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Greedy lawyer casts shadow on all attorneys

By: dmc-admin//October 25, 2006//

Greedy lawyer casts shadow on all attorneys

By: dmc-admin//October 25, 2006//

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Cade
Nate Cade

I love lawyers, partly because I love being a lawyer. Lawyers have access to everything. In essence, we are the old temple scholars who hold the keys to the temple and are the only ones who can speak the arcane language.

Being a lawyer reminds me of Al Pacino’s character in the movie, “The Devil’s Advocate,” who as the Devil, when Keeanu Reeves’ character asked why the Devil manifested himself as a lawyer (all jokes aside), responded (and I paraphrase) “They have their hand in everything.”

Being a lawyer is a wonderful thing. I would hope that most of my legal brethren would agree with me. Yet at times I question whether this is true because, as lawyers, we often act as our own worst enemies.

When a lawyer does something really stupid and it makes the front page of the paper, unfortunately the rest of us get lumped in with the stupid ones and look bad.

Case in point: After the Sept. 11 attacks, Congress created a Victim Compensation Fund to award monies to families of the victims. The monies paid out by the fund are set based on a number of criteria, but generally, it’s safe to say that a person’s earnings potential is what, above all else, determines the final award. As is typical of Congress, it created a process to appeal the damage award.

But this article is not about Sept. 11 or the appeals process for the fund. This article is about an attorney’s receipt of a contingency fee as a result of a damage award. In particular, an attorney in New York, Thomas Troiano, received approximately $2.2 million for his work on behalf of a widow, Laura Balemian.

The guardian of Ms. Balemian’s four children has challenged the fee award in a New York probate court as excessive. After the guardian challenged the fee, Attorney Troiano did what any lawyer would do having received $2.2 million: he filed suit in federal court. Fortunately, that suit is stayed pending the outcome of the probate court.

Ms. Balemian eventually received $6.7 million from the fund. She had signed a contingency fee agreement with Troiano, her neighbor, shortly after the attacks (awkward is an understatement). She actually would have received a higher damage award, but there were offsets for insurance. So the issue becomes, is Troiano entitled to one-third of what she received.

Allegedly, Troiano claims she was only going to receive about $1.1 million, and it was his skill and acumen as a lawyer that raised this amount, thereby justifying the fee. At first glance, one might argue, that if Troiano did do the work necessary to raise the award, why shouldn’t he get the increased fee? However, I think at first glance, we as lawyers have to ask ourselves, is this fee “shocking and unconscionable?”

Under Rule 1.5, I would say yes.

Wisconsin’s Rule 1.5 is likely to be modified this month by the Wisconsin Supreme Court as a result of Ethics 2000, but only slightly. It currently requires a lawyer to charge a “reasonable fee” and delineates eight factors to determine whether a fee is reasonable. The factors include time and labor required to develop or recover the fee, the likelihood that the lawyer will be barred from other employment, the fee customarily charged for similar services, the amount involved, time limitations, etc. An example that I often use on ethics with regard to Rule 1.5 will help.

Imagine being a top criminal defense attorney in Wisconsin when the Capitol Scandal hits. A legislative aide comes to your office and wants you to represent her. No problem, you say, and ask for a retainer of $10,000. The retainer is paid, you spend less than an hour with the aide when she confesses everything to you, and she promises to call you back the next day.

When she does call back later, she indicates that she wants to have her “Cousin Vinny” represent her instead, and wants all (or most) of her retainer back. Is the fee “earned” in that case? Likely, you are now prevented from representing other “criminals” (er, legislators) in the Scandal because you did represent the aide, even if for only a brief moment in time, and you know too much.

Such is not the case for Attorney Troiano. While he decided to charge Ms. Balemian a full fee, many of the families of the victims of Sept. 11 had attorneys helping with the applications to the Compensation Fund performing the work either pro bono or on a greatly-reduced fee. I am not criticizing him for charging a fee. I criticize what his fee was contingent on. If a client agrees to pay you a large fee to handle a matter, and you do so with just one call, have you “earned” the full fee?

There was no dispute that Ms. Balemian was going to receive something. In fact, she was guaranteed at least $1 million based on the way the fund calculated fees. So, the question is whether it was the “skill and legal acumen” of Attorney Troiano that allowed Ms. Balemian to recover an additional $5 million, or whether it had more to do with the fact that the widow’s late husband was the president of an inter-dealer brokerage with offices in the World Trade Center, and he was a highly compensated employee, thereby more likely that he had a higher earning potential.

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I think the latter. But, the New York probate court will have to decide that issue. However, it is a good segue back to my point of lawyers being our own worst enemies.

Troiano is guaranteed a payday and, in theory, had to do very, very little work in order to get that guaranteed payday. Is he being greedy by demanding $2.2 million from the widow for payment of his business acumen, or is he a smart lawyer entitled to a fee?

I don’t think that matters much because in the court of public opinion he already has lost. Unfortunately, Troiano makes the rest of us look bad and greedy because most people cannot distinguish between the good and the bad attorneys. I am hopeful a court will look at this situation and say the $2 million was never earned. However, if the court disagrees and awards him the full amount, we all suffer as lawyers.

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