to Current Ethical Issues
FINANCIAL RESPONSIBILITY BY-LAW ADOPTED
The Supreme Court finally approved and adopted an amendment to the State Bar By-Laws concerning a disclosure by attorneys of whether they have malpractice insurance or unpaid judgments in their professional capacity. The State Bar first submitted a proposed disclosure to the Supreme Court in April 2004 and public comments were later solicited. [See posting below entitled "Proposed Amendment to State Bar By-Laws to Require Attorneys to Certify the Existence of Malpractice Insurance"]. Based upon those comments, the State Bar made certain amendments to exclude from participation those lawyers who are not in private practice.
The By-Law requires attorneys who are in private practice to fill out a form disclosing whether they have malpractice insurance in the amount of $100,000 per claim/$300,000 aggregate. If they do not, they must disclose whether they possess funds in the amount of $100,000 in a financial institution to satisfy potential liability. They must also disclose whether they have unpaid judgments arising out of their professional conduct. Forms must be completed by September 1, 2005. Failure to complete the form will result in an administrative suspension similar to the nonpayment of dues or failure to comply with mandatory continuing legal education requirements.
The purpose of the disclosure is to promote consumer awareness before an attorney is hired. The State Bar is charged with making the information available to the public, but the rule has no specific requirements. Availability of the information to the public thinking about hiring a lawyer will not be useful unless the public knows this source exists. One drawback is that the lawyer is not required to update the information if conditions change until the next annual reporting period. A client, in theory, could always request from the lawyer that he/she be notified of a change in status. But almost no one, except perhaps an insurance company, will be willing to tackle that issue. The idea of the State Bar being the repository of the information is that potential clients can check up on the lawyer without the lawyer knowing about it.
Posted: July 5, 2005
THE AMAZING CASE THAT WOULDN'T DIE!
Four--count'em--four postings below have been devoted to the issue of an attorney collecting a percentage of money paid under a medical payments insurance coverage (referred to as "med-pay"). Two of these have been about the civil litigation involving Mabel Bass and lawyer Laura Coltelli, later called Laura Coltelli-Rose, and finally called Laura Rose. This case involves a dispute over $6,250, although with 10% prejudgement interest, that amount has more than doubled by now.
Originally, this matter went up on certified questions as to whether an attorney may charge a contingent fee with respect to obtaining med-pay for the client. Bass v. Coltelli, 192 W. Va. 516, 453 S.E.2d 350 (1994). The Circuit Court had sided with Ms. Coltelli. The Supreme Court declined to answer the certified questions because "it was impossible to determine the factual basis upon which the questions were formulated."
In 2000, the case came back. It had been before a different Circuit Court Judge. The lower court found that the cotingent fee contract only pertain to recovery of moneys for the personal injury tort, not contractual amounts (there were actually two contingent fee contracts, two med-pays and two fee charges, but why confuse you). The Supreme Court reversed, finding that the contingent fee contract language was broad enough to encompass any recovery secured from a party legally obligated to compensate the accident victim. Bass v. Coltelli-Rose, 207 W. Va. 730, 536 S.E.2d 494 (2000).
On remand, the lower court still found for Bass, holding that the fees charged to collect med-pay were excessive and unreasonable when looking at the time and effort that went into collecting med-pay. On appeal, the Supreme Court reversed, holding that the lower court violated the mandate of Bass II by looking at only a segment of the representation as opposed to the representation as a whole. Bass v. Rose, 216 W. Va. 587, 609 S.E.2d 848 (2004). The Court tempered its opinion in a footnote, advising: "This is not to say that a reviewing court loses its discretion to conduct a review of discrete segments of an attorney's representation in situations involving apportionment of attorney's fees when some claims and efforts are unsuccessful, no appreciable advantage is achieved or no significant contribution results from such discernable activities."
Posted: May 17, 2005
PROPOSED AMENDMENT TO STATE BAR BY-LAWS TO REQUIRE ATTORNEYS TO CERTIFY THE EXISTENCE OF MALPRACTICE INSURANCE
I submitted the following comment to the Chief Justice of the Supreme Court of Appeals on a proposed amendment of the By-Laws of The West Virginia State Bar to require lawyers to certify annually to the State Bar whether they have legal malpractice insurance in the amount of $100,000/$300,000 and whether they have any unpaid legal malpractice judgments against them. There is no requirement that the lawyers have malpractice insurance. The intent of the disclosure is to raise consumer awareness. The State Bar will disseminate that it has this information so that potential clients may contact the Bar before hiring a lawyer.
My letter dated April 21, 2004 stated as follows:
I worked in the lawyer disciplinary field for eleven years. I currently represent plaintiffs in legal malpractice actions. I therefore have had experience with the problem of lawyers who need malpractice insurance the most not having it, the problem of a lawyer evaluating a potential malpractice case trying to determine whether the lawyer has insurance and the problem of the clients not understanding that malpractice insurance is not mandatory.
