Bill Limiting Attorney Fees

[guido911]

I was curious as to what people think about this potential referendum capping attorney contingency fees at 33% on the first $1M and 20% on anything more than $1M. As an attorney, I support the measure.

http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20090215_16_A13_Billya456899

Incidentally, I commented on another thread a while back about the plaintiff bar's effort at stopping tort reform. Right on cue, I received another e-mail from those folks asking me to oppose the referendum.

[pmcalk]

What would the bill accomplish, really?  I tend to agree with the statement of one of the attorneys--they'll just ask for more money in their lawsuits.  I wonder if it wouldn't discourage settlements, because lawyers will have to hold out for more $$.

Honestly, I am not a big fan of "ambulance chasers."  But I don't see this accomplishing much.  And I find it hypocritical that republicans are pursuing this.  After all, wouldn't republicans be the first to argue the market should dictate what attorneys charge?  Could you imagine if the state tried to regulate defense attorney's salaries?  If they put a cap on what they could charge per hour?

[sgrizzle]

They could ask for me but no-one says they will be awarded more. There is a problem where some TV lawyers take so much in fees and reimibursements that the average joe ends up without even enough money to pay the medical bills for the injuries the case was about.

[guido911]

quote:Originally posted by pmcalk

What would the bill accomplish, really?  I tend to agree with the statement of one of the attorneys--they'll just ask for more money in their lawsuits.  I wonder if it wouldn't discourage settlements, because lawyers will have to hold out for more $$.

Honestly, I am not a big fan of "ambulance chasers."  But I don't see this accomplishing much.  And I find it hypocritical that republicans are pursuing this.  After all, wouldn't republicans be the first to argue the market should dictate what attorneys charge?  Could you imagine if the state tried to regulate defense attorney's salaries?  If they put a cap on what they could charge per hour?

Shoot, by that thinking, why shouldn't the lawyer get 80 or 90%? As for what this will accomplish? It will limit attorney fees and will put more money in the pockets of plaintiffs.
Incidentally, as you might know PM, attorney fee caps are already in place in workers comp court and in social security cases (yes, I know it's federal) so the capping concept is not that foreign.

[nathanm]

While this isn't a road I'd like to start down (mainly due to the slippery slope argument), these caps seem reasonable.

Of course, it's right around what my clients charge for their contingency PI cases. Who is charging more? Are there really attorneys taking cases on contingency that take more than a third as of today?

What idiot hires those sharks, if they do in fact exist?

Now that I think about it, that's another good reason not to have this law. It's like passing a law making it illegal for a doctor to amputate a person's head.

[tulsascoot]

quote:Originally posted by nathanm



What idiot hires those sharks, if they do in fact exist?

While i am not commenting on the legislation, I can say that people genereally do not know much about the law, and many who are uninformed will just pick the one with the biggest ad in the phone book. That's how they get stuck with the sharks. It does not make them idiots if they are just ignorant.

[guido911]

quote:Originally posted by nathanm

Are there really attorneys taking cases on contingency that take more than a third as of today?

What idiot hires those sharks, if they do in fact exist?

Many PI firms contract 1/3 with an escalator up towards 1/2 depending on the complexity and duration of the case.  

As an aside, I was out in Creek County on a general docket where one case involved the approval of a minor child's settlement (I think it was $15K or something). Anyway, after paying medicals and the $7000 attorney fee, the child received a net of something like $2,500. The judge asked that attorney in front of a full court room if he thought it was fair that he received almost three times what the minor child received. The attorney defended his fee by stating it is what was contracted for and the case was complicated. Although the judge essentially called BS on the explanation and gave him one hell of a glare, much to the delight of many laypersons watching the proceeding, he ultimately approved the settlement.

Cases like that are what I think underlies this movement on capping fees.

PM has a point, that is there is no effort to cap defense lawyer's hourly rates. I am curious how the legislature would go about capping  or setting those rates, particularly given the wide ranging hourly rates that are charged throughout Oklahoma. In any case, I can see how plaintiff lawyers would believe that to be unfair.

