Michael Sean Quinn, Ph.D, J.D., Etc., Author
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(Resumes: www.michaelseanquinn.com)
Commandment Two Published on Jauary 16, 2015
This Preface is attached to each of the parts, oppressive though that may appear.This blog  is part (1/11th) of a collection called the ELEVEN COMMANDMENTS OF LEGAL ETHICS.  There are 11 separate mini-blogs; they need not be read in any particular order.  I have tried to keep them “together,” but cyber-success is not an inevitability when I am around. An early version* of it was published a decade or so ago.  Before that very short speech versions  were used as part of a day long CLE course ordered by the Supreme Court of Texas for new lawyers.  Later for several years it was used in other CE or CLE contexts.A version of this essay is to be found in my essay, The Eleven Commandments of Professional Responsibility: A Gallimaufry, Book II, Commandment 3, THE ETHICS COURSE (4TH [AND PREVIOUS] EDITION[S] (2001), edited by Beryl P. Crowley, Mitchel L. Winick, and Michael Sean Quinn.

All of this can be found on my Resume which is linked to (attached to) my website. www.michaelseanquinn.com. There are video versions somewhere in the cyber-sphere, and if not there in the cyber-world or in e-space and/or in the so-called “real world,” for sale.  As old as it is, the collection–whether in print, in the cyber-sky, on a something like a motion picture–is not really out of date, except there are not explicit references it to legal ethics and the cyber world.  At the same the obligations of the lawyers have not changed much, except now there is a new dimension to our confidentiality obligations and and out obligations to keep up to date. The “code numbers” are sometimes to the ABA Model Rules and sometimes to the Texas Rules of Professional Conduct. (*The term “version” means what it says: wordings change and ideas shift, tough the latter very little. Earlier version can be found entered on July 2, 2012 and on March 12, 2014.)

Given the purposes and context in which the early versions of the essays were written, many of the legal rules explicitly numbered are from The Texas Rules that were built upon the ABA Model Rules. 

Some of the Blogs will contain supplementary additions. Those added after January 1, 2015 will probably be dated, barring oversight. Readers may note that many of the cites are Texas cases.  This resulted from the history of the contents of these blogs.

These disquisitions are revisions something I wrote at least several years ago. First editions of these essays were  begun some time ago.  Somehow their print got locked in, to some degree, so some parts of the essays were thrown out of kilter and can’t be made right today. This is particularly true along the left margins of some of the essays.

                                                     COMMANDMENT THREE:  DON’T GOUGE

Gouging is very much like stealing.  However, stealing is something which is done quite intentionally, since it involves taking something which doesn’t belong to you, knowing it doesn’t belong to you, with no intention of giving it back.  Gouging is not necessarily exactly like stealing.  It’s simply substantially overcharging.  Sometimes, bills are overstated because junior associates don’t know the billing rules.  Sometimes they are overstated because one person in a firm erroneously thinks that another will be auditing and shaping the bill.  Sometimes, it is hard to draw the line between fraudulent overbilling (unquestionably a form of stealing) and gouging.  Some types of gouging are not even remotely like stealing.  Criminal defense lawyers, and others, who bill by means of fixed fees are sometimes overly aggressive about setting high fees.  One lawyer we know thought that he had not set the fee high enough unless the prospective client choked when he first heard it.  Quite possibly this is gouging.  This lawyer thought he was simply charging what the market would bear.  Classic capitalism.

A.        Legal Rules

1.         1.04(a):  Fees shall not be unreasonable. It is worth keeping in mind that reasonableness is defined in terms of what is or is not unconscionable.

2.        1.04(c):  Fees shall be clear and agreed to.

3,  Breaches of fiduciary duties by lawyers may lead to the forfeiture of fees, as well as other damages. Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999).  The rule in this case is quite simple: Faithless fiduciaries forfeit fees.  (Lawyers, of course, are fiduciaries, and this case specifically concerned lawyers.)  They may not forfeit all of their fees, but they may very well forfeit some of them.  How much is a matter to be decided by the court and not by the jury.

