What Price Justice?

What do George Clooney and Kenneth Lay have in common? Nothing really… well, except for the fact that lawyers for defrauded Enron investors played a clip from George’s movie “Michael Clayton” at their hearing requesting attorney fees. How much were the attorneys requesting in fees? A record $700 million. What percentage is that of the total settlement earned for investors? 9.5%. What happened to the founder of the firm seeking these record fees? He recently pleaded guilty to a kickback scheme in a different case (but will pull in millions from the Enron case). What did the self-effacing lawyer for the plaintiffs argue at the fee hearing? “This is an extraordinary case and we did an extraordinary job.” When can we see the real story of Enron’s collapse in a film drama? Soon to come with Leo in the lead.

How much did an attorney earn in his class action suit alleging that Sears’ stoves had a tendency to tip over? $17 million. How many stoves actually tipped over? None. The attorney only alleged that if you put too much weight on a stove, it could tip over. What did Sears stove owners get from the lawsuit? If they signed on for the settlement, a stove owner could get a $100 coupon towards installation of an anti-tip bracket. How much did Sears pay to attorneys who brought a lawsuit over wheel-alignment pricing? $950,000. How much did the company pay to customers over the lawsuit? $2,402. Or as the judge in the case put it, “Doing the math in this case is easy. For each class member who received a $10 check or $4 coupon, plaintiffs’ counsel received just shy of $3,000.” Bonus Question: Is cow-tipping possible?

What’s a reverse contingency fee? Unlike a regular contingency fee (which is based on how much the lawyer recovers), a reverse contingency fee is based on how much the lawyer saves the client–for example, if a $10 million judgment is reduced to $2 million, the lawyer’s contingency fee would apply to the $8 million reduction. For that reason, the reverse contingency is not uncommon among appellate lawyers. The principle has also been approved by the ABA ethics committee. Can a lawyer convert a regular contingency fee agreement into a reverse contingency fee? It’s possible … but not when the client denies knowing about the arrangement. Oops.

Which presidential candidates do not support caps on attorney fees in medical malpratice cases? Obama, Clinton, Edwards, and Thompson are opposed to capping fees in medical malpractice cases. Most Republican candidates support some form of cap. Does the American public care? Not according to (the often unreliable) Yahoo! Answers. How many of the current presidential candidates are lawyers? All of them, except John McCain. How many presidents have been lawyers? 25 (out of 43). How many presidents worked as lawyers after being president? One.

Is it unconscionable for a lawyer to get 40% contingency fees on top of $18 million in hourly fees already paid? No, not on “first blush,” according to a New York Appeals Court. The court acknowledged that the fee agreement for the 22-year litigation “might arguably seem excessive and invite skepticism” (the deal would add another $42 million to the law firm’s coffers). But things could have been worse; the law firm initially tried to get a 50% contingency agreement, but the 80-year-old client balked.

I reported on attorney/author Scott Turow’s crusade against the billable hour. But not surprisingly, as Wendy Werner pointed out, billable-hour lawyers don’t earn the record breaking fees of contingency fee attorneys.

What’s a contingency fee? Contingency fees (or as some practitioners like to call them, “success based” billing) have their upside—allowing access to the court house for the financially disadvantaged.

What are the conflict of interest disclosure rules for contingency fees? Despite the slew of legal rules and disclaimers regarding contingency agreements, “There is no requirement that the attorney explain fully how his interests might conflict with those of the client.” That’s especially true when it comes to settlement, for example, when the client wants to snare a low settlement and the lawyer wants to take it to trial. Or consider the reverse, when the client wants to take it to court and the lawyer believes that’s a mistake.

What about when government pays contingency fees? State and federal governments often award contingency fees to private practitioners, a practice that’s been associated with political favoritism and campaign contributions. Well, at least the federal government got a grip on it; in May 2007, President Bush signed an executive order prohibiting the feds from hiring of attorneys on a contingency basis.