In my opinion, if the legislature wants to get serious about tort reform, it should scrap that idiotic joint and several liability statute and mandate that all professional liability cases be reviewed by an expert and a report verifying that the case is meritorious. Also, at a minimum, the legislature needs to do something about the state's punitive damages statute. As it stands, it is inconsistent with the U.S. Supreme Court's opinion in Philip Morris, USA v. Williams, 127 S.Ct. 1057, 1063, 166 L.Ed.2d 940 (2007). Indeed, at least one Northern District court has found that this statute may be constitutionally infirm.

[Red Arrow]

I cannot imagine a defense lawyer taking a case on contingency since if he/she wins the case, there is no money to be gained by the winners. If we were to "make it interesting" as they say about poker etc, by having the loser side pay all, maybe the defense could get a piece of the action too.  I'm not holding my breath.

[pmcalk]

quote:Originally posted by guido911

quote:Originally posted by pmcalk

What would the bill accomplish, really?  I tend to agree with the statement of one of the attorneys--they'll just ask for more money in their lawsuits.  I wonder if it wouldn't discourage settlements, because lawyers will have to hold out for more $$.

Honestly, I am not a big fan of "ambulance chasers."  But I don't see this accomplishing much.  And I find it hypocritical that republicans are pursuing this.  After all, wouldn't republicans be the first to argue the market should dictate what attorneys charge?  Could you imagine if the state tried to regulate defense attorney's salaries?  If they put a cap on what they could charge per hour?

Shoot, by that thinking, why shouldn't the lawyer get 80 or 90%? As for what this will accomplish? It will limit attorney fees and will put more money in the pockets of plaintiffs.
Incidentally, as you might know PM, attorney fee caps are already in place in workers comp court and in social security cases (yes, I know it's federal) so the capping concept is not that foreign.

My point is that it will not necessarily limit attorney's fees.  When an attorney takes a case, he or she can estimate about how much time it will take, what the expense will be, and how much $$ is needed to make it worth the time.  People sometimes bring lawsuits more to make a statement/stop a behavior than to recover large amounts of money.  So if a case comes in that may not worth a lot of money, the attorney could do one of three things:  1. not take the case, 2. charge a higher percentage of return, or 3. set too high of a price for the settlement.  If you eliminate #2, you might get fewer attorneys willing to take low dollar suits.  But you might also get more attorneys asking for a higher amount.  You might get attorneys convincing their clients to hold out for more money.  

Again, I just don't see that this really solves any problem.  I know there is precedent for it; I just think it is hypocritical of republicans to be dictating how much lawyers get paid.  In response to caps on executive compensation for banks getting bail out money, Inhofe had this to say:

quote:...as I was listening to him [Obama] make those statements I thought, 'Is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?'

I guess the answer is yes, if those getting paid are likely democrats.

[guido911]

The hypocrisy goes both ways. Dems have no problem limiting executive pay but not lawyer pay?

With my tin foil hat securely fastened, I think this approach is retaliation for the plaintiff bar's support of dems.

[Conan71]

quote:Originally posted by pmcalk

quote:Originally posted by guido911

quote:Originally posted by pmcalk

What would the bill accomplish, really?  I tend to agree with the statement of one of the attorneys--they'll just ask for more money in their lawsuits.  I wonder if it wouldn't discourage settlements, because lawyers will have to hold out for more $$.

Honestly, I am not a big fan of "ambulance chasers."  But I don't see this accomplishing much.  And I find it hypocritical that republicans are pursuing this.  After all, wouldn't republicans be the first to argue the market should dictate what attorneys charge?  Could you imagine if the state tried to regulate defense attorney's salaries?  If they put a cap on what they could charge per hour?

Shoot, by that thinking, why shouldn't the lawyer get 80 or 90%? As for what this will accomplish? It will limit attorney fees and will put more money in the pockets of plaintiffs.
Incidentally, as you might know PM, attorney fee caps are already in place in workers comp court and in social security cases (yes, I know it's federal) so the capping concept is not that foreign.