B.        When a firm is disqualified due to a conflict of interest, it may not be entitled to fees.  Image Technical Service, Inc. v. Eastman Kodak Co., 136 F.3d 1354 (9th Cir. 1998).  (In this case, a prevailing anti-trust plaintiff could not recover some fees under a statutory fee-shifting system, because one of its law firms had been disqualified.)

C         Legal fee agreements across state lines may not be enforceable. 

B.        Commentary

1.        Don’t overwork cases.  In re Arabia, 19 P.3d 113 (Kan. 2001).  (Nearly $157,200 was an unreasonable fee for research and filing in a simple discrimination case.)

2.         Explain fees carefully.  Do it beforehand.  Do it in the bill.   

3.         If work is charged for, make sure it gets done.  In re Cotten, 624 N.W.2d 360 (Wis. 2001), In re Diamon, 624 N.W.2d 147 (Wis. 2001).

4.         Guidelines.  Try to match fee statements to fee guidelines.  (This is a real problem.)  Insurance companies are getting nervous about using outside auditing services, so many of them are using in-house auditors.  Jill Schachner Chanen, Adios Outside Auditors, Insurance Carriers Go In-House to Check Attorneys’ Bills, 86 ABA J. 20 (January 2000).  Many insurers promulgated and imposed guidelines upon defense counsel.  They may now be unlawful in Texas.  See § 104.001-.006 of the Texas Insurance Code.  (Maybe: This was a bill passed in the 2001 Legislative Session.  The governor had not signed as of June  2001.  It may cause a good deal of trouble in the area of insurance defense ethics.)
           
5.         Fees: Agreed v. Reasonable.  In most jurisdictions, “an attorney is entitled only to reasonable fees regardless of the existence of a contract between her and her client.”  Vaughn v. King, 975 F. Supp. 1147, 1151 (N.D. Ind. 1997).  This rule is not mechanically applied in all cases.  See Alderman v. Pan Am World Airways, 169 F.3d 99 (2d Cir. 1999) (holding that in a dispute among attorneys as to sharing a fee the contractual fee agreement controlled).  Moreover, what constitutes a reasonable fee is not always self-evident.  For a demonstration of the in-depth analysis involved in determining whether a fee is reasonable, see In re Dorothy, 605 N.W.2d 493 (S.D. 2000) (concluding, after exhaustive discussion, that $60,000 fee was unreasonable in child custody case).

6.         Across States.  If a citizen of state A contracts with lawyers in state B to do work in state A, and they do so, the out-of-state attorneys may not be able to enforce the fee agreement, because they were not licensed to practice law in state A.  Z. A. v. San Bruno Park School District, 165 F.3d 1273 (9th Cir. 1999).  In California, no person may recover compensation for an attorney’s services performed in California unless the attorney was a member of the State Bar of California at the time the services were rendered.  Birnbrower, Montalba, Kondin, & Frank v. Superior Court, 949 P.2d 1 (Cal. 1998), cert. denied, 119 S. Ct. 291 (1998).

7.         Expenses.  The Don’t Gouge! rule applies to expenses as well as to fees.  (Remember what brought Webb Hubbell down.)

a.         You don’t have to order the most expensive thing on the menu.  You don’t even have to order the most expensive dessert.  Moreover, not all courts believe that meals are billable.  See Apple Corps. Ltd. v. Int’l Collectors Soc., 25 F. Supp.2d 480, 499 (D.N.J. 1998).  Besides, huge restaurant bills are often irksome to auditors employed by the client.  Envy is not a vice restricted to lawyers.  It’s bad business.

b.         You don’t have to take along an associate when you don’t need one.  The same applies to paralegals.  In general, when a lawyer shows up with an entourage, it is a fair inference that the lawyer suffers from under-preparation or psychic insecurity.

c.         Unnecessary personalties should not be charged to clients.  (Perhaps this is a form of stealing and thus belongs under C1.)