The proposed amendment is a step in the right direction, but it does not go far enough for two reasons:
(1) For the public to be truly informed, lawyers should be required to inform their prospective clients directly that they do not have malpractice insurance, because many potential clients will not know to contact the State Bar before retaining a lawyer.
(2) Since most malpractice insurance are claims- made policies, nothing prevents a lawyer from cancelling his or her insurance after September 1, leaving even those clients who know enough to contact the State Bar under the mistaken impression that they are still protected.
There is a great problem that exists in this State: Those lawyers who are most likely to commit malpractice do not have malpractice insurance. Mr. Tinder's letter to you states that almost 80% of the lawyers who are members of the State Bar have professional liability insurance coverage. With a membership base of 4,200, this leaves more than 840 lawyers without insurance.
I have no statistics on who those 840 lawyers are. Many may be governmental attorneys with statutory immunity. My experience and observations suggests that a fair number of these 840 lawyers are sole practitioners in private practice directly serving the public.
My current practice supports this thesis:
Attorney A of Wyoming County represented a personal injury client in a clear case of liability where there was some insurance on the tortfeasor and a large amount of underinsurance. He utterly failed to do anything in the case for four years, and it was dismissed for lack of prosecution. Attorney A lied to his client for two years to conceal the dismissal. He was a sole practitioner who has no malpractice insurance. After the fact, Client told me she thought all lawyers had to maintain malpractice insurance.
Attorney B of Randolph County represented a divorce client poorly. He failed to conduct discovery; he failed to submit a proper brief to the Circuit Court after being given a second chance by the Court, and the appeal was dismissed. He is a sole practitioner. When his client came to me, I learned that although he had malpractice insurance during these events, he did not renew his insurance in December of 2002. After the fact, the client told me she thought all lawyers had to maintain malpractice insurance.
Attorney C of Kanawha County charged his client $5,500 to file a lawsuit against her employer charging sexual harassment. He misled his client that he had filed the lawsuit; he literally did nothing on the case and let the statutory filing deadline pass. Another lawyer's informal efforts to get Attorney C to make a refund were unsuccessful. Attorney C has no malpractice insurance. After the fact, the client told me she thought all lawyers had to maintain malpractice insurance. The client applied to the State Bar's Lawyer Protection Fund only to be told that her application would not be considered unless she first sued the lawyer, who is no longer practicing.
Attorney D of Kanawha County mishandled estate planning and probate. The beneficiaries consulted me. During the time period, he practiced with one other attorney; more recently he was a sole practitioner. The Attorney had no malpractice insurance. I looked in the County Clerk's offices of Kanawha and Putnam for any assets. The lawyer lived in a rented apartment. I went so far as to check the probated will of a relative to make sure he had not inherited. He may have a large bank account somewhere, but I wouldn't be able to determine that unless I filed suit. Even then, attorneys resist disclosure of personal assets during discovery on the grounds that such information is not relevant unless there is a judgment. I am litigating this issue in a separate lawsuit in Kanawha County. I advised the clients not to sue Attorney D.
Attorney E of Boone County was the referring attorney in a personal injury action involving seven family members. Attorney F of Roane County handled the case primarily, embezzled $30,000 of settlement money that had been earmarked for hospital costs, and lied for over one year about it. Attorney E never confronted Attorney F despite the family's calls to him and even appeared as counsel to the family when the hospital sued them on their bill. Attorney E, as well as F, were sole practitioners. He had no malpractice insurance. In a lawsuit, he consented to a judgment of $19,000 in Logan County but he never paid it. It took me nine months to get the Circuit Clerk's office to issue a proper abstract of judgment against this lawyer to be filed in Boone County. Then the Sheriff's office, which was to execute the judgment, eventually returned my calls and reported that Attorney E could not be located. After the fact, the clients told me they thought all lawyers had to maintain malpractice insurance.
The stated purpose of Article III(A) is "to make information available to the public about the financial responsibility for professional liability claims of each active lawyer admitted to practice law in West Virginia." The amendment requires a lawyer to provide important information concerning financial responsibility, but that information is provided only annually to the State Bar. Lawyers must certify to the State Bar whether they have a certain amount of insurance and whether there are any unpaid judgments against the lawyer.
The potential client is the one who needs this information. How the State Bar is going to alert the public that it is the repository of such information is not detailed in the amendment or Mr. Tinder's letter to you. The amendment merely says the information "shall be made available to the public by such means as may be designated by the West Virginia State Bar." If many people already think that legal malpractice insurance is mandatory, they won't know this information exists. Moreover, the State Bar has never, to my knowledge, actively promoted public awareness that a lawyer disciplinary system exists. There is no toll-free number or public service announcements, for example.
The information required by the amendment is only helpful to lawyers, like me, who bring legal malpractice actions and wish to know whether a lawyer has insurance or has other assets before deciding to accept a case. However, the harm has already been done to the client, and this information actually may decrease the number of malpractice actions brought.
