• January 4, 2013

I have been representing plaintiffs in personal injury matters for 30 years.  I rarely get to work alongside other plaintiff lawyers and learn how they do their practice.  I am much better acquainted with defense lawyers, than I am with plaintiff lawyers.  I assume, since I have enjoyed some success over the years, that how I do things must be about right and similar to how everyone else does those things.   I recently had an “ah-hah” moment that reminded me of the many different ways there are to approach the practice of law.  Not all of them are what we would hope for.   Since what I learned went against my grain, I thought I would share this story and my view of the matter in the hope of discouraging those tempted to take undue advantage.

Here’s the story.  An injured person expressed some dissatisfaction with his injury lawyer to another lawyer he met.  The second lawyer, not practicing in the personal injury area, suggested that he hire a new lawyer who had personal injury expertise.  She then referred the dissatisfied client to me.  I am a big fan of the “golden rule”.  I never like to take another lawyer’s client, since I wouldn’t want someone else to take mine.  Generally lawyer-client differences can be remedied with a little more communication, and a bit less ego by the lawyer.  Usually I just help the lawyer and client to get back together.   Although it may hurt to pass up the opportunity for a new client, I tell myself that the “good karma” of this approach will someday redound to my benefit.  (I still believe that, but I am also still waiting to be proven right, since the other lawyer seldom seems to appreciate what I have done.)  In this particular case, it appeared the injury lawyer was not doing the job and had already burned the bridge with the client.  Since this was not a relationship that could be repaired, I figured there was no harm in me taking the case.  The client deserved proper representation.

The client was unemployed and uninsured when he sustained a bad injury on a commercial property.  The large medical bills had mounted to make his economic distress all the worse. He was being hounded by the medical creditors.  Because his lawyer was not doing anything to address the situation, the client fired the lawyer. After being fired, the original lawyer claimed to have done one particular thing.  He claimed that when he contacted the insurer of the business owner, he learned their liability coverage also included a kind of “no-fault” insurance coverage for medical bills incurred by anyone injured on the property.  This is known as “medical payment” coverage.  Since he informed the insurer that the bills clearly exceeded the substantial limit of coverage, the lawyer believed he had effectively obtained a verbal “offer” of the coverage limits before being fired and that he was entitled to “one-third” of the coverage.  The lawyer’s contingent fee agreement with the client provided for a fee amounting to “one third of any amount recovered, whether by settlement or verdict”.  The lawyer believed he was owed one-third of the as yet unpaid medical payment coverage and told his client that.

Once the client hired a new lawyer ( in this case me), the former lawyer wisely researched  Minnesota law regarding his fee claim and learned that, by being fired, his  fee lien interest had become one for “quantum meruit”.   See Lawler v. Dunn, 145 Minn. 281, 176 N.W. 989 (1920). A lovely Latin phrase meaning the amount that is deserved.  The lawyer wisely dropped his claim for a third of the medical payment insurance coverage. While the