8.         Who Must Pay?  A law firm has a right to be paid only by the party that has agreed to pay it.  That may be the client, or it may not.  In general, if a law firm does work for a corporation, it may not collect from the individual who owns the corporation.  LeBouf Lamb Greene & [which merged with Dewey Balentine and then went bankrupt with it]; MacRae v. Worsham, 185 F.3d 61 (2nd Cir. 1999).  The problem here seems to have been that the law firm did work for several corporations overseas, and it probably wasn’t clear which corporation was liable for the fees.  The law firm sued the individual which owned all of them.  Alas, the court rebuffed LeBouf.  Perhaps this was not so much gouging as confusion.  Still . . .  .

9.         Gouging and  Lying.  Violations of the rule against gouging are often coupled with subsequent violations of the rule against lying.  In re Glynn, 618 N.W.2d 740 (Wis. 2000) (L paid himself excessive and unauthorized fees in two guardianship matters and then attempted to justify the payments by submitting false itemized statements and by documents falsely indicating he was reimbursing the states for disbursements he had made to himself without court approval.)

10.       For new types of work, there is a steep learning curve.  This is especially true for high tech work.  Who should pay for the education time?  Don’t lawyers who are not yet learned have to say as?

C.   Cases:  Every case that results in the reduction of legal fees involves probable violations of these disciplinary rules.  Fees can be quite large.  So can reductions.

            1.         Fees in Tobacco Cases:  For general exploration of these problems, see Panel Discussion, The Tobacco Litigation and Attorneys’ Fees, 67 Fordham L. Rev. 2827 (May 1999).  No less a figure than Professor Charles Silver of the University of Texas School of Law has defended the plaintiffs’ attorneys’ fees  at some length.  He believes that the fees are a reasonable return upon investments of money and time, fully in keeping with the traditions of contingency fee payments.  The investments are larger, so the returns have to be larger.  See Beating Tobacco Industry Means Spending Like It Does, Austin American-Statesman at A-17 (Wednesday, October 1, 1997).  See also Just Blowing Smoke, Texas Lawyer 32 (June 8, 1998)(arguing that the briefs of the intervenors misrepresented the law on attorneys’ fees to the court) and AG Lawyers Spar Over Tobacco Litigation Fees, 43 Tex. Lawyer 1 (January 18, 1999).  Significantly, the plaintiffs’ lawyers have withdrawn their claim with respect to the State of Texas.31

2.         Class action fees:  These fees are usually quite large and they are subject to substantial scrutiny.  Sometimes, but not invariably, these fees should be considered under Commandment Two.

a.         Since the defendants don’t care what the contingency fee is because it comes out of the settlement, and since there is a conflict of interest between plaintiffs’ counsel and the class, the court treats itself as a fiduciary of the plaintiffs in reviewing counsel’s bills.

b.         There is a tendency for attorneys to over-report time and to put in surcharges for expenses.  Courts are now examining these rather carefully.  For a detailed discussion of how courts audit bills and expenses, see Feinberg v. Hibernia Corp., 966 F. Supp. 442 (E.D. La. 1997). 

c.         Sometimes courts have to protect attorneys against plaintiffs who are trying to maximize the funds available to them.  “When the members of the class entered this courthouse four years ago, they perceived their case as weak and had little hope of recovery.  Now, as the class prepares to leave the courthouse with a recovery vastly exceeding their initial expectations [a recovery of $140 million], a few class members object to the extent of the ‘enhancement requested by their foot soldiers.’  The Court would give greater weight to these objections were they voiced at the same decibel level when there was little hope of recovery.”  Walco Investments, Inc. v. Thenen, 975 F. Supp. 1468 (S.D. Fla. 1997).  (Interestingly, some internationally known law firms contributed millions to the settlement pot in this case.)32

d.         Fees of consulting experts, such as accountants, are also subject to judicial scrutiny.  Lawyers presenting these fees need to do so carefully and in conformity with applicable legal rules.  In re Fleet/Norstar Sec. Litig., 974 F. Supp. 155 (D.R.I. 1997).

