Blawgletter thought little of an op-ed title that appeared a couple days ago in the WSJ — "Contingency-Fee Con-Men". It seemed par for the course. But the text so distracted us that we hit a towering slice. We triple-bogeyed the hole.
The gist went like this:
Client hires Lawyer on contingent fee. Lawyer negotiates settlement. Defendant later agrees to pay additional bonus to Lawyer, who refuses to split it with Client.
Can you spot the problem? Does it involve Lawyer, er, breaking his contract? Or do you worry that the Lawyer asked for a bonus only after settling Client’s case?
That second concern didn’t jump out at us either, but it fairly obsessed the op-ed author. He seemed to think that people do such things in the real world — that actual defendants make binding settlements and then — apparently out of the goodness of their black corporate hearts — spread more monetary cheer directly to the plaintiffs’ lawyers.
Where do these people come from? You have to ask?
Yes, they lurk the halls of the legal academy. And we would make a large bet that none has ever represented any client on a contingent fee basis.
We do see an ethical worry about simultaneously negotiating a settlement and a fee in class action cases. But we’ve never seen that happen, and Mr. Professor glosses over the sequence issue. In our experience, the parties agree on the settlement and paper it. The deal does not depend on whether the parties also agree on an attorneys’ fee award. On the contrary, the papers provide just the opposite. So we have a hard time seeing how such an arrangement "beyond cavil" violates ethical rules.
In truth, writers of such opinion pieces don’t like contingent fees at all. (This author actually argues, for example, that the mere act of suing a tobacco company guarantees the lawyer at least a billion dollar fee.) The more restrictions, the greater and more time-consuming the scrutiny, and the more risk to the plaintiffs’ lawyers, the more they like it. They don’t want to reform contingent fees — they want to regulate them out of existence.