Ohio has addressed this situation differently. If a lawyer does not have professional liability insurance with limits of no less than $100,000/$300,000, he or she must disclose this fact in writing in a form provided by the Code of Professional Responsibility. The rule reads:
DR 1-104. DISCLOSURE OF INFORMATION TO THE CLIENT.
(A) A lawyer shall inform a client at the time of the client's engagement of the lawyer or at any time subsequent to the engagement if the lawyer does not maintain professional liability insurance in the amounts of at least one hundred thousand dollars per occurrence and three hundred thousand dollars in the aggregate or if the lawyer's professional liability insurance is terminated. The notice shall be provided to the client on a separate form set forth following this rule and shall be signed by the client.
(B) A lawyer shall maintain a copy of the notice signed by the client for five years after termination of representation of the client.
(C) The notice required by division (A) of this rule shall not apply to a lawyer who is engaged in either of the following:
(1) Rendering legal services to a governmental entity that employs the lawyer;
(2) Rendering legal services to an entity that employs the lawyer as in-house counsel.
NOTICE TO CLIENT
Required by DR 1-104
Ohio Code of Professional Responsibility
Pursuant to DR 1-104 of the Ohio Code of Professional Responsibility, I am required to notify you that I do not maintain professional liability (malpractice) insurance of at least $100,000 per occurrence and $300,000 in the aggregate.
_____________________
Attorney's Signature
CLIENT ACKNOWLEDGMENT
I acknowledge receipt of the notice required by DR 1-104 of the Ohio Code of Professional Responsibility that [insert attorney's name] does not maintain professional liability (malpractice) insurance of at least $100,000 per occurrence and $300,000 in the aggregate.
___________________
Client's Signature
_____________________
Date
The goal of Ohio's rule is two-fold: (1) the public is provided with direct and immediate knowledge; and (2) the attorney will feel compelled to obtain insurance rather than broach the issue with the client.
Our State Bar's proposed rule improves upon Ohio's rule by requiring disclosure of any unpaid malpractice judgments. Perhaps making this disclosure will embarrass a lawyer enough to pay the judgment. But making the disclosure to the State Bar may not be a sufficient deterrent.
Moreover, Ohio requires that a lawyer notify current clients if he or she no longer has malpractice insurance. Under the West Virginia proposal, the information is only good as of the date of the certification. A lawyer need not update the information during the year.
In one of my cases, a lawyer did not renew his insurance in December, several months after he, in my opinion, committed malpractice. He had voluntarily filled out the State Bar's annual renewal form earlier that year that he had insurance, which was true enough. With coverage that only includes claims asserted during the existence of the policy, not acts committed during the existence of the policy, the lawyer may have been trying to discourage a malpractice action.
In such a situation, even if the potential client knows enough to contact the State Bar, he or she will receive false reassurance. Nothing prevents the lawyer from discontinuing the insurance. The client will not receive notification. If another potential client called the State Bar in December of that year, the State Bar would report that as of September 1, the attorney had insurance.
Certainly a client could ask the lawyer directly if the State Bar's information is up-to-date, but most potential clients will be afraid of offending the lawyer. If the lawyer is required to provide notification of no or insufficient insurance, the problem would not exist.
I would imagine that the State Bar considers its proposed amendment to be less intrusive of the attorney-client relationship. The potential client may quietly make a call to learn the information. The proposal only works if all potential clients know that lawyers are not required to have malpractice insurance and that there is a place to call, and the lawyer who has insurance continues to maintain his or her policy.
I would request that the Court consider adopting something similar to the Ohio rule. If the Court is disinclined, it should, at the very least, require a lawyer to update his or her insurance status, if it has changed to fall below the $100,000/$300,000 level, during the fiscal year.
Thank you for the opportunity to comment.
Posted: April 27, 2004
CONTINGENT FEES ON MED-PAY - WE'RE NOT DONE, YET!
Three of my postings below discuss in detail the ethical issues surrounding an attorney charging a contingent fee for collecting medical payments from a client's own insurance company. As noted below, the Supreme Court recently dismissed a disciplinary complaint that an attorney had collected an unreasonable fee when she charged a percentage of the med-pay her client received. Lawyer Disciplinary Bd. v. Morton, 212 W. Va. 165, 569 S.E.2d 412 (2002).
The Lawyer Disciplinary Board is evidently extremely unhappy with this ruling and fears that it will open a floodgate of abusive fee practices. The Board took the unusual step of issuing a warning to lawyers in the January 2003 issue of The West Virginia Lawyer magazine. This warning isn't in the form of a formal ethics opinion. It is basically a notice that lawyers shouldn't interpret the Morton case too broadly.
Said the Board, "[T]he decision did not approve contingent fees for the recovery of medical benefits in every case. A careful reading of the majority, concurring and dissenting opinions indicates that a contingent fee for the recovery of medical benefits under an autombile insurance policy will still violate Rule 1.5(a) where the attorney does little work and assumes no risk of loss."