e.         As indicated above, courts are skeptical about large fees for plaintiffs’ lawyers in class action settlements.  Courts are worried that plaintiffs’ lawyers may sell their clients out for fat fees.  After all, when the defendant offers to pay a substantial fee directly to the plaintiffs’ lawyers, the lawyer has less incentive to pursue a larger settlement for the class.  General Motors Corp. v. Bloyed, 916 S.W.2d 949 (Tex. 1996).  See Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).  But see Shaw v. Toshiba Am. Info. Systems, Inc., 91 F.Supp.2d 942 (E.D. Tex. 2000).  (The court found that a settlement of $2.1 billion was “fair, adequate, and reasonable.  On the basis of this action, the court awarded $147.5 million in attorneys’ fees and $3 million in expenses.  This case involves a comprehensive discussion  of legal fees and class actions.)

 (1)        One sees very few contingency fee agreements in individual cases where the percentage declines as the recovery increases, although such agreements are common when firms handle subrogation cases for insurance companies.

(2)        Which approach, as a general matter, is the better one:  a constant contingency fee or a decreasing one?

(3)        Can an argument be made for increasing the contingency fee after a certain level?  Wouldn’t this make sense if one were trying to encourage attorneys to absolutely the largest recovery possible?

3.         Withdrawal.  Sometimes lawyers are permitted to withdraw when clients are not paying their fees.  U.S. ex rel. Cherry Hill v. Healthcare Rehab Systems, Inc., 994 F. Supp. 244 (D.N.J. 1997).  Sometimes not.  Hasbro v. Serafino, 966 F. Supp. 108 (D. Mass. 1997) (a motion to withdraw denied).  See Whiting v. Incorporated Village of Old Brookville, 20 F.Supp.2d 438 (E.D.N.Y. 1998) rev’d by Whiting v. Lacara, 187 F.3d 317 (2nd Cir. 1999).  In this case, the Second Circuit agreed with the district court that if a lawyer–who was the third lawyer for the client–knows that the client is difficult, his withdrawal after jury selection will not be permitted, since it will substantially prejudice other parties and waste judicial resources.)  However, the Second Circuit nevertheless allowed the attorney to withdraw here, primarily because the client expressed his opinion that he should be able to both dictate legal strategy and sue the lawyer for malpractice if that strategy was not followed.  Id. at 322.  Withdrawal depends on a variety of factors:  prejudice to the client, prejudice to other parties, problems of delay, how much has already been paid, whether the fees already paid are reasonable, and so forth.  Withdrawal may also be timed or phased.  Taylor v. Stewart, 20 F.Supp.2d 882 (E.D. Pa. 1998)(firm permitted to withdraw at the end of discovery).

a.         When an attorney withdraws from an action and then intervenes to obtain the recovery of attorneys’ fees, and the former client wishes to sue the attorney for malpractice, the suit must be done in the underlying case.  Russian Kurier, Inc. v. ITAR-TASS Russian News Agency, 140 F.3d 442 (2nd Cir. 1998).  This often happens in divorce cases.

b.         Claims of attorney malpractice are compulsory counterclaims to claims for attorneys’ fees.  Goggin v. Grimes, 969 S.W.2d 135, 138 (Tex. Civ. App. — Houston [14th Dist.] 1998, no pet.) (relying upon Rule 97(a) of the Texas Rules of Civil Procedure).

c.         In general, when lawyers sue to recover fees, they should consider carefully the possibility that there will be a malpractice counterclaim or a suit for the recoupment of some fees that the client will claim  constitute gouging.  Levison, Lerner, Burger & Langsam v. Medical Taping Systems, Inc., 20 F.Supp.2d 645 (S.D.N.Y. 1998).

d.         If a client absconds, does not pay a fee, and is helped by someone else, do not count on succeeding in a tortious interference action against the interloper.  Egorov v. Puchinsky, Afanasiev, & Juring v. Terriberry, Carol & Yancy,  183 F.3d 453 (5th Cir. 1999) (Louisiana law).  This case involved crew members who were not paid and then sued a shipowner.  The ship was then sold to someone else.  That someone else paid the crews’ wages, and everyone sailed happily away except for the American and Russian law firms that represented the crew.  They did not succeed in their tortious interference action against the new owners of the ship.  

e.         It is impermissible for a lawyer to condition the ending of an attorney-client relationship upon the execution of a release.  The Florida Bar v. Frederick, 756 So.2d 79 (Fla. 2000) (conduct found to be prejudicial to the administration of justice).

