as amended by L. 1985, ch. 760, 8, and L. 1986, ch. 485, 12, Judiciary Law 474-a was revised so as to reduce the contingent fees to which an attorney in a medical, dental or podiatric malpractice action is entitled to.

In In re Estate of Kritzer , Surrogate Lambert held that Judiciary Law 474-a does not apply to a wrongful death action founded on medical, dental or podiatric malpractice and that in a wrongful death action premised on defendant's medical malpractice the attorney is entitled to the higher rate of contingent fees allowed by the applicable Appellate Division rules.114SUPREME COURT RULES 3rd JUDICIAL DEPT.ARTICLE 1. APPELLATE DIVISION SUBARTICLE B. ATTORNEYS NY CLS Sup Ct 806.13 (a) (2007)The receipt, retention or sharing of contingent compensation in excess of the schedule of fees shall constitute the exaction of unreasonable and unconscionable compensationCh. 3 fees and billing114115SUPREME COURT RULES 3rd JUDICIAL DEPT.ARTICLE 1. APPELLATE DIVISION SUBARTICLE B. ATTORNEYS NY CLS Sup Ct 806.13 (a) (2007)SCHEDULE A

(1) 50 per cent on the first $ 1,000 of the sum recovered,

(2) 40 per cent on the next $ 2,000 of the sum recovered,

(3) 35 per cent on the next $ 22,000 of the sum recovered,

(4) 25 per cent on any amount over $ 25,000 of the sum recoveredExtraordinary result may justify higher fee app.Ch. 3 fees and billing115116SCHEDULE BA percentage not exceeding 33 1/3 % of the sum recoveredNo additional compensation because of extraordinary circumstances may be soughtCh. 3 fees and billing116117How the fee is computedNet sum recovered after deducting expenses and disbursements for Filing feesDepositionsMedical recordsExpert witnessesInvestigative or other servicesCh. 3 fees and billing117* Reasonable and necessary to prosecution or enforcement of the action(ii) if.. the attorney agrees to pay costs and expenses of the action pursuant to Judiciary Law section 488(2)(d),on the gross sum recovered before deducting expenses and disbursements. In computing the fee, the costs as taxed, including interest upon a judgment, shall be deemed part of the amount recovered. Ch. 3 fees and billing118(ii) in the event that the attorney agrees to pay costs and expenses of the action pursuant to Judiciary Law section 488(2)(d), on the gross sum recovered before deducting expenses and disbursements. The retainer agreement or letter of engagement shall describe these alternative methods, explain the financial consequences of each, and clearly indicate the client's selection. In computing the fee, the costs as taxed, including interest upon a judgment, shall be deemed part of the amount recovered. For the following or similar items there shall be no deduction in computing such percentages: liens, assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or of self-insurers or insurance carriers.118(ii) if.. the attorney agrees to pay costs and expenses of the action pursuant to Judiciary Law section 488(2)(d),For the following or similar items there shall be no deduction in computing such percentages: liens, assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or of self-insurers or insurance carriers.Ch. 3 fees and billing119(ii) in the event that the attorney agrees to pay costs and expenses of the action pursuant to Judiciary Law section 488(2)(d), on the gross sum recovered before deducting expenses and disbursements. The retainer agreement or letter of engagement shall describe these alternative methods, explain the financial consequences of each, and clearly indicate the client's selection. In computing the fee, the costs as taxed, including interest upon a judgment, shall be deemed part of the amount recovered. For the following or similar items there shall be no deduction in computing such percentages: liens, assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or of self-insurers or insurance carriers.119120How the fee is computedTaxed costs and interest upon a judgment are part of the amount recovered

Ch. 3 fees and billing120* Reasonable and necessary to prosecution or enforcement of the action121How the fee is calculatedNo deduction for liens, assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or self-insurers or insurance carriers.Ch. 3 fees and billing121122How the fee is calculatedCommon liensMedicareMedicaid (and other public entitlement)Assignments of benefitsUnion-mgt benefit funds (ERISA)Workers compensationCh. 3 fees and billing122123NY CLS Jud 474-a Contingent fees in claims or actions for medical, dental or podiatric malpractice30 % of the first $ 250,000 of the sum recovered;

