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What’s In It for Them: Contingent Fees, continued
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“Regardless of one’s view of the suits, the mega-fees from
the 1998 tobacco settlement were nothing but egregious. Some
300 lawyers from 86 firms will pocket as much as $30 billion
over the next 25 years even though, for many of them, the
suits posed minimal risk and demanded little effort.” That
staggering sum comes right out of taxpayers’ pockets –
enough to hire 750,000 teachers.
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., see footnote 26: Robert A.
Levy, "The Great Tobacco Robbery: Lawyers Grab Billions",
Mar. 6, 1999, (citing Robert A. Levy, "The Great Tobacco
Robbery", Legal Times, Feb. 1, 1999, p. 27))
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The advent of non-monetary relief, e.g., coupon settlements
or enhanced disclosure, has lead to incongruous results: the
injured parties receive something of insignificant or no
value, while plaintiffs’ attorneys walk off with millions.
For example, in 1999 plaintiffs in a class action received
no payouts; the defendant, agreed to make fuller disclosures
and the plaintiffs’ attorneys received $7.5 million.
(KRC:
From Olson, The Rule of Lawyers, p. 88)
-
"[I]n mass tort and class action claims, plaintiffs’ awards
are typically divided among so many individuals that the
only people who meaningfully profit are the plaintiffs’
lawyers themselves."
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 7)
-
19% of all tort costs – estimated to be approximately $200
billion in 2003 – go to plaintiffs’ attorneys.
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 2)
-
Because so many lawyers are getting rich off lawsuits, only
46 cents out of every dollar spent on our tort system goes
to plaintiffs.
(AJP,
Fast Facts on the Litigation Lottery, 2005, p. 1)
-
“Lawyers have
erected toll booths across the courthouse steps, exacting
not a fee for passage but a percentage of all business
transactions upon traversal. Contingent fee setting today
operates in a milieu substantially devoid of fiduciary
oversight. Overcharging clients is routine and typically
unquestioned, especially when the client is unaware of the
degree to which it has occurred.” So pervasive are these
abuses that one may legitimately describe the current
regulatory scheme as “rotten.”
(KRC:
Hantler, "Seven Myths ...", as quoting Lester Brickman,
"Contingent Fees Without Contingencies: Hamlet Without the
Prince of Denmark?" 37
UCLA L. Rev.
29, 1998)
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Examples of Outrageous
Fees
-
In Texas, two attorneys recovered $6 million in a
divorce action – the equivalent of a fee of
$42,379 per hour for one of the attorneys and
$8,079 per hour for the other.
(KRC:
Hantler, "Seven Myths",, p. 20 as quoting
Margaret Cronin Fisk, "Two Texas Lawyers Hit
with $6.3M Overcharging Verdict", National Law
Journal, Dec. 6, 1999 at A11)
-
Attorney fees of $250 to $350 million were
awarded in one asbestos case, resulting in
effective hourly fees averaging $2,500 to $5,000
and provoking a federal judge to label these
fees as “grossly excessive.”
(KRC:
Hantler, "Seven Myths", p. 20 as quoting In re:
Joint Eastern and Southern Dist. Asbestos Litig.
(Johns-Mansville Trust Reorganization), 129 B.R.
710, 863 (E.D. & S.D.N.Y. 1991) (Weinstein, J.),
vacated, 982 F. 2d 721 (2d Cir. 1992), op.
modified on reh'g, 993 F 2d 7 (2d Cir. 1993))
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In
one airline accident case in which there was no
issue of liability, a one third contingency fee
yielded an attorney $383,244 for only 25 to 35
hours of work, a rate of $10,000 to $15,000 an
hour.
(KRC:
Hantler, "Seven Myths", p. 20 as quoting Warden,
"Should A Lawyer Make $10,000 an Hour?", Student
Law, Apr. 1981, at 21-23.)
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The
Florida attorney teams who worked in the
universal tobacco settlement for the state
received $3.4 billion, or $233 million per
attorney. That’s the equivalent of $7,716 per
hour per attorney, assuming each attorney worked
24 hours a day, seven days a week for three and
a half years.
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 6)
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A
single law firm, headed by an attorney who has
been characterized in some circles as “the
president of the tobacco branch of the lawsuit
industry, received $1.4
billion in the tobacco settlement.
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 6)
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