4.         Criminal Cases:  Where statutes call for the payment of criminal defense fees, courts will determine whether the fees are reasonable.  United States v. Nichols, 184 F.3d 1169, 1171 (10th Cir. 1999) (the statute at stake was 21 U.S.C. § 848(q)(10).33

D.        Long-Range Self-Interest:  It is getting harder and harder for lawyers who gouge to get away with it.  Institutional clients are becoming more and more watchful.  Insurance companies are leading the way, but banks are not far behind.  Although many businesses are not yet scrutinizing bills carefully, this trend will likely continue.  Billing practices spill over into other realms of the law, and that can lead to awkward situations.  See Bohatch v. Butler & Binion, 977 S.W. 2d 543 (Tex. 1998) (assertion of over-billing led to personnel problems).

E.         Contingency Fees.  Some contingency fees are unquestionably reasonable.  However, courts, and others, have expressed some doubt about them in mass tort litigation, where attorneys can accumulated multimillion dollar fees for what is essentially administrative work (e.g., in asbestos cases after the first round).  Also, courts have some qualms about the perverse incentives that large contingency fees create for mass tort lawyers.34

Some courts have also declared that contingency fee contracts that provide for payment to the attorney on discharge, whether or not the action is successful, are unreasonable and hence violate disciplinry rules prohibiting excessive fees.  See Cuynhoga Cty. Bar Assoc. v. Levey, 724 N.E.2d 395, 397 (Ohio 2000).

1.         Enforceability.  Many contingency fee contracts are without question enforceable.  See Chapman v. Hootman, 999 S.W.2d 118 (Tex. App.–Houston [14th Dist.] 1999, no pet. h.).  In this case, the attorney was entitled to a contingency fee if he eliminated or reduced the amount his client would have to pay.  Of course, contingency fees usually presuppose recoveries, but not always.  As a general rule, defendants may not attack the contingency agreement formed between plaintiffs and their lawyers.  Abbott v.  Kidder Peabody & Co., 42 F. Supp.2d 1046 (D. Colo. 1999).  However, attorneys can be disqualified from representing plaintiffs under retainer agreements.  Abbott was a securities case that allowed a minority of the plaintiffs to control settlement arrangements.

2.         Contract Work.  A law firm’s agreement to pay someone for working on a case does not constitute an equitable assignment of the client’s obligation to pay.  Consequently, the lawyer who did the work is entitled to some payment, he may  not recover it from the client.  Silverthorne v. Mosley, 929 S.W.2d 680 (Tex. App.–Austin 1996, writ denied).

3.         Greed.  For a case in which contingency fees got way out of hand over many years and over which the court expressed substantial exasperation, see In re San Juan Dupont Plaza Hotel Fire Litigation, 50 F.Supp.2d 100 (D.P.R. 1999).  A court described the litigation as having been paralyzed for years by fee disputes and that the litigation over the fee distribution part of the case had “‘long since out-distanced the substantive part.’”  Id. at 102.  Some fees were substantially reduced.

4.         Court Review:  Courts have the authority to set aside contingency fee agreements.  For a lengthy discussion of a philosophical basis for contingency fees, and their relationship to court ordered fees, see Cambridge Trust Co.  v.  Hanify & King Prof.  Corp., 430 Mass.  472 (1999), Nebraska State Bar v.  Miller, 258 Neb.  181 (1999) (discussed among other problems).

5.         Written Agreement.  In many states, contingency fee agreements must be in writing.  In re Spak, 719 N.E.2d 749 (Ill.  1999).