25 % of the next $ 250,000 of the sum recovered;

20 % of the next $ 500,000 of the sum recovered;

15 % of the next $ 250,000 of the sum recovered;

10 % of any amount over $ 1,250,000 of the sum recovered.Ch. 3 fees and billing123Laws 1985, ch 294, 1, 25 in part eff July 1, 1985, provide as follows:Section 1. Legislative findings and declaration. The legislature hereby finds and declares that a comprehensive reform of the medical and dental malpractice adjudication system is necessary in order to ensure the continued availability and affordability of quality health services in New York state. Escalating malpractice insurance premiums discourage physicians and dentists from initiating or continuing their practice in New York and contribute to the rising cost of health care as premium costs are passed along to health care consumer. The legislature finds, therefore, that steps must be taken to reduce the cost of malpractice insurance and to restrain associated health care costs, while assuring the availability of compensation for persons injured as a result of malpractice. By expediting case resolution, discouraging frivolous claims and defenses, moderating attorney contingency fees, limiting the opportunity for double recoveries, and requiring the periodic payment of large future awards, the legislature intends to reduce the escalating cost of malpractice insurance and to improve the adjudication of malpractice claims. The legislature further finds that hospitals must enhance their efforts to reduce medical and dental malpractice through the establishment of medical and dental malpractice prevention programs and through greater scrutiny of physicians and dentists prior to granting hospital privileges and that increased resources should be devoted to the investigation and prosecution of professional misconduct. The legislature finds that the public interest further requires that premium levels for physicians and dentists must be restrained to the extent feasible in order to maintain high quality medical services for New York and to explore alternative long-term approaches to the malpractice issue.

NY CLS Jud 474-a 124NY CLS Jud 474-a Extraordinary CircumstancesTrial judge has discretion to fix as reasonable compensation an amount greater than 474-a- in extraordinary circumstances- without regard to the claimant's consentBUT not in excess of that provided by contract between attorney & clientAre such reductions in med mal cases warranted?Ch. 3 fees and billing124.In the event that claimant's or plaintiff's attorney believes in good faith that the fee schedule set forth in subdivision two of this section, because of extraordinary circumstances, will not give him adequate compensation, application for greater compensation may be made upon affidavit with written notice and an opportunity to be heard to the claimant or plaintiff and other persons holding liens or assignments on the recovery. Such application shall be made to the justice of the trial part to which the action had been sent for trial; or, if it had not been sent to a part for trial, then to the justice presiding at the trial term calendar part of the court in which the action had been instituted; or, if no action had been instituted, then to the justice presiding at the trial term calendar part of the Supreme Court for the county in the judicial department in which the attorney has an office. Upon such application, the justice, in his discretion, if extraordinary circumstances are found to be present, and without regard to the claimant's or plaintiff's consent, may fix as reasonable compensation for legal services rendered an amount greater than that specified in the schedule set forth in subdivision two of this section, provided, however, that such greater amount shall not exceed the fee fixed pursuant to the contractual arrangement, if any, between the claimant or plaintiff and the attorney. If the application is granted, the justice shall make a written order accordingly, briefly stating the reasons for granting the greater compensation; and a copy of such order shall be served on all persons entitled to receive notice of the application.5.Any contingent fee in a claim or action for medical, dental or podiatric malpractice brought on behalf of an infant shall continue to be subject to the provisions of section four hundred seventy-four of this chapter.

