counsel.fees discussion slides remedies

7/22/2019 Counsel.fees Discussion Slides Remedies

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Counsel Fees remedies spring 2014

George W. Conk

Adjunct Professor & Senior Fellow, SteinCenter for Law & Ethics

[email protected]

Room 409

212-636-7446

Counsel Fees spring 2014 remedies
mailto:[email protected]:[email protected]


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Each party bears its own costs

except.

The American Rule

Counsel Fees spring 2014 remedies 2


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How lawyers fees are set

Free market pricinglodestar/reasonable and custoamry

Court rules Court decisions in fee-shifting and

common fund cases

Statutes



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R. 1.5 - A Reasonable Fee

(a) A lawyer shall not make an agreement

for, charge, or collect an unreasonable feeor an unreasonable amount for expenses.The factors to be considered in

determining the reasonableness of a feeinclude the following:

(1) the time and labor required, the

novelty and difficulty of the questionsinvolved, and the skill requisite to performthe legal service properly;



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FRCP 54Judgment (d) Costs; Attorneys

Fees

(2) Attorney's Fees.

(A) Claim to Be by Mot ion.A claim for

attorney's fees and related nontaxable

expenses must be made by motion

unless the substantive law requires

those fees to be proved at trial as an

element of damages.



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FRCP 54 (2)(B)Motion for Attorneys Fees

(ii) specify the judgment and thestatute, rule, or other grounds entitling

the movant to the award;

(iii) state the amount sought or providea fair estimate of it; and

(iv) disclose, if the court so orders, the

terms of any agreement about fees forthe services for which the claim is

made.



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N.J. Rule 4;42

(1) In a family action

(2) Out of a fund in court.

(3) In a probate action, if probate is

refused

(4) In an action for the foreclosure of

a mortgage, (rates specified)

(5) In an action to foreclose a tax

certificate Counsel Fees spring 2014 remedies 7


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N.J. Rule 4;42

(6) In an action upon a liability or

indemnity policy of insurance, infavor of a successful claimant.

(7) As expressly provided by theserules with respect to any action,whether or not there is a fund incourt.

(8) In all cases where attorney's feesare permitted by statute.



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Fee shifting and fees as damages

42 USC 1988 and state analogs

* Patent infringement35 USC 285(exceptional cases)

Copyright 5 USC 505 (may to prevailingparty)

Common fund casesclass actions,

bankruptcy, probate

As an element of damage



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Fee shifting and fees as damages

Statutes: e.g. fees barred in Veterans

claims, limited (e.g. $200 in UIappeals), PD `pool attorneys , 14B NY, Federal panel fees, appointments

by courts per Gideon v. Wainwright Cap and review: Social security

disability

Awarded by court: e.g. workerscompensation



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Court Awarded Fees state law Chancery cases

Common Funds Statutory fees

Statutory Discrimination Cases

Sanctions



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Fee shifting statutes

* ERISA29 USC 1132: - by participant or

beneficiarydiscretionarysome degree of success on the merits.

- - in collection actionmandatory

* EAJA28 USC 2412actions v. U.S. (non-tort)- Shall award fees to prevailing party unless

U.S. was substantially justified

- CAP - $125/hour + COLA



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EAJA 28 U.S.C. 2412

Under the Equal Access to Justice Act, acourt in a civil action against the UnitedStates shall award to a prevailing party

other than the United States fees andother expenses . . . incurred by that partyif the position of the United States was not

substantially justified.



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Lawyers working on spec

Contingent fees



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Contingent Fees R. 1.5

Generally permitted

Must be written retention agreement

Basis of calculation must be stated

Litigation expenses deducted or not

Written accounting reqd



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Contingent Fees - generally

The norm for plaintiffs in PI cases,workers compensation, SS disability,subrogation claims, debt collection

Closely regulated in PI cases bystatute and rule

Barred in

- criminal defense- marriage dissolution & child support

cases



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R. 1.5 (d) A lawyer shall not

Enter into an arrangement for, charge orcollect:

1) any fee in a domestic relations matter,

the payment of which is contingent ondivorce or the amount of alimony orsupport or property settlement in lieu

thereof 2) a contingent fee for representing a

defendant in a criminal case



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R. 1.5 Contingent Fees Permitted

(c) in a writingsigned by the client

shall state the methodby 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 appeal



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Expenses

whether such expenses are to bededucted before or afterthe contingentfee is calculated

In the event of loss

must clearly notify the clientof anyexpenses for which the client will beliable if the client does not prevail



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Accounting the lawyer shall provide the client

with a written statement stating the

outcome of the matterand, if there isa recovery, showing the remittanceto the client and the methodof itsdetermination



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The criminal defense ban

In Commonwealth v. Facella, 679 N.E.2d221, 226 (Mass. App. Ct. 1996) defendantwas charged with armed assault withintent to murder

the retainer agreement provided thatdefense counsel Beatrice

would be paid an additional $ 15,000

if he negotiated a sentence of no morethan ten years. He did so.