6.         Collection Efforts.  An up-front contingency fee agreement normally includes collections efforts, so that law firms may not seek additional fees upon the grounds of having to collect.  Dardovitch v.  Haltzman, 190 F.3d 125, 142 (3rd Cir.  1999).

7.         Remedies.  Courts can order the repayment of excessive fees.  Uy & Kinigstein v. The Bronx Municipal Hospital Center, 182 F.3d 152 (2nd Cir. 1999).  This rule obviously applies to contingency fees.  It is also important to note that standards for ordering the repayment of privately-contracted-for legal fees are different from the standards either for fee-shifting statutes or for fee-related Rule 11 sanctions.

8.         Stockholder Derivative Actions.  Non-monetary results that benefit a corporation can justify the award of attorneys’ fees.  Mills v. Electric Auto-Lite Co., 396 U.S. 375, 395-96 (1970).  See Seinfeld v. Robinson, 676 N.Y.So.2d 579 (N.Y. App. 1998).  However, when the benefits conferred upon the corporation are illusory, the lawyer bringing the action not only receives no fees, but also risks sanctions under federal Rule 11.  Kaplan v. Rand, 192 F.3d 60 (2nd Cir. 1999) (reversing a fee award by the district court and mandating that the plaintiff’s lawyers receive nothing. “An argument. . .could be made, on the basis of the contentions. . .advanced by plaintiffs’ counsel [at the end of the suit], that the extensive claims originally made in this case had no chance of success and, accordingly, were made for the improper purpose of early settlement and the allowance of substantial counsel fees.”  Id. at 72.35

9.         Criminal Cases.  Contingency fees in criminal cases are unlawful.  There is some theoretical dispute about this, although not much in practicality.  See Lindsey D. Dogfrey, Notes: Rethinking the Ethical Ban on Criminal Contingent Fees: A Commonsense Approach to Asset Forfeiture, 79 Tex. L. Rev. 1999 (2001) (advocating the heavily regulated use of contingency fees in criminal cases, while discussing key judicial decisions in previous law review articles).

F.         Legal Fees and Bankruptcy.  This is a complex topic, well beyond the scope of this outline.  However, if an attorney gouges in the context of a bankruptcy proceeding, that may very well constitute a defalcation while acting as a fiduciary.  In re Hayes, 183 F.3d 162 (2nd Cir. 1999) (discussion of many significant cases).  Payment to an attorney precedent to bankruptcy in the form of stock can easily be a preferential transfer, subject to avoidance.  In re First Jersey Securities, 180 F.3d 504, 513 (3rd Cir. 1999).  Contingency fees charged in bankruptcy cases should be in accordance with state law.  In re Mailman Steam Carpet Cleaning Corp., 212 F.3d 632 (1st Cir. 2000) (contingency fee agreement describing an aggregate fee equal to the greater of 43% of any recovery or the attorney’s overall time charges based on specified billing rates inconsistent with Massachusetts law).

G.        Interpretation.  Sometimes contingency fee contracts will be interpreted in a reasonable–even gentle–way and in favor of the client.  Thus, if a lawyer has a percentage contingency fee, it will generally be taken to be a percentage of the net recovery.  Thus, if a client is found liable for $1 million but recovers $700,000 on a counterclaim, the lawyers contingency fee will be taken out of the $300,000 recovery.  Levine v. Bayne, Snell & Krause, 40 S.W.3d 92 (2001).  It was absolutely amazing that lawyers from Texas needed to be told this.

H.        Subtle Gouging?  One of the characteristics of the gouging lawyer–particularly big-firm lawyers–is to overwork cases.  Frequently, corporate clients virtually encourage this, because they are frightened.  Lawyers are ingenious at painting bleak scenarios of what might happen if everything doesn’t go just so.  When this happens, not only are lawyers permitted to overwork cases, they are urged to do so.  Truly it cannot be ethical to set up this sort of situation.
Yet, don’t law firms frequently over-document cases?  I recently heard of a relatively simple antitrust case tried in Texas by counsel from the upper midwest, where they transported one hundred boxes of documents to the courtroom.  All of the documents–every page!–had been computer indexed.  Surely this was excessive.