NY CLS Jud 474-a 125NY Rules of the Appellate Courts 691.20:Retainer and Closing Statements2nd Judicial DepartmentWritten retainers, etc. reqd in:personal injuryproperty damagewrongful death condemnation or change of grade proceedingsCh. 3 fees and billing125126NY Rules of the Appellate Courts 691.20 Retainer and Closing Statements2nd Judicial Department(1) Every attorney who accepts a retainer or enters into an agreement, express or implied, for compensation for services whereby his compensation is to be contingent in whole or in part upon successful prosecution or settlement Shall, within 30 days sign personally and file with the Office of Court Administration of the State of New York a written statement of such retainer or agreement. Ch. 3 fees and billing1263) An attorney retained by another attorney, on a contingent fee basis, as trial or appeal counsel or to assist in the preparation, investigation, adjustment or settlement of any such action, claim or proceeding shall, within 15 days from the date of such retainer, sign personally and file with the Office of Court Administration a written statement of such retainer in the manner and form as above set forth, which statement shall also contain particulars as to the fee arrangement, the type of services to be rendered in the matter, the code number assigned to the statement of retainer filed by the retaining attorney and the date when said statement of retainer was filed.127NY Rules of the Appellate Courts 691.20 Retainer and Closing Statements2nd Judicial Department(b) Closing statement; statement where no recovery.(1) A closing statement shall be filed in connection with every claim in which a retainer statement is required, as follows: Every attorney upon receiving, retaining or sharing any [such] sum shall, within 15 days after such receipt, retention or sharing, sign personally and file with the Office of Court Administration and serve upon the client a closing statementCh. 3 fees and billing127128NY Rules of the Appellate Courts 691.20 Retainer and Closing Statements2nd Judicial DepartmentRetainer agreement, under which attorney would receive [less than rules permit] was not enforceable due to failure to timely file. Connors v. Wildstein (2 Dept. 2000)

Attorney was suspended from practice of law for one year .. For failing to prepare retainer statement for filing with Office of Court Administration in personal injury case and by failing to prepare closing statement Matter of Laskorski (2 Dept. 1995)Ch. 3 fees and billing128129N.J. Court Rules, R. 1:21-7 Contingent fees (c) In any [tort claim for damages] but excluding statutorily based discrimination and employment claims, and the client is not a subrogee, an attorney shall not contract for, charge, or collect a contingent fee in excess of the following limits

Ch. 3 fees and billing129Written agreement required

(b) An attorney shall not enter into a contingent fee arrangement without first having advised the client of the right and afforded the client an opportunity to retain the attorney under an arrangement for compensation on the basis of the reasonable value of the services.

130N.J. Court Rules, R. 1:21-7 Contingent fees in Personal Injury and Wrongful Death Cases(1) 33 1/3% on the first $ 750,000 recovered;

(2) 30% on the next $ 750,000 recovered;

(3) 25% on the next $ 750,000 recovered;

(4) 20% on the next $ 750,000 recoveredCourt will set fee if above $3million

Ch. 3 fees and billing130(b) An attorney shall not enter into a contingent fee arrangement without first having advised the client of the right and afforded the client an opportunity to retain the attorney under an arrangement for compensation on the basis of the reasonable value of the services.

131N.J. Court Rules, R. 1:21-7 Contingent fees 25% in case of minors and mentally incapacitated persons if the case settles without trialincludes services rendered on any appeal or review proceeding or on any retrial, but this shall not be deemed to require an attorney to take an appealCh. 3 fees and billing131(b) An attorney shall not enter into a contingent fee arrangement without first having advised the client of the right and afforded the client an opportunity to retain the attorney under an arrangement for compensation on the basis of the reasonable value of the services.

132N.J. Court Rules, R. 1:21-7 Contingent fees (f) If at the conclusion of a matter an attorney considers the fee permitted by paragraph (c) to be inadequate, an application on written notice to the client may be made to the Assignment Judge for the hearing and determining of a reasonable fee in light of all the circumstances.Ch. 3 fees and billing132(b) An attorney shall not enter into a contingent fee arrangement without first having advised the client of the right and afforded the client an opportunity to retain the attorney under an arrangement for compensation on the basis of the reasonable value of the services.