Of course, this interpretation is not binding upon the Supreme Court of Appeals, as the ultimate arbiter of ethics, but it is an indication of the type of situation which will still land a lawyer in trouble with the Board, if not the Court.
Posted: March 4, 2003
MOTIONS TO WITHDRAW
Many lawyers are unaware of the fact that the West Virginia Trial Court Rules impose specific obligations and requirements for an attorney who has made an appearance in a matter to withdraw from representation of a client. Rule 4.03(b) codifies case law that no attorney may withdraw from a case without court permission. The Rule further requires that an attorney seeking to withdraw must make reasonable efforts to give actual notice to the client that the attorney wishes to withdraw, that the court retains jurisdiction over the case, that the client has the burden of keeping the court informed where documents may be served upon him or her, that the client has the obligation to prepare for trial or hire other counsel to prepare for trial when a trial date has been set, that if the client fails to meet these obligations the client may suffer possible default, that the dates of any proceedings will not be affected by the counsel's withdrawal, the the client may object to the attorney's motion to withdraw and that service of process may be made at the client's last known address.
The moving attorney must prepare a written notification certificate stating that the above notification requirements have been met, setting forth the manner of notification and providing the client's last known address and telephone number. If withdrawal is permitted by the court, the attorney must give notification of the effective date of withdrawal.
Posted: December 17, 2002
COURT FINALLY SETTLES THE QUESTION OF A CONTINGENT FEE FOR MED-PAY
The Supreme Court finally resolved a question which had been lingering for seven years. On May 2, 2002, the Court held that it is not unethical to charge a contingent fee to recover medical payments from a client's own insurance company, at least when the attorney is representing the client on matters broader than med-pay recovery. This decision came in a disciplinary proceeding, Lawyer Disciplinary Board v. Morton. The Lawyer Disciplinary Board had found that Ms. Morton had charged an excessive fee in violation of Rule 1.5(a) of the Rules of Professional Conduct. Ms. Morton had obtained $5,000 from her client's own insurance company under the policy's medical payments provision and retained $1,500 as a fee under her contingent fee contract which allowed her a fee of 30% of all monies recovered. Ms. Morton subsequently ceased representing her client because he failed to pay $500 towards costs and expenses of pursuing his claim against the tortfeasor's insurance.
The Court rejected the reasoning of a number of previous cases and decisions from other disciplinary jurisdictions without any analysis in a per curium decision. Two members dissented and one concurred. At least lawyers now have some guidance on this issue, although it is a shame that the Court previously passed up the opportunity to decide the issue and waited until a lawyer went through a disciplinary proceeding unnecessarily.
For a history and more thorough discussion of the ethical issue about med-pay, see two entires below on this page: "CONTINGENT FEES FOR MED-PAY--THE ISSUE THAT WON'T DIE" and "CHARGING A CONTINGENT FEE FOR MED-PAY."
Posted: 5/6/02
AMNESTY OFFERED FOR SELF-REPORTING LAWYERS
April 1, 2002, Charleston, WV: In an unprecedented bid to clear up the ethics complaints backlog, the Lawyer Disciplinary Board is offering complete and full amnesty during the month of April, 2002 to any lawyer who reports his or her own unethical conduct to the Office of Disciplinary Counsel. Taking its cue from public libraries who have "fine free week" and other specials designed to induce recalcitrant patrons to return overdue books, the Board announced that any lawyer who comes in out of the cold and fesses up will face absolutely no discipline. This outstandingly generous offer applies equally to conduct that is already the subject of a pending ethics complaint and conduct which the Office knows nothing about. Once the lawyer is given amnesty, no complaint about the same conduct will be docketed in the future. There is one slight exception to this program. Lawyers who have misappropriated client funds will only receive full amnesty is they bring canned good with them. The ratio is one can per $100 misspent. The Board intends to donate the food to the State Bar for use in its upcoming Bench/Bar luncheon at its Annual Meeting May 10-11.
"This hair-brained scheme could put me out of business," complained attorney Sherri Goodman who--dare we say it--specializes in defending lawyers before the Board. The Sir Thomas Moore Society, an organization of Catholic lawyers took a more charitable view: "To err is lawyerly, to forgive is the divine province of the Lawyer Disciplinary Board."
Posted: 4/1/02 - get it?
NEW LEGAL ETHICS OPINION
The Lawyer Disciplinary Board just released L.E.I. 2002-01 entitled "Retention and Destruction of Closed Client Files". The Rules of Professional Conduct provide no guidance or a standard on how long to keep client files. The Board recommends that the firm's file retention policy be included in the representation agreement and a concluding letter at the end of representation. The Board further recommends that files be kept for a minimum of five years after the termination of representation. In addition, it suggests that a file be kept longer based upon any applicable statute of limitations, such as in tax cases, cases involving minors, or those with written fee agreements (where a 10 year statute of limitations applies).