J.          The Fantasy of the Billable Hour.  This is the title of a chapter in Benjamin Sells’ Order in the Court:  Reflections on the Essence of the Law 101-04 (June 1999).  Sells points out that “the basic problem is that it is impossible to quantify intellectual work.”  Id. at 102.  Exploratory thoughtfulness–a process necessarily characterized by imagination, hypothesis, rejection, modification, replacement, and variation–is extremely difficult to translate into temporal terms.  For this reason, Sells says that “the billable hours of fantasy, [are] a fiction that we use as a rough approximation for measuring the lawyering process in terms of an economic construct.  Everyone knows you cannot encapsulate creativity and intellectual insight, and as long as we remember this going in we’re O.K.  If we lose our way we begin to take the billable hour seriously.”  Id. at 103.  Undoubtedly, Sells is right for some aspects of some legal practices.  The problem is that recognizing the truth he asserts creates a new temptation.  Lawyers billing by the hour should always err in favor of the client.  This should become deeply ingrained and habitual.36

K.        Quantum Meruit.  Many states require that fee agreements be in writing.  Some states permit lawyers to obtain quantum meruit recoveries, even when there is no written fee agreement.  Gagne v. Vaccaro, 766 A.2d 416 (Conn. 2001) (unjust enrichment conflated with quantum meruit).

 L. Lawyer’s Own Fees.  If a lawyer sues a client for the failure to pay a fee, fee entries in both the underlying case and in the py-my-fees case will be examined and scrutinized in the usual way. If L has been sued by C for malpractice, and L counterclaims for fees, then L’s fees in the contract claim (“Pay my fees, scoundrel.)  are recoverable, but not L’s fees in the defense of the malpractice claim.  It is not a contract case; it is a tort case.  This rule means that L’s fees must be carefully segregated. McMahon [C] v. Zimmerman [L], 433 S.W.3d 680 (Houston Court of Appeals [1st Dist.] March 27, 2014, no petition to TxSpCt). Here C lost the malpractice case, and L got only a very modest sum in the contract counter claim. I have my doubts about this decision. See my blog essay, “Divorce Cases and Disputed Attorney Fees, Quinn’s Commentaries on Lawyers and Lawyering, February 5, 2015.


                31 Symposia on tobacco cases comprise 33 Ga. Rev. (Spring 1999) and 22 S. Ill. U.L. J. (Spring 1998).  See Dan Zegart, Civil Warriors:  The Legal Seige on the Tobacco Industry (2000),  Michael Orey, Assuming the Risk:  The Mavericks, The Lawyers, And Whistle-Blowers Who Beat Big Tobacco (1999), Carrick Mollenkamp, The People vs. Big Tobacco:  How the States Took On the Cigarette Giants (1998), and Peter Pringle, Cornered:  Big Tobacco at the Bar of Justice (1998).  See also David A. Kessler, Regulation of Tobacco:  Health Promotion and Cancer Prevention, 36 Houston L. Rev. 1597 (1999).