133Federal Tort Claims ActStatutory contingent fee limitsCh. 3 fees and billing13313428 U.S.C. 2678. Attorney fees; penalty No attorney shall charge, demand, receive, or collect for services rendered, fees in excess of 25% of any judgment or [settlement] or in excess of 20% of any award, compromise, or settlement (at administrative adjustment stage] [28 USC 2672]Ch. 3 fees and billing13413528 U.S.C. 2678. Attorney fees; penalty Any attorney who charges, demands, receives, or collects for services rendered in connection with such claim any amount in excess of that allowed under this section, if recovery be had, shall be fined not more than $ 2,000 or imprisoned not more than one year, or both. Ch. 3 fees and billing135136Setting a Reasonable Fee for the private attorney general - Johnson v. Georgia Hwy Express (5th Cir.-OLD 1974)Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. 2000e-5(k):the Court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the cost of the litigation.Ch. 3 fees and billing136Johnson v. Georgia Hwy Express, 488 F.2d 714 (5th Cir.-OLD 1974)137Setting a Reasonable Fee for the private attorney general - Johnson v. Georgia Hwy Express (5th Cir.-OLD 1974)If [the plaintiff] obtains an injunction, he does so not for himself alone but also as a "private attorney general," vindicating a policy that Congress considered of the highest priority.

Ch. 3 fees and billing137138Setting a Reasonable Fee for the private attorney general - Johnson v. Georgia Hwy Express (5th Cir.-OLD 1974)If successful plaintiffs were routinely forced to bear their own attorneys' fees, few aggrieved parties would be in a position to advance the public interest by invoking the injunctive powers of the federal courts.

This Court..."to make sure that Title VII works," has liberally applied the attorney's fees provisionCh. 3 fees and billing138139The Johnson FactorsThe Disciplinary rules/RPC 1.5 factors PLUS(10) The "undesirability" of the case.

Civil rights attorneys face hardships in their communities because of their desire to help the civil rights litigant. This can have an economic impact on his practice which can be considered by the Court.Ch. 3 fees and billing139LodestarContingent fee enhancementWhat is a reasonable fee?Ch. 3 fees and billing140140Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662 (2010) p. 284 6 Rules1) a reasonable fee is one that is sufficient to induce a capable attorney to undertake the representation of a meritorious civil rights case but that does not provide a form of economic relief to improve the financial lot of attorneys 2) there is a strong presumption that the lodestar method yields a sufficient fee.Ch. 3 fees and billing141141Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662 (2010) p. 284 6 Rules3) the Court has never sustained an enhancement of a lodestar amount for performance, but has repeatedly said that an enhancement may be awarded in rare and exceptional circumstances. 4) the lodestar includes most, if not all, of the relevant factors constituting a reasonable attorney's fee.Ch. 3 fees and billing142An enhancement may not be based on a factor that is subsumed in the lodestar calculation, such as the case's novelty and complexity, or the quality of an attorney's performance142Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662 (2010) p. 284 6 Rules5) the burden of proving that an enhancement is necessary must be borne by the fee applicant.6) an applicant seeking an enhancement must produce specific evidence supporting the award, to assure that the calculation is objective and capable of being reviewed on appeal.Ch. 3 fees and billing143143Rule 1.5New YorkCh. 3 fees and billing144144145Fees for Legal Services [22 NYCRR 1200.11]R. 1.5 (a)A lawyer shall not make an agreement for, charge, or collect an excessive or illegal fee or expense.Ch. 3 fees and billing145Note that the exposure to discipline begins with agreement not just charging or collectingIllegal court rules, statutes, judicial determinations often govern what fees can be chargedE.g. EAJA, SSD, bankruptcy courts, contingent fee rules, FTCA146R. 1.5 (a) Fee for Legal Services [22 NYCRR 1200.11]A fee is excessive when, after a review of the facts, a reasonable lawyer would be left with a definite and firm conviction that the fee is excessive.Ch. 3 fees and billing146 Factors to be considered as guides in determining the reasonableness of a fee may include the following the usual per R. 1.5147Model Rule 1.5: Fees(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.Ch. 3 fees and billing147Expenses charges of $1.00/page faxed may be unreasonable but generally a lot of indulgence is allowedHidden charges in real estate closings are a common practice that I find offensiveREASONABLENESS is the overriding criterion re fees and expensesNote though that one may charge interest for $$ advanced in a contingent fee matter148R. 1.5 (1) Factors to considertime and labor required

novelty and difficulty of the questions involved

skill needed to perform the legal service properlyCh. 3 fees and billing148* Market factors149R. 1.5 Factors to consider(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer

Ch. 3 fees and billing149We see some of this in BrobeckThe lawyer commits his resources, limits his own ability to take on other cases150R. 1.5 Factors to consider(3) the fee customarily charged in the locality for similar legal services

Ch. 3 fees and billing150* Similar locality discuss Goldfarb v. 151R. 1.5 Factors to consider(4) the amount involved and the results obtained

Ch. 3 fees and billing151* Results may be considered looking back in a suit for the balance owed on fees152R. 1.5 Factors to consider(5) the time limitations imposed by the client or by the circumstances

(6) the nature and length of the professional relationship with the clientCh. 3 fees and billing152(5) Time pressure may justify a larger fee or it may make services that are compromised by time pressure nonetheless reasonable(6) Relates to voluntariness, resolving ambiguity re fee agreements whether written or oral

153R. 1.5 Factors to consider(7) the experience, reputation, and ability of the lawyersCh. 3 fees and billing153* This is a market factor154R. 1.5 Factors to consider(8) is the fee fixed or contingentCh. 3 fees and billing154Fixed or contingent Use of the moneyEntrepreneurial Business riskOpponents of contingent fee incentive emphasize the fairness of the fee by the criterion of the case before the court and often measure its reasonableness by the hourly rates of lawyers not working on contingent feeAs a practical matter one considers: the cost of money, the cost of staff, expenses on the file, time to recovery, and risk of non-recoveryIncentive to provide legal services to those who need itNeed for incentive for those who cannot hire a lawyer otherwise is emphasized on the other side of the debate155Not only fees, but attitudes shiftCity of Burlington v. Dague, 112 S. Ct. 2638 (U.S. 1992) JUSTICE SCALIA delivered the opinion of the Court. The "lodestar" is "the product of reasonable hours times a reasonable rate"

District Court declared that Dague's "risk of not prevailing was substantial" and that "absent an opportunity for enhancement, [Dague] would have faced substantial difficulty in obtaining counsel of reasonable skill and competence in this complicated field of law [Clean Water Act]." It concluded a 25% enhancement is appropriate, but anything more would be a windfall to the attorneys."Ch. 3 fees and billing155Dague v. City of BurlingtonWe note at the outset that an enhancement for contingency would likely duplicate in substantial part factors already subsumed in the lodestar. The risk of loss in a particular case (and, therefore, the attorney's contingent risk) is the product of two factors: (1) the legal and factual merits of the claim, and (2) the difficulty of establishing those merits. Ch. 3 fees and billing156156Dague v. City of BurlingtonThe second factor, however, is ordinarily reflected in the lodestar -- either in the higher number of hours expended to overcome the difficulty, or in the higher hourly rate of the attorney skilled and experienced enough to do so. Taking account of it again through lodestar enhancement amounts to double counting.Ch. 3 fees and billing157157158Not only fees, but attitudes shiftCity of Burlington v. Dague, 112 S. Ct. 2638 (U.S. 1992) JUSTICE SCALIA delivered the opinion of the Court. We see a number of reasons for concluding that no contingency enhancement whatever is compatible with the fee-shifting statutes at issue. Ch. 3 fees and billing158159Not only fees, but attitudes shiftCity of Burlington v. Dague, 112 S. Ct. 2638 (U.S. 1992) JUSTICE SCALIA delivered the opinion of the Court. Just as the statutory language limiting fees to prevailing parties bars a prevailing plaintiff from recovering fees relating to claims on which he lost, so should it bar a prevailing plaintiff from recovering for the risk of loss. Ch. 3 fees and billing159160Not only fees, but attitudes shiftCity of Burlington v. Dague, 112 S. Ct. 2638 (U.S. 1992) JUSTICE SCALIA delivered the opinion of the Court. To award a contingency enhancement under a fee-shifting statute would in effect pay for the attorney's time (or anticipated time) in cases where his client does not prevail.Ch. 3 fees and billing160161Not only fees, but attitudes shiftCity of Burlington v. Dague, 112 S. Ct. 2638 (U.S. 1992) JUSTICE SCALIA delivered the opinion of the Court. An attorney operating on a contingency-fee basis pools the risks presented by his various cases: cases that turn out to be successful pay for the time he gambled on those that did not. Gambling? Or entrepreneurial risk-taking?Ch. 3 fees and billing161162Rendine v. Pantzer, 141 NJ 292 (2005)We are unpersuaded by Justice Scalia's suggestion in Dague, supra, that awarding contingency enhancement under a fee-shifting statute "would in effect pay for the attorney's time (or anticipated time) in cases where his client does not prevail." ...Ch. 3 fees and billing162163Rendine v. Pantzer, 141 NJ 292 (2005)In our view the case for contingency enhancement has nothing to do with the amount of time lawyers invest in losing cases.It rests on the desire to enable parties to compete for legal services in the private market. Ch. 3 fees and billing163164Rendine v. Pantzer, 141 NJ 292 (2005)A more practical approach is that outlined in the Delaware Valley II dissent. A court's job is to determine 1) was the case was taken on a contingent basis?2) was the attorney able to mitigate the risk of nonpayment in any way?3) were other economic risks were aggravated by the contingency of payment?Ch. 3 fees and billing164165Rendine v. Pantzer, 141 NJ 292 (2005)It is the actual risks or burdens that are borne by the lawyer or lawyers that determine whether an upward adjustment is called for.'