CHARGING INTEREST ON ADVANCED LITIGATION EXPENSES
Pending before an ad-hoc committee of the Lawyer Disciplinary Board is the request for an advisory opinion on whether a lawyer may charge a client interest on advanced litigation expenses. This is not to say that a lawyer is currently prohibited from doing so. But only in the past nine years has the Board opined that a lawyer may charge interest on a delinquent invoice. L.E.I. 93-02. In addition to any considerations of the Rules of Professional Conduct, anytime a lawyer charges interest, he or she should be familiar with the laws on consumer credit and interest on loans.
CHANGES TO THE RULES FOR ADMISSION TO PRACTICE
Lawyers who serve as local counsel in West Virginia litigation should be aware of changes to Rule 8.0 of the Rules for Admission to Practice or the pro hac vice rule. The Rule specifies that local counsel must appear for depositions, even if they are out-of-state. A court no longer has the authority to excuse local counsel from appearing for proceedings or depositions for good cause. The Circuit Clerk is directed not to accept pleadings not signed by local counsel or signed by out-of-state counsel not admitted under this Rule. However, once a party has been put on notice that pleadings have been filed in violation of this rule, he/she has 30 days to file a certificate by local counsel. The Rule does not specify what should be in this certificate, but I suggest it should list all defective pleadings and represent that he/she has reviewed those pleadings and affirms them as bona fide and appropriate pleadings. If the problem is that the out-of-state attorney has not yet filed a motion pro hac vice, local counsel should certify that this problem has been rectified (and make sure it is).
My recommendation: Always arrange for the pro hac vice application to be filed at the same time as the complaint or the first responsive pleading. Make sure a copy is sent to the State Bar with a $100 check.
PROPOSED 30-DAY DELAY ON WRITTEN SOLICITATIONS
The Board of Governors passed an amendment to Rule 7.3 of the Rules of Professional Conduct which prevents attorneys without a prior professional or family relationship from writing to accident victims or their families to solicit a personal injury case for 30 days following the accident. The rule also makes clear that e-mails or other forms of electronic communication are included as a form of advertising communication. The next step will be a petition to the Supreme Court to adopt the amendment. Expect a period for written comments from the public.
CONTINGENT FEES FOR MED-PAY--THE ISSUE THAT WON'T DIE
The Supreme Court had the opportunity twice in the same case to resolve the issue of whether a lawyer may ethically charge a contingent fee to collect money from an accident victim's own insurance company for medical payments--and blew it both times.
The case is Bass v. Coltelli and its path through the judicial system was truly tortuous. For the background to this case, see "Charging a Contingent Fee for Med-Pay "below on this web page.
The lower court granted summary judgment for the plaintiff on a purely contractual basis and ordered a refund minus a quantum meruit fee: Its reasoning was that the contingent fee, by its own terms, did not cover any moneys payable under the client's own contract of insurance.
On appeal, the Supreme Court reversed on the grounds that the plain wording of the contract encompassed any recovery secured from a party who was legally obligated to compensate the victim for losses caused by the accident. Bass v. Coltelli-Rose, 207 W. Va. 730, 536 S.E.2d 494 (2000).
In a footnote, the Court commented that it would not address Bass's alternative contention that the contingent fee was excessive under the Rules of Professional Conduct because the lower court had not "fully delineated the facts necessary to determine" whether the contingency fee was excessive.
Justice Scott, in a recently filed dissent, correctly chastised the Supreme Court for ducking this issue: "I also disagree with the majority's total failure to consider whether the contingent fee charged was reasonable and ethical. If the majority would have bothered to go beyond the question of whether the contingent fee agreement was ambiguous, a much different opinion would have been reached and much more important principles would have been discussed."
Justice Scott proceeded to analyze the issue and opined that the lawyer's contingent fee was excessive. To read his dissent, go to: http://www.state.wv.us/wvsca/docs/fall00/26658d.htm
MEASURES TO STOP LAWYER TRUST ACCOUNT ABUSE
I wish the State Bar's Board of Governors would be as offended and outraged by lawyer defalcation (a nastier sounding word for embezzlement) as it is by lawyer advertising. The members fuss and fume that the reputation of the Bar is being cheapened and impugned by televised images of tires rolling from an accident scene or a werewolf scratching at a debtor's door (my personal favorite). Horse pucky! The reputation of the Bar is tarnished by lawyers neglecting their clients, being unprepared for hearings and, above all, stealing their clients' money.
In case you think that lawyer theft doesn't happen in West Virginia, be aware that during my tenure at the Office of Disciplinary Counsel, at least ten lawyers lost their law license for misappropriation of client funds. Some stole over a quarter of a million dollars. And these are only the ones we found out about. Many more lawyers "borrowed" from their trust accounts and were able to put the money back without being caught or turned into the Office.
Yet, the Board has resisted for years taking any measures which would prevent lawyers from fiddling with their trust account. The two simplest methods are (1) requiring lawyers to maintain a trust account only at banks willing to notify the Bar when a trust account goes into a negative balance; and (2) requiring insurance companies to notify a personal injury claimant in writing when a settlement check has been sent to the claimant's lawyer.