My point is that it will not necessarily limit attorney's fees.  When an attorney takes a case, he or she can estimate about how much time it will take, what the expense will be, and how much $$ is needed to make it worth the time.  People sometimes bring lawsuits more to make a statement/stop a behavior than to recover large amounts of money.  So if a case comes in that may not worth a lot of money, the attorney could do one of three things:  1. not take the case, 2. charge a higher percentage of return, or 3. set too high of a price for the settlement.  If you eliminate #2, you might get fewer attorneys willing to take low dollar suits.  But you might also get more attorneys asking for a higher amount.  You might get attorneys convincing their clients to hold out for more money.  

Again, I just don't see that this really solves any problem.  I know there is precedent for it; I just think it is hypocritical of republicans to be dictating how much lawyers get paid.  In response to caps on executive compensation for banks getting bail out money, Inhofe had this to say:

quote:...as I was listening to him [Obama] make those statements I thought, 'Is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?'

I guess the answer is yes, if those getting paid are likely democrats.

On the surface it sounds like a reasonible proposition, but allow me to play devil's advocate for a second:

The vast majority of civil lawsuits never see the interior of a courtroom.  If anything it will encourage plantiff attorneys to seek quick settlements as the longer the file is open, it's ostensibly got the meter running.

The defense and insurance lobbies wouldn't be pushing this if they thought it was going to increase the amount of awards that civil P/I attorneys would seek.

I can see where this could actually wind up costing legit plaitiffs because an attorney does't want to risk a bunch of time and expenses to go to trial.  

It won't stop frivolous cases from being filed, most of those either get settled quick and cheap anyhow or tossed pretty quick if they do make it to court.  

[nathanm]

quote:Originally posted by Conan71


The defense and insurance lobbies wouldn't be pushing this if they thought it was going to increase the amount of awards that civil P/I attorneys would seek.

Hmm..I hadn't thought of the insurance companies. Until we figure out how to keep them from stalling for years and years to avoid paying claims, I don't know that we need to be capping contingency fees.

Insurance companies piss me off a lot more than even the sleazebag PI firms.

[pmcalk]

quote:Originally posted by Conan71
On the surface it sounds like a reasonible proposition, but allow me to play devil's advocate for a second:

The vast majority of civil lawsuits never see the interior of a courtroom.  If anything it will encourage plantiff attorneys to seek quick settlements as the longer the file is open, it's ostensibly got the meter running.

The defense and insurance lobbies wouldn't be pushing this if they thought it was going to increase the amount of awards that civil P/I attorneys would seek.

I can see where this could actually wind up costing legit plaitiffs because an attorney does't want to risk a bunch of time and expenses to go to trial.  

It won't stop frivolous cases from being filed, most of those either get settled quick and cheap anyhow or tossed pretty quick if they do make it to court.  

I agree--in some cases it could be more likely to cause the attorney to settle, to stop the meter running.  But cases might also get to a point that the only way to recoup cost is to go to trial.  If the ultimate goal is to limit how much money a trial attorney can make, this may or may not achieve that.  The only way to be sure it limits what trial attorneys make is to combine this law with a cap on recovery--which I wouldn't agree with.

And I agree that it won't stop frivolous law suits.  The bottom line is that attorneys want to make money.  Like every profession, there are some idiots that file worthless lawsuits, which usually get thrown out.  Smart lawyers (it isn't a complete oxymoron) know that 30%, 50% or even 100% of $0 is still $0.

My guess is that the insurance industry support the law because they think it will discourage attorneys from taking smaller claims.  In my experience, insurance companies often fight over the small amounts.  I suspect they save a lot of money by doing that.

[cannon_fodder]

quote:As a [defense] attorney, I support the measure.