483 U.S. at 747 (Blackmun, J., dissenting)Ch. 3 fees and billing165166Rendine v. Pantzer, 141 NJ 292 (2005)We conclude that contingency enhancements in fee-shifting cases ordinarily should range between 5% and 50% of the lodestar fee, the enhancement in typical contingency cases should range between 20% and 35 % of the lodestar. Ch. 3 fees and billing166167Rendine v. Pantzer, 141 NJ 292 (2005)Enhancements should never exceed 100%of the lodestarEnhancement of that size will be appropriate only in the rare and exceptional case in which - the risk of nonpayment has not been mitigated at all, i.e., where the "legal" risk constitutes "an economic disincentive independent of that created by the basic contingency in payment * [AND] the result achieved * * * is significant and of broad public interest. Delaware Valley II, 483 U.S. at 751, (Blackmun, J., dissenting)Ch. 3 fees and billing167Managing the conflicts among claimants and lawyersAggregate Litigation

Ch. 3 fees and billing168168Principal types of aggregate claimsClass actions (FRCP 23)- fairness hearingsSingle action with multiple claimants Quasi class actions/Consolidated case management- state mass tort case management- MDL -federal multi district litigationCh. 3 fees and billing169Rule 23. Class Actions

(a) PREREQUISITES TO A CLASS ACTION. One or more members of a class may sue or be sued as representative parties on behalf of all only if

(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Judge Hellerstein 9/11 cleanup cases"...because of the extraordinary public interest in this case and because of the limited nature of the funds that are available for settlement, that there will undoubtedly be fairness proceedings that will be part of the settlement. That means that what is fair and reasonable will have to be determined by the court, subject to the right of appeal."Judge Hellerstein also stressed the importance of fairness to individual plaintiffs.....my conception of fairness relates not only to the aggregate size of the settlement, but more to the individual settlements themselves. .... I regard the 9,000 cases as just those, 9,000 separate cases. Many of them are similar. Many of them can be ranked for convenience into categories, but in their fundamental aspects they have an individual plaintiff in each individual case, plus the possibility of additional family members. But they all revolve around one personal injury or one death, as they case may be.So the fairness to individuals is an extremely important aspect of settlement. And I will be looking carefully, if and when there is a settlement at how individual members are treated.http://lawprofessors.typepad.com/mass_tort_litigation/2010/02/twelve-instead-of-six-developments-in-the-wtc-disaster-site-litigation-.html