The bank statements of some embezzling lawyers show a pattern of negative balances followed quickly by a deposit. The lawyer is robbing Peter to pay Paul; that is, writing a bad check to Client A after misappropriating Client A's settlement check and then covering the check with the settlement proceeds received in Client B's case. The overdraft notification plan would alert someone at the Bar that there may be a problem. This procedure has been used successfully in several states.
What is the opposition? The plan is "too intrusive" because there may be an innocent explanation for the overdraft. Banks would be afraid of creating liability for themselves to the clients if they failed to notify the Bar in a particular instance.
The settlement check notification plan would also be effective in those cases where the lawyer forges the client's signature on a settlement check and strings the client along about the case still being active for years. The opposition? The plan is "too intrusive" into the lawyer-client relationship. The client will start calling the lawyer's office every day to inquire if the check has come in. Insurance companies would be afraid of incurring liability to the claimant if they failed to notify him/her in a particular case.
So the Board of Governors is content to do nothing and simply wait until the next large attorney embezzlement to engage in another round of hand wringing. To do otherwise might take valuable time away from the more pressing concerns of nefarious lawyer advertising.
CHARGING A CONTINGENT FEE FOR MED-PAY
Personal injury lawyers are awaiting a decision from the Supreme Court on whether and under what circumstances they may charge a contingent fee to assist a client in collecting medical payments under his/her own insurance contract. The case of Bass v. Coltelli was argued in March, 2000. This is truly the case that wouldn't die.
Bass was seriously injured in a 1990 two-car wreck in which he was a passenger. Bass's driver was not at fault. Bass was a minor at the time. His mother hired Coltelli and signed a standard one-third contingent fee agreement. Coltelli collected $25,000 in medical payments under the State Farm insurance policy of Bass's driver, and she deducted one-third as a fee.She later obtained $21,000 from State Farm under Mrs. Bass's car insurance policy, although the company initially resisted "stacking" insurance policies. Coltelli also settled with the tortfeasor's insurance company and secured underinsurance payments from State Farm
Bass turned 18 in 1991, and after he and his mother's relationship became strained, Coltelli and Bass entered into a new contingent fee agreement. Mrs. Bass obtained her own attorney in 1992 who demanded reimbursement of the one-third contingent fee on the first $25,000 in med-pay. Coltelli contacted me, and we discussed the ethical issue involved. As a result, she agreed to reduce her contingent fee to one-fourth. Who was owed the refund was one of the issues which became litigated when Mrs. Bass filed suit against Coltelli and Bass in 1993.
On a summary judgment motion, the Circuit Court certified questions to the Supreme Court, finding that as long as a client agreed to the contingent fee for med-pay in the representation agreement, Coltelli could charge such a fee. After oral argument, the Supreme Court dismissed the case in December, 1994 because (1) Coltelli's summary judgment motion was too general; (2) facts about the subrogation rights of Mrs. Bass's medical insurance provider had not been presented; (3) the plaintiff had not addressed some of the certified questions; (4) the certified questions did not address one of the counts in plaintiff's complaint; and (5) by golly, they just didn't feel like answering all those pesky certified questions.
Another Circuit Court judge eventually issued a decision, finding against Coltelli on the contingent fee for med-pay issue, and the matter is again before the Supreme Court. But in the meantime, Bass and Mrs. Bass reconciled, Bass became the client of Mrs. Bass's lawyer and Bass fired Coltelli. Can't tell the players without a program.
In case you are wondering just what the ethical issue is. . .read on.
In a 1986 case, Committee on Legal Ethics v. Tatterson, the Court held that a lawyer should not have charged a contingent fee to help a mother collect the benefits of a life insurance policy after her son killed himself. She was the named beneficiary. The Court found that a contingent fee was excessive to compensate a lawyer for performing essentially an administrative task to collect contractual payments. (The insured committed suicide more than two years after the policy was in force.)
The facts in Tatterson were bad--the lawyer did make-work, such as driving to Detroit to hand-deliver the request for payment and accompanying documents, to fool the client into thinking a lawyer was necessary--and the decision was good. But the holding's applicability to the long standing practice by some lawyers of collecting a contingent fee on med-payments began being debated.
Simply stated for those who don't practice PI work, med pay involves payments made by your own insurance company under your contract to those injured in your car regardless of fault. You pay for this coverage when you get car insurance. The insurance company usually pays the amount of medical bills the injured person submits. Sometimes the insurance company pays the medical provider directly, but more often it pays the injured party or his/her lawyer, (which is another source of ethics complaints by medical providers).
After Tatterson, I recommended to lawyers that they may charge a fee for their administrative work in collecting and submitting medical bills to the insurance company, but they should not charge a contingent fee. Also, a lawyer's normal hourly fee might be too high for this type of administrative work.