Should such contracts be barred?Counsel Fees spring 2014 remedies 21


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SUPREME COURT RULES3rd JUDICIAL DEPT.

ARTICLE 1. APPELLATE DIVISION

SUBARTICLE B. ATTORNEYS

NY CLS Sup Ct 806.13 (a) (2007)

The receipt, retention or sharingof

contingent compensation in excess of

the scheduleof fees shall constitute

the exaction of unreasonable and

unconscionable compensation



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SUPREME COURT RULES3rd 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 sumrecovered,

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

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

(4) 25 per cent on any amount over $ 25,000 of thesum recovered

Extraordinary result may justify higher fee app.Counsel Fees spring 2014 remedies


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SCHEDULE B

A percentage not exceeding

33 1/3 % of the [net or gross*] sum

recovered

No additional compensation because

of extraordinary circumstances maybe sought



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How the fee is computed NYCRR

691.20 Net sum recovered

after deducting

expensesand disbursements for

Filing fees Depositions

Medical records

Expert witnesses Investigative or other services

UNLESS LAWYER ADVANCES COSTS



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How the fee is computed

Taxed costs and interest upon a

judgmentare part of the amount

recovered



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How the fee is calculated

No deduction for liens, assignments orclaims in favor of hospitals, for medical

care and treatment by doctors and

nurses, or self-insurers or insurance

carriers.



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How the fee is calculated

Common liens

Medicare

Medicaid (and other publicentitlement)

Assignments of benefits

Union-mgt benefit funds (ERISA)

Workers compensation



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NY CLS Jud 474-a Contingent fees in claims or

actions for medical, dental or podiatric malpractice

30 % of the first $ 250,000 of the sumrecovered;

25 %of the next $ 250,000of the sumrecovered;



10 %of any amount over $ 1,250,000of the

sum recovered.Counsel Fees spring 2014 remedies


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NY CLS Jud 474-a Extraordinary Circumstances

Trial judgehas discretion to fix asreasonable compensation an amountgreater than 474-a

- in extraordinary circumstances - without regard to the claimant's

consent

BUT not in excess of that provided bycontract between attorney & client

Are such reductions in med mal cases

warranted? Counsel Fees spring 2014 remedies


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NY Rules of the Appel late Cour ts

691.20:

Retainer and Closing Statements

2nd Judicial Department

Written retainers, etc. reqd in:

personal injury

property damage

wrongful death

condemnation or change of grade

proceedings



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691.20 Retainer and Closing Statements


(1) Every attorney who accepts a retainer orenters into an agreement, express orimplied, for compensation for services

whereby his compensation is to becontingent in whole or in part uponsuccessful prosecution or settlement

Shall, within 30 days sign personally andfilewith the Office of Court Administrationof the State of New York a writtenstatement of such retaineror agreement.



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(b) Closing statement; statement where norecovery.

(1) A closing statement shall be filedin

connection with every claim in which aretainer statement is required, as follows:Every attorney upon receiving, retaining orsharing any [such] sum shall, within 15

daysafter such receipt, retention orsharing, sign personally and filewith theOffice of Court Administration and serve

upon the client a closing statementCounsel Fees spring 2014 remedies


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Retainer agreement, under which attorneywould receive [less than rules permit] wasnot enforceable due to failure to timely file.

Connors v. Wildstein (2 Dept. 2000)

Attorney was suspended from practice of lawfor one year.. For failing to prepare retainer

statement for filing with Office of CourtAdministrationin personal injury case andby failing to prepare closing statementMatterof Laskorski (2 Dept. 1995)



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N.J. Court Rules, R. 1:21-7 Contingent fees

(c) In any [tort claim for damages] but

excludingstatutorily 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



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(1) 33 1/3% on the first $ 500,000 recovered;

(2) 30% on the next $ 500,000 recovered;

(3) 25% on the next $ 500,000 recovered;

(4) 20% on the next $ 500,000 recovered; and



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25% in case of minors and mentally

incapacitated persons if the case settles

without trial

includes 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 appeal



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(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 Judgefor

the hearing and determining of a reasonable

fee in light of all the circumstances.



