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E. Client liability: fees

Classic U.S. “contingent fee”: % of recovery What ethical problems does it present? “acquiring a proprietary interest in [client’s] cause of action”, MRPC 1.8( i ): potential conflict of interest lawyer-entrepreneur, “stirring up” lawsuits why this exception (1.8( i )(2))?

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E. Client liability: fees

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  1. Classic U.S. “contingent fee”: % of recovery • What ethical problems does it present? • “acquiring a proprietary interest in [client’s] cause of action”, MRPC 1.8(i): potential conflict of interest • lawyer-entrepreneur, “stirring up” lawsuits • why this exception (1.8(i)(2))? • no explanation in current Comments! • traditional: enables access to civil justice for claimants otherwise unable to pay a lawyer Special Problems with Contingent Fees E. Client liability: fees

  2. Contingent Fees c’t’d • Other kinds of “contingen[cy] on outcome” • fixed amount if successful, lesser amount if not • UK: “conditional”, bonus up to 50% of normal fee • France and Italy: palmarium: fixed fee plus additional amount if successful – the latter can be measured by the amount of recovery • traditional view in most other countries: U.S. version (“quota litis”) is unethical

  3. Problem pp. 172-4 • Who decides whether or not a contingent fee should be charged? What considerations are relevant? • What special requirements do the Rules impose? • 40% contingent fee, lawyer files petition, D’s insurer immediately offers full amount of policy ($500K), D has no other assets. • Is lawyer entitled to $200K? MRPC 1.5(a); Rohan, p. 174 • If not, what amount?

  4. Problem pp. 172-4 c’t’d • Structured settlement under contingent fee • $100K up front, $25K/yr for 25 yrs or to death or remarriage, whichever first • How to measure and/or collect, if not specified in fee K? • default position: agreed % of each payment rec’d by client, when received • problems: • delay in getting paid • contingency of total amount • solution: up-front amount + cost of annuity

  5. Problem pp. 172-4 c’t’d • Contingent fee in marital dissolution case, MRPC 1.5(d)(1) • What are the policy considerations? • Would any of the alternative fee arrangements in (b) pass muster? • dissolution contested? • dissolution not contested or already granted? • dissolution granted, support awarded, H is delinquent on payments – contingent fee for recovery?

  6. Problem pp. 172-4 c’t’d • Widow is decedent’s life insurance beneficiary, accused of murdering him • lawyer asked to represent her in both civil claim and criminal defense • can lawyer properly do both for 25% of insurance proceeds? MRPC 1.5(d)(2) • if the representation is improper under 1.5(d)(2), and client is convicted, is the conviction unconstitutional?

  7. (3) Division of Fees • Lawyer A refers medical malpractice case to lawyer B, then receives check from B for $200K, as “your share” of the fee he earned • What should you do with the check? MRPC 1.5(e); Chambers, p. 183 • Would the answer be different, if A and B had entered into the agreement described in question (b)? • What about sharing fees with a deceased partner’s estate, or a retired partner? MRPC 5.4(a)

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