Some PI lawyers argued that they were entitled to a contingent fee, because their legal skills often obtained a better result than if the client had attempted to collect med-pay on his/her own. For example, when the same insurance company insured the tortfeasor and the victim, the company might try to provide med pay instead of payments under the tortfeasor's liability policy. Sometimes, as in Bass's case, there might be more than one source of med pay, and the insurance company is reluctant to pay from more than one policy.
The holding in Tatterson has significance in other billing situations, such as when a lawyer charges a contingent fee on temporary total disability payments from Worker's Compensation, even though the payments were already being paid on a monthly basis when the client hired the lawyer. I hope the Supreme Court issues a comprehensive opinion in Bass this time, one which is not per curium, in order to provide better guidance on when a lawyer may properly charge a contingent fee.
RECENT SUPREME COURT CASE ON CONFLICT OF INTEREST
The Supreme Court recently held that a Circuit Court may disqualify a lawyer for potential conflict of interest even if the clients affected have waived the conflict. State ex rel. Michael P. v. Miller, No. 26851 (W. Va. 3/24/2000). In that case, a lawyer was appointed to represent a juvenile found with a knife at school. The principal testified during the preliminary hearing that another student, Daniel, had ratted on Michael after being found with a knife at school, too.
Then, the same lawyer was appointed to represent Daniel on the delinquency charge concerning carrying a knife. At the preliminary hearing, the prosecutor moved for the lawyer's disqualification and it was granted. The prosecutor later filed a motion seeking to disqualify the lawyer in Michael's case, too, because the lawyer had already consulted with Daniel, who might be a witness in Michael's trial. The lawyer argued there was no conflict because the juveniles gave corresponding accounts of the events and they and their parents had waived any conflict.
The Court held that the Circuit Court had the discretion to disqualify a lawyer notwithstanding client consent to a potential conflict. The full magnitude of the conflict might not be clear until the trial is underway, and a criminal defendant's right to a fair trial should be protected. This is particularly true in the case of juveniles whose waivers might not be intelligent or knowing.
This holding is probably limited to criminal cases. The Court only recently held that in order to disqualify opposing counsel, a party must have been affected by the conflict of interest. Kalwar v. Liberty Mutual.
The factual underpinnings of this case are strange, which makes me wonder how valuable a precedent this case will be, despite the fact that it is not a per curium opinion. The lawyer was appointed to both cases, presumably by the same Judge. The lawyer and the prosecutor are old political foes. It is unusual for a lawyer on an appointed juvey case to appeal a disqualification. Finally, although the juveniles may have not understood waivers, what about the parents? Are they chopped liver?
PROCRASTINATION
My smart-ass husband pointed out to me that my Goodman's Guide installment on procrastination was late. Of course! He just didn't realize that it was planned that way to get people thinking about procrastination. Also my dogs/horse/pony/self was sick. I had car trouble, and I have had a very heavy caseload. My volunteer work at the animal shelter has increased, too.
As you can see, I am qualified to advise you on procrastination. It may be one of the most common problems facing lawyers. Most of us have it to varying degrees. Some lawyers end up in disciplinary hearings over it.
Here are some of the symptoms when you are procrastinating on a task:
–You feel a knot or tightness in your stomach or chest when you think about starting the project and usually start thinking about something else quickly;
–You make plans to begin today and then, with relief, decide to begin it "tomorrow";
–Other things just seem to take higher priority day in and day out;
–You develop a fascination for some mundane chore, like updating your loose-leaf reporter service, looking at the newest Supreme Court cases on the internet or studying baseball statistics;
–You obtain an extension of time; feel immediate relief and push the project to the back of your mind;
–You can't think of starting without first eating; drinking alcohol; smoking; playing a computer game or web browsing;
–You are extremely irritable and defensive with anyone who brings up the project;
–You just don't feel well enough to start;
–You rationalize that everyone procrastinates on something and, darn it, you work harder than most other lawyers; or
–You get increased pressure from the client/opposing counsel/the court/disciplinary counsel and you still just can't get to work on it.
Procrastination is like a multi-flora rose rooted in a rich loam of fear. It may start out small and harmless looking, but soon engulfs everything in its path. But fear of what? I've heard different explanations: Fear of success, fear of failure, avoiding uncomfortable feelings while you struggle with the task, perfectionism.
Someone once gave me some useful insight. He said, "Your fear of doing something is like when you were a kid in the deep end of the pool, hanging onto the side and afraid to push off. The fear and dread you experienced before you let go was more unpleasant than actually swimming across the pool."
Another insight I read in a law-related newspaper. An associate frustrated by the constant last minute, trivial changes made by a partner to the associate's motions or briefs amidst a frenzied effort to make the last mail deadline of the evening drew an analogy to a behavioral experiment he had witnessed in college. A mouse was supposed to learn that when it presses a lever with its paw, food will be released into its cage. Unfortunately, one mouse accidentally fell backwards onto the lever the first time and, lo and behold, food appeared. It never learned to simply press the lever with its paw; it thought the only way to get food was through this convoluted and unnecessary procedure.