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Federal Tort Claims ActStatutory contingent fee limits



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28 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]



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28 U.S.C.2678. Attorney fees; penalty

Any attorney who charges, demands,

receives, or collects for servicesrendered in connection with such claimany amount in excessof that allowed

under this section, if recovery be had,shall be fined not more than $ 2,000 orimprisoned not more than one year, orboth.



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NJ ll ti t f


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NJ allows contingent fee

enhancement Walker v. Guiffre, A-72-10, the Court

reinstates a $99,000 legal fee on theplaintiff's $650 recovery in a suit accusing

Route 22 Nissan Inc. and other cardealerships of fraudulently inflating fees insales contracts."

In Humphries v. Powder Mill ShoppingPlaza wheelchair access claim



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Not only fees, but attitudes shift

City 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 hourstimes a reasonable rate"

District Court declared that Dague's "risk of notprevailing was substantial"and that "absent anopportunity for enhancement, [Dague] would havefaced substantial difficulty in obtaining counsel ofreasonable skill and competence in this complicatedfield of law [Clean Water Act]."

It concluded a 25% enhancement is appropriate, butanything more would be a windfallto the attorneys."



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We see a number of reasons for

concluding that no contingency

enhancement whatever is compatible

with the fee-shifting statutes at issue.


N l f b i d hif


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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.


N t l f b t ttit d hift


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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.



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R di P t 141 NJ 292 (2005)


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Rendine 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 notprevail." ...


R di P t 141 NJ 292 (2005)


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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.


Rendine v Pantzer 141 NJ 292 (2005)


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A more practical approach is that

outlined in the Delaware Valley IIdissent. 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 wereaggravated by the contingency ofpayment?


Rendine v Pantzer 141 NJ 292 (2005)


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It is the actual risks or burdensthat

are borne by the lawyer or lawyers

that determine whether an upward

adjustment is called for.'

483 U.S. at 747 (Blackmun, J., dissenting)Counsel Fees spring 2014 remedies

R di P t 141 NJ 292 (2005)


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We conclude that contingency

enhancements in fee-shifting casesordinarily should range between 5%and 50%of the lodestar fee,

the enhancement in typical contingencycases should range between 20% and35 % of the lodestar.



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Managing the conflicts amongclaimants and lawyers

Aggregate Litigation



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Deepwater Horizonan outlier

Any common benefit Class Counselfees and costs awarded by the Courtwill not be deducted from Class

Members recoveries, but will be paidby BP in addition to other classbenefits.



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R 1 8 (g) Conflicts Aggregate


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R. 1.8 (g) ConflictsAggregate

Litigation

A lawyer who represents two or moreclients shall not participate in makingan aggregate settlement of the

claims of or against the clients, or ina criminal case an aggregatedagreement as to guilty or nolo

contendere pleas, unless:



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Florin v. Nationsbank of Ga., N.A. p. 180


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o at o sba o Ga , p 80

(7th Cir. 1995) Class actions

Counsel for the classsought

Lodestar$ 1,863,838.75

Enhanced by risk multiplier (1.53) = $ 2.85 million or 18.45 % of the fund

District court on remand.... allowed the

smallest possible multiplier of 1.01




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, p


We reviewthe district court's award ofattorneys' fees deferentially

plaintiff class is unrepresentedin theissue of attorneys' fees

court mustjealously guard the interestsof the class.

court must also be careful to sustain theincentive for attorneyson an"inescapably contingent" basis




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The risk multiplier is an effort to mimic

market forces.

The district court in essence foundthat 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.Counsel Fees spring 2014 remedies

Florin v Nationsbank of Ga N A p 180


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the benchmark in common fundcases is 20 % - 30 %

Usual range 13 % - 20 %for funds of

$ 51-$ 75million

6-10 % range for funds of $ 75-$ 200million

the multiplier of 1.53 leads toattorneys' fees of $ 2.85 million -about 18.5 % of the settlement fund


Florin v Nationsbank of Ga N A p 180


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the benchmark in common fundcases is 20 % - 30 %

Usual range 13 % - 20 %for funds of

$ 51-$ 75million

6-10 % range for funds of $ 75-$ 200million

the multiplier of 1.53 leads toattorneys' fees of $ 2.85 million -about 18.5 % of the settlement fund



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Private agreement or judicialcontrol?