169R. 1.8 (g) Conflicts Aggregate LitigationA lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless:Ch. 3 fees and billing170170Fees drawn from a common fundAggregate Litigation: Class ActionsCh. 3 fees and billing171June 16, 2010Paul Weiss Wins $90 Million Contingency FeeIn February, Paul, Weiss, Rifkind, Wharton & Garrison said that 2009 was the most profitable year in its history. That record could be broken in 2010, now that the firm has won a $90 million contingency fee as the result of a $500 million settlement it won for Alaska's pension board. Last Friday, a month before the Alaska Retirement Management Board's case against Mercer Inc., the consulting unit of Marsh & McClennan, was headed for trial in Juneau superior court, Mercer agreed to a $500 million settlement. According to Paul Weiss partner Lewis Clayton, who would have served as Alaska's lead trial counsel, the firm's sliding-scale fee agreement with the pension board means the firm is entitled to about 18 percent of that recovery, or about $90 million. Total revenue at Paul Weiss in 2009 was $665.5 million.The pension board's suit filed in 2007 alleged that Mercer failed to competently calculate the expected liabilities of two Alaska state pension plans. Alaska alleged that near the end of a period between 1992 and 2002, which was the subject of the original complaint, Mercer discovered a math error that created a $1 billion shortfall for the funds. But instead of coming clean and correcting the error, Mercer allegedly tried to cover it up. Mr. Clayton said Mercer ultimately conceded its mistake after employees admitted it in depositions.In a statement, Mercer denied liability and said that $100 million of the settlement would be funded by insurance. The company, which has been represented by Wesley Howell Jr. of Gibson, Dunn & Crutcher and Eric Van Vugt of Quarles & Brady, said it faced $2.9 billion in damages at trial. Andrew Longstreth171172Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsattorneys' fees from a "common fundjudge-made exception to the "American RuleJudicial discretion -lodestar methodpercentage of recovery methodor some combination of the twoCh. 3 fees and billing17260 F.3d 1245, 1248-1249 (7th Cir. 1995)The underlying lawsuit involved a class of plaintiffs, participants in and beneficiaries of the Simmons Mattress Company's employee stock ownership plan ("ESOP"), who claimed that the defendants violated the Employee Retirement Income Security Act ("ERISA") by causing shares of Simmons stock to be sold to the ESOP at a price above the market value. The parties settled the suit and set up a common fund, totaling approximately $ 15.5 million. 173Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsCounsel for the class sought Lodestar $ 1,863,838.75 Enhanced by risk multiplier (1.53)= $ 2.85 million or 18.45 % of the fundDistrict court on remand.... allowed the smallest possible multiplier of 1.01Ch. 3 fees and billing173174Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsWe review the district court's award of attorneys' fees deferentiallyplaintiff class is unrepresented in the issue of attorneys' feescourt must jealously guard the interests of the class.court must also be careful to sustain the incentive for attorneys on an "inescapably contingent" basisCh. 3 fees and billing174175Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsThe risk multiplier is an effort to mimic market forces. The district court in essence found that the attorneys for the class faced no risk in taking on the case, that in the end, they were assured of a paycheck. We disagree.Ch. 3 fees and billing175176Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsthe benchmark in common fund cases is 20 % - 30 %Usual range 13 % - 20 % for funds of $ 51-$ 75 million6-10 % range for funds of $ 75-$ 200 millionthe multiplier of 1.53 leads to attorneys' fees of $ 2.85 million - about 18.5 % of the settlement fundCh. 3 fees and billing176177Florin v. Nationsbank of Ga., N.A. (7th Cir. 1995) Class actionsthe benchmark in common fund cases is 20 % - 30 %Usual range 13 % - 20 % for funds of $ 51-$ 75 million6-10 % range for funds of $ 75-$ 200 millionthe multiplier of 1.53 leads to attorneys' fees of $ 2.85 million - about 18.5 % of the settlement fundCh. 3 fees and billing177Private agreement or judicial control?Aggregate Tort LitigationCh. 3 fees and billing178178WTC Ground Zero casesJudge Hellerstein refused to mark cases settled when the lawyers for City, contractors and plaintiffs presented their agreement.He ordered them to continue to trial, etc.He said that not enough money was going to plaintiffs and too much was going to lawyers.Its a quasi class action, he saidCh. 3 fees and billing179179WTC Ground Zero casesWhat should the lawyers do if they think he is overreaching?Did the Judge have the right to approve or disapprove a private settlement?Almost all the money is federal funds (WTC Captive) - does that make a difference?Ch. 3 fees and billing180180WTC Ground Zero casesPlaintiffs lawyers: $30 Million in costs for 8 years, plus tens of millions for staff, etc.Defense took 1,200 deps, spent $200 MClients signed standard NY retainer agreements providing 33 1/3% contingency* did Judge Hellerstein have the right to cut fees as he had threatened?

