SC Lawyer, May 2005, #6. Ethics Watch - Charging fair fees.

AuthorBy John Freeman

South Carolina Lawyer


SC Lawyer, May 2005, #6.

Ethics Watch - Charging fair fees

South Carolina Lawyer May 2005

Ethics Watch - Charging fair feesBy John FreemanThe biggest single air tragedy to strike this country pre-9/11 occurred on May 25, 1979, when the left engine dropped off American Airlines Flight 191 shortly after the flight took off out of O'Hare Airport. There were 273 fatalities, including two killed when the jet crashed near the airport.

I will always remember the dry response an aviation official gave when a reporter asked whether something was amiss with Flight 191's equipment: "Sir, engines do not normally drop off multi-million dollar jet aircraft." Of course they don't. And railroad trains do not normally plow into other trains owned by the same company and parked on the same track, either. As with Flight 191, something went seriously awry for Norfolk Southern in Graniteville on January 6, 2005.

The Graniteville disaster has the makings of a personal injury lawyer's dream: clear-cut liability, a deep pocket defendant and, in many cases, very serious injuries. The ethical challenge is to not mess up such an inviting opportunity. Here are two ways to mess up: charge an unfairly high fee and fail to inform the client of key facts.

What will be an unfairly high fee for legal services rendered related to the Graniteville disaster? It is early in the game right now, and hence difficult to judge, but there is reason to believe that standard contingent fee contracts of one-third or 40 percent may turn out to yield excessive fees when all is said and done. A major reason for contingent fees is to compensate the lawyer for being willing to defer receipt of fees and bear the risk of a poor result. Exactly how much risk is there in a case where liability is clear and damages are substantial? Because the risk is lower, the fee should be, too.

I am not crusading against lawyers, lawsuits or contingent fees. I am urging Bar members to think through the consequences of treating slam dunk winning cases as deserving standard size contingency percentages. They don't. Sophisticated clients who bring contingent fee commercial cases customarily negotiate for discounted fees where the lawyer's risk of going unpaid is small and the likely damage numbers are very high.

A story about the recent IPO litigation yielding...

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