Likewise, you may subconsciously, believe the only way to get big projects is to heap all sorts of stress on yourself by leaving it to the last minute. Only then can you get focused. How many of us have said we work better under pressure?
Do useful insights always lead to behavior changes? In the movies and in your dreams. I do know what doesn't work: Sounding like a Nike commercial and screaming (internally) at yourself "JUST DO IT you stupid worthless s.o.b.!"
But there are ways to overcome procrastination. If a task seems overwhelming, break it down into smaller steps or parts. Promise yourself that if you do the first part, you won't have to do the rest immediately after. For example, if you have to prepare proposed findings of fact, a first step might be to read one transcript and jot down facts with the page numbers. If you are lucky enough to have had someone else prepare excerpts, review those and highlight the ones you want to use.
When I have to write the legal argument of a brief and am spinning my wheels, I begin on a sheet of paper that I literally entitle "Points to Make in No Particular Order" and those are what I write down, leaving space underneath in case I think additional related points (I'm cheating already). Then I go back and number the points. This process gets me over the hurdle of wanting to sit down and have the perfect brief flow from my pen or keyboard.
Sometimes I first write in a stream of consciousness what I'm thinking and feeling (expletives deleted): I HATE THIS!!!!!!! I DON'T WANT TO DO IT!!!! WHY DIDN'T I BECOME A LIBRARIAN OR A FLORIST?????? THIS SUCKS RAW EGGS BIG TIME!
This is the written equivalent of a tantrum, and I feel better for it. Note–always remember to delete this from your document if you draft on a computer or shred that piece of yellow legal pad paper. There was a Dick Van Dyke Show episode like that once, and they tried to steal the script back from their boss before he read it.
For those truly committed to overcoming procrastination, I suggest this exercise. On a daily basis, write down the things on which you have been procrastinating and number the items in the order of those you dread the most first. Then tackle at least item number one that day. (Gives me chills just thinking about it!) This technique is supposed to desensitize your fear.
E-mail me your thoughts on this subject–when you get around to it.
NONREFUNDABLE RETAINERS
The Lawyer Disciplinary Board recently issued a formal opinion on nonrefundable retainers, L.E.I. 99-03. Its main points are:
1. Do not attempt to charge a nonrefundable retainer when being hired to perform a specific task, such as criminal defense representation or filing a divorce complaint.
2. If you are being hired to be available, i.e., "on retainer", should legal representation be needed in the future, you may charge a nonrefundable retainer, BUT
A. The nonrefundable nature of the fee must be explained and agreed to in writing by the client; and
B. If retention of the retainer results in an unreasonable fee within the meaning of Rule 1.5 of the Rules of Professional Conduct, you must refund a portion.
When not to charge a nonrefundable retainer:
A rose by any other name. . . .Lawyers often charge a nonrefundable retainer under a different name, such as "minimum fee" and sometimes attempt to charge in this manner without a written contract. One reason: to compensate them for devoting immediate attention to the client's case, such as in a domestic relations matter. Another: to discourage a client from changing lawyers, such as in criminal cases. Lawyers also complain that they are conflicted out of representing the other side in domestic cases.
My advice:
When you are being hired to a specific matter, do not attempt to charge a nonrefundable fee, no matter what you call it.
May you still charge a retainer:
Of course. In keeping with the warning in L.E.I. 99-03 that "all fees must be earned", however, how you treat the retainer may change from your current practice.
Hourly: The easiest way to handle a retainer is to charge an hourly rate and draw from the retainer on a periodic basis, providing an itemized statement to your client when you do so. Lawyers are sometimes reluctant to charge in this manner for divorces or criminal cases, because the average consumer of legal services balks at the concept of being charged for every call or review of correspondence.
Per task: Some lawyers charge a flat fee per task. For example, in a criminal matter, the lawyer will charge $1,000 through the preliminary hearing; $2,000 for pretrial matters including a guilty plea; and $5,000 for a trial lasting up to 5 days. The lawyer could collect a retainer of $3,000 or the entire amount and draw from it as earned.
Flat fee: Some attorneys charge flat fees for domestic work, criminal defense, incorporating a business, title work or preparing a will or other documents. A flat fee is still in the nature of a nonrefundable retainer. If the lawyer does not complete the task, he/she will still have to justify retaining the entire fee under a quantum meruit theory. This may seem unfair, because if the representation is more complicated than originally thought, the client will balk at paying more. But as a practical matter, you should be prepared to articulate the reasonable value of your services.
Charging a nonrefundable retainer:
These types of retainers are usually charged with a sophisticated client who can afford to have you "on call" or to prevent you from representing an adverse party.
My advice:
No matter how sophisticated the client, explain the nonrefundable fee in writing and have your client sign the agreement. Include the caveat that all retainers are still subject to the reasonableness requirement of Rule 1.5 of the Rules of Professional Conduct.