Aggregate Tort Litigation


WTC Ground Zero cases


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Judge Hellerstein refused to mark casessettled when the lawyers for City,

contractors and plaintiffs presented theiragreement.

He ordered them to continue to trial, etc.

He said that not enough money was goingto plaintiffs and too much was going tolawyers.

Its a quasi class action, he said


WTC Ground Zero cases


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What 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 adifference?



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R 1 8 (g) Conflicts Aggregate Litigation


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R. 1.8 (g) Conflicts Aggregate Litigation

each 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 pleasinvolved and the participation of each person in

the settlement

Does the WTC settlement honor theseprinciples?



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Quaere

* are the plaintiffs adequately informed ofthe terms of the aggregate settlementunder RPC 1.8 (g)?

* do the opt outs have a realistic chance?

* will 95% take the settlement?


Apportioning fees among


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Apportioning fees among

lawyers in MDL litigation

Individually retained lawyers

Lead counsel

State vs. Federal litigation on parallel

tracks



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Zyprexa

Judge Jack B. Weinstein

467 F. Supp. 2d 256 (EDNY 2006)


Federalism: the state court problem


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Federalism: the state court problem

State-Federal Comity

Conflicts of interest due to differing feestructures

Equity Litigation misconduct

- state court filings to evade MDL fee

limits and common benefit assessments - filings of non-meritorious new claims


Common benefit work by Plaitniffs


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Steering committee 1 Discovery

Bellwether trials

Settlement negotiations

8000 cases settled Claims processing and payment

procedures and implementation

Resolving Medicare and Medicaidliens (agreement approved by allstates and federal government)


A f


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Attorneys fee structure

Capping fees

20% of recovery in smaller, lump-sumclaims

35% of recovery in all other claims

1% hold-back from the gross settlement ,plus interest on the escrow fund for

Plaintiff Steering Committee I (PSC 1)

PSC IInot set


Common benefit fund purpose


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Common benefit fund purpose

Reimburse members of PSC I and

other attorneys for the time and

fundsexpended by them for the

common benefit of all settling

plaintiffs in

conduct of the litigation

implementation of the settlement


FRCP R l 11


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FRCP Rule 11

Provides for sanctions for litigationmisconduct

- costs to adverse party including

attorneys fees


S ti d N Y k L


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Sanctions under New York Law


AWARDS OF COSTS AND IMPOSITION OF FINANCIAL


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SANCTIONS FOR FRIVOLOUS CONDUCT IN CIVIL

LITIGATION - 22 NYCRR 130-1.1

Costsand reasonable attorneys fees

may be awarded TO a party injured by

frivolous litigation conduct of

Attorneys

Parties


AWARDS OF COSTS AND IMPOSITION OF FINANCIAL


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SANCTIONS FOR FRIVOLOUS CONDUCT IN CIVIL

LITIGATION - 22 NYCRR 130-1.1

Conduct is frivolousif:

(1) completely without merit in lawand

cannot be supported by a reasonableargument for an extension, modificationor reversal of existing law;

(2) it is undertaken primarily to delayorprolong the resolution of the litigation,or to harassor maliciously injureanother; or



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FRCP 11


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FRCP 11

(4) Nature of a Sanction.

A sanction imposed under this rulemust be limited to what suffices to

deter repetition of the conduct orcomparable conduct by otherssimilarly situated.


FRCP 11


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FRCP 11

The sanction may include

nonmonetary directives

an order to pay a penalty into court

an order directing payment to themovant of part or all of thereasonable attorney's fees and other

expenses directly resulting from theviolation.


Rule 11 FRCP - sanctions


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Rule 11 FRCP sanctions

As toAny papera lawyer signsor

advocates forthe attorney certifies factual contentionshave (or will have)

evidentiary support

denials of factual contentions arewarranted on the evidenceor arereasonably based on belief or a lack of

information


28 USC 1927. Counsels liability forexcessive costs


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excessive costs

Any attorney ..who so multiplies theproceedings in any caseunreasonably and vexatiously may berequired by the court to satisfy

personallythe excess costs,expenses, and attorneys feesreasonably incurred because of such

conduct.

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