Ch. 3 fees and billing181181R. 1.8 (g) Conflicts Aggregate Litigationeach client gives informed consent, in a writing signed by the client. The lawyer's disclosure shall include the existence and nature of all the claims or pleas involved and the participation of each person in the settlementDoes the WTC settlement honor these principles?

Ch. 3 fees and billing182* what is the role of Roy simon?

* What do you think of the communication level seen in the website

182Quaere* are the plaintiffs adequately informed of the terms of the aggregate settlement under RPC 1.8 (g)?

* do the opt outs have a realistic chance?

* will 95% take the settlement?

Ch. 3 fees and billing183183Apportioning fees among lawyers in MDL litigationIndividually retained lawyersLead counselState vs. Federal litigation on parallel tracksCh. 3 fees and billing184184ZyprexaJudge Jack B. Weinstein467 F. Supp. 2d 256 (EDNY 2006)

Ch. 3 fees and billing185185Federalism: the state court problemState-Federal ComityConflicts of interest due to differing fee structuresEquityLitigation misconduct- state court filings to evade MDL fee limits and common benefit assessments- filings of non-meritorious new claimsCh. 3 fees and billing186186Common benefit work by Plaitniffs Steering committee 1DiscoveryBellwether trialsSettlement negotiations8000 cases settledClaims processing and payment procedures and implementationResolving Medicare and Medicaid liens (agreement approved by all states and federal government)Ch. 3 fees and billing187 Claims procedure is in the final stages of execution. See In re Zyprexa Prods. Liab. Litig., 433 F. Supp. 2d 268, 269 (E.D.N.Y. 2006). All individual awards have been fixed by the special settlement masters. See Letter from Special Master Kenneth R. Feinberg, No. 04-MD-01596 (Aug. 18, 2006) (setting forth awards for each settling plaintiff).

See In re Zyprexa Prods. Liab. Litig., 451 F. Supp. 2d 458 (E.D.N.Y. 2006). All states and the federal [**6] government have agreed to modify their lien demands to provide a national equitable system.187Attorneys fee structureCapping fees 20% of recovery in smaller, lump-sum claims35% of recovery in all other claims1% hold-back from the gross settlement , plus interest on the escrow fund for Plaintiff Steering Committee I (PSC 1)PSC II not setCh. 3 fees and billing188How far does the MDL courts authority to extend?What is the source of that authority?Why can it override individual contractual agreements?Hat about state courts?

An attorneys' fees structure has been ordered, capping fees at 20% of recovery in smaller, lump-sum claims, and at 35% of recovery in all other claims. See In re Zyprexa Prods. Liab. Litig., 424 F. Supp. 2d 488 (E.D.N.Y. 2006). Costs related to the individual cases and charged to the individual settling plaintiffs are limited to 1% of each plaintiff's recovery. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-01596, 2006 U.S. Dist. LEXIS 59984, 2006 WL 2443248 (E.D.N.Y. Aug. 24, 2006).

188Common benefit fund purposeReimburse members of PSC I and other attorneys for the time and funds expended by them for the common benefit of all settling plaintiffs in conduct of the litigationimplementation of the settlementCh. 3 fees and billing189189January 5, 2007 New York TimesLilly Settles With 18,000 Over Zyprexa

At least 1,200 suits are still pending, the company said.The settlement covers cases filed in state and federal courts by law firms or groups of firms.The federal suits have been overseen by Judge Jack B. WeinsteinCh. 3 fees and billing190The settlement will not affect continuing civil or criminal investigations of Zyprexa by state attorneys general and federal prosecutors.

190Sources of courts authority to control feesInherent authority to sanction officers of the courtFRCP Rule 11MDL Complex Litigation Manual28 USC 192722 NYCRR 130-1Ch. 3 fees and billing191191Manual for Complex Litigation 20.312 (4th ed. 2004) Federal Judicial Center "MDL judges