                32 For some other recent interesting cases, see Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000) (affirming the trial court’s denial of a contingency fee amounting to 25% of a recovery and affirming an award of 4% of the recovery based on the Lodestar method), Petrovic v. Amoco Oil Co., 200 F.3d 1140 (8th Cir. 1999) (contingency fee of 24% approved), Waters v. Int’l Precious Metals Corp., 190 F.3d 1291 (11th Cir. 1999) (substantial contingency fee enforced in a class action brought by customers against a commodity futures brokerage firm and its brokers), Savoie v. Merchants Bank, 166 F.3d 456 (2d Cir. 1999), Gaskill v. Gordon, 160 F.3d 361 (7th Cir. 1998)(Posner, C.J. refusing to increase a multimillion dollar fee award), In re Texaco, Inc. Shareholder Litigation, 20 F. Supp. 2d 577 (S.D.N.Y. 1998), Teamsters Local Union 705 v. Ligurotis, 142 F.3d 1004 (7th Cir. 1998) (ERISA class action), Wallace v. Fox, 7 F. Supp.2d 132 (D. Conn. 1998), In re Computron Software, Inc., 6 F. Supp.2d 313 (D.N.J. 1998) (using percentage-of-recovery method to award attorneys fees in the amount of 25% of settlement award), In re Coply Pharmaceutical, Inc., 1 F. Supp.2d 1407 (D. Wyo. 1998), In re PaineWebber Ltd. Partnerships Litigation, 999 F. Supp. 719 (S.D.N.Y. 1998) (calculating fees through the use of the lodestar method), Fournier v. PFS Investments, Inc., 997 F. Supp. 828 (E.D. Mich. 1998), In re Prudential Securities, Inc. Ltd. Partnerships, 985 F. Supp. 410 (S.D.N.Y. 1997) (extraordinary settlement entitled to extraordinary fees); Berlinsky v. Alcatel Alsthom Compagnie Generale D’Electricite, 970 F. Supp. 348 (S.D.N.Y. 1997); In re Combustion, Inc., 968 F. Supp. 1116 (W. D. La. 1997); In re Marian Merrell Dow, Inc., Sec. Litig., 965 F. Supp. 25 (W.D. Mo. 1997) (28% attorneys’ fee award would be fair for class counsel); In re Quantum Health Resources, Inc., 962 F. Supp. 1254 (C.D. Cal. 1997) (reducing class counsel fee from 30% to 10%).
                33 For a comprehensive treatment of this matter, see Gabriel J. Chin and Scott C. Wells, Can A Reasonable Doubt Have An Unreasonable Price; Limitations on Attorneys’ Fees in Criminal Cases, 41 B. C. L. Rev. 1 (1999).

                34 For a systematic discussion of deficiencies in the contingency fee system, see David Luban, Speculative Justice:  The Ethics and Jurisprudence of Contingency Fees, in Stephen Parker and Charles Samford, Legal Ethics and Legal Practice:  Contemporary Issues 89-126 (1995).

                35 See Ralph K. Winter, Paying Lawyers, Empowering Prosecutors, and Protecting Managers:  Raising the Cost of Capital in America, 42 Duke L. J. 945, 948-53 (1993) (noting that a large percentage of stockholder derivative actions are brought solely to collect attorneys’ fees.” ).

                36 Here are several interesting recent writings on legal bills.  Kevin M. Quinley, Litigation Management (1995).  This book is published by the International Risk Management Institute, Inc. in Dallas, Texas.  This institute services the insurance industry, and this book is widely read in insurance industry circles.  There is a three article symposium in 11 Geo. J. Legal Ethics 189-244 (Winter 1998).  The articles concern honesty in billing, when time should be charged, and the ethics of contingency fees.  Michael H. Trotter, Profit and the Practice of Law:  What’s Happened to the Legal Profession (1997) is a graceful book which is partly a history of the legal profession, partly observations on the Atlanta Bar, and partly  a meditation on billable hours.  It is worth reading.  For a more comprehensive and systematic treatment of billing issues see William G. Ross, The Honest Hour:  The Ethics of Time-Based Billing By Attorneys (1996).  For a discussion of this book and problems it raises, see Michael Sean Quinn, Attorneys’ Fees and Lawyers’ Billings:  A Tale of Emperors’ Old Clothes, 10 Envt’l Claims J. 131 (1997). For a polemical and somewhat dyspeptic treatment of legal fees and the role of money in the law generally, see Macklin Fleming, Lawyers, Money, and Success:  The Consequences of Dollar Obsession (1998).  (Macklin Fleming is a California judge.)  For a discussion of this book see Michael Sean Quinn, Legal Fees and Legal Audits, 11 Envt’l Claims J. 1 (Autumn 1998).  See also Cameron Strecher, Double Billing:  A Young Lawyer’s Tale of Greed, Sex, Lies, and the Pursuit of a Swivel Chair (1998).  For a discussion of this book, see Michael Sean Quinn, Lives Lawyers Lead, 11 Envt’l Claims J. 2 (1999).