(I don't know that to be a fact)

For full disclosure, I do about 75% plaintiff's work.  About half of that on contingency contract.  Now, I'm just a hired gun, I'm not a principle - so the contingency contract is as important to me as your company making a profit to be able to pay the bills.  I have also worked for Defense Firms in town - so I'm not ignorant on the subject from either perspective.  But as an attorney, I'm against this measure.

It is nothing more than a naked attempt from insurance companies to buy off citizens contracting rights.  Does this bill protect citizens in some way that they are not already able to protect themselves? Is there a monopoly on PI work that needs to be corrected?  Of course not, there are hundreds of attorneys in the yellow pages - call one and tell him Jeff Martin gave you 40% and you want 33% (if you think that's a wise move).  Certainly the cheapest attorney will be the best (that's why the insurance company on the other side went with a cheap firm... right?).

There is plenty of competition to allow citizens to decide what is best for them.  That is, unless insurance companies can get laws passed that dictates what is best for them.  The law would result in less expenditures from insurance companies, not more money TO victims.

1) The standard PI Contract

The standard PI contract is for 25% for settlement, 33% if a suit is filed, and 40-50% if the case goes to trial - or some variation on that theme (there is in fact a cap already in place, it is unethical to take more than 50%), plus costs (which at some firms are just filing fees, some include mileage, copy charges, etc.).

The reason is very simple:  to settle a case may only require a few hours of attorney time plus a dozen or so support staff time.  To actually file a suit takes still more time.  And to go to trial it could take weeks of work.

Now remember that many PI cases are for $10K (most firms waive fees on property settlements).  40 hours of attorney time, 40 hours of support staff time.   80 hours of work to complete the failed settlement, discovery, trial prep and a trial (and that's fast).  Even at 50% that works out to $60 an hour.  Lets pretend the case is for $20K (minimum coverage range) and still only takes 80 hours - $120 an hour.  $40K - $240 an hour.  Now we are in the ballpark of Defense attorney fees - except the PI attorney only collects if they win.

If you think Plaintiffs will get a decent attorney for $60 an hour, you're wrong.   The reason insurance companies want the cap is so that decent attorneys won't take the cases.  Or will be forced to settle more cases.  Without a real threat of going to trial an insurance company is free to settle the claim for much less.

2)

quote:Cases like that are what I think underlies this movement on capping fees.

Wow, a heart touching anecdote about a poor child that didn't get as much money as he should and an attorney who took too much.  Tell me, was there a defense counsel and an insurance company on the other side offering to fully compensate the kid?  Did the defense counsel waive their fees (after fighting to keep the kid from getting any money) in order to more fully compensate the poor child? Did the insurance company step in with more cash?

No?  Well if the defense counsel wasn't willing to give up his fees and the insurance company isn't putting any more money in to help the kid, it's pretty crappy to expect the plaintiff's counsel to do the same.  Personally, I would like to have seen Plaintiff's counsel help the kid out and believe most would not have taken such a share - but without the work of said counsel the kid would have had zero dollars (if he had to go to trial there would likely not have been a settlement).

If we want to start pointing fingers about poor victims then why not point them at the people whose entire goal is to stop them from getting money?   If we capped defense counsel fees at $150 an hour and they only got paid if they win the case - then insurance companies would have more money to pay the poor starving child.  Sell the big defense firms on $150 /hr contingency, or $200, or $250, or $300. . .

3) The vast majority of plaintiffs get their bills covered.  

Most PI firms will waive fees, negotiate with subrogates, or otherwise ensure that the fees are covered.  The big advertising "ambulance chasers" chief among them.  Why spend $1,000,000+ a year advertising then have the word of mouth from a few bad nickle or dime cases destroy your base of business?

FURTHERMORE, it is the client's choice to settle or not.  If his bills are not going to be covered by a settlement, the odds of agreeing to a settlement are slim.  Yet another example of telling people they are too stupid to make a decision for themselves.

4) Limiting lawyer pay?  REALLY?  The DEFENSE BAR is talking about limiting lawyer pay.  Cute.

Lets list the most expensive firms in town and then list whether they are plaintiff's firms (working for injured parties) or defense firms (working for insurance companies).  If we are limiting attorney pay, then lets cap hourly rates too.  Fair is fair right?  Or are insurance companies smart enough to know what an attorney is worth and citizens too stupid to figure it out?

So lets cap defense fees and make them payable only if the defense wins the case outright (zero award).  Justice for all!  Or maybe it makes more sense to only limit one side of the equation by working to keep the pay down of the victims attorneys while allowing the insurance company to spend whatever they want on an attorney. That should results in a balanced litigation process.

5) NO, I WILL NOT TAKE YOUR CASE.

Get ready to hear that a lot.  For 33% only the lowest rung of attorneys would take a case that they felt would probably go to trial or one that brought unique aspects of law.  No thanks, I'll pass... I'll get a few more easy cases to settle because it is not worth my time to fight for your rights.  I'll do it for an hourly fee?  What, you're poor... too bad then.

I do much of my work on an hourly basis.  I can tell you actually doing the work is only half the battle - getting paid for doing the work is the real trick.  Super Mega Corp. Inc. is going to pay their bills, but a $5,000 bill for Joe Blow is significant.  An attorney working for private parties ends up financing private parties all too often.  I would not take a complex case on an hourly basis without a full retainer - I doubt many others would either.  Hence, it is unlikely many difficult cases would ever be heard.

6) Workers Comp and SS are administrative suits against governmental entities.

Workers Comp and SS cases have attorney fee caps because those are suits petition the government for money.  Not too mention the outcome of most SS/workers comp. cases is dang near predetermined with only the numbers to be filled in.  Very simple distinguishing quality to an admin suit petition a governmental (or quasi governmental) body for funds and suing another citizen for negligence.    

7) Limiting attorney pay in Oklahoma?

I work as an attorney in Oklahoma.  I took a massive pay cut to do so as well as massive debt.  Attorney's in Oklahoma are not a wealthy bunch by and large.  The ones at the top are, just as the ones at the top of most professions are.  Now I'm not complaining, I would always go back to my old career and have a standing offer to do so, but most of us still work for a living.  

There is enough competition among attorneys in Oklahoma that if you do not like the rate you are being offered, you can find 500 others in the phone book.  Why do you think so many attorneys spend so much on advertising?  Don't like the 50% contract, then move on.

Why do we need the legislature to tell citizens what a fair rate is?  That's the basic question we aren't getting at.
- - - - -


So do I think we should tell insurance companies what their attorneys are worth?  Of course not.  If Federal Insurance wants to pay Conner Winters $300 an hour to defense my suit, so be it.    Presumably they earn their fee.

If they disagree with my position and refuse settlement, forcing me to go to trial - then I'll have to spend more of my time sticking up for my clients rights.  And my contract will compensate me for that extra time and hopefully my client will be rewarded by a judgment that fully compensates them.  I earn my fee too.

Do I think the system as it stands is perfect?  Of course not.  But as an adversarial system it relies on their being actual adversaries that are both skilled at what they do and both in a position to negotiate.  If you limit the pay of one side and remove a bargaining chip (willingness to go to trial) then you have off balanced that system.   And in this instance, the scales will be tilted away from John Q. and towards the insurance company.


[if forced to tell, I'd have 50% of all punitives over $X paid to a Bar Fund of some kind for victims rights, or indigent counsel, or to subsidize education of some kind.  I'd support more dismissals of frivolous cases before they get rolling.  I'd have fees awarded more often like domestic cases if a party refuses to cooperate in discovery or repeatedly files junk.  There are improvements to be made, but stacking the compensation in favor of the Defense Bar is not one of them.]

[rwarn17588]

quote:Originally posted by cannon_fodder

Why do we need the legislature to tell citizens what a fair rate is?  

Boy, this is rich with irony.

Especially since the legislation is being introduced and touted by Republican lawmakers -- the same ones who b*tch about the government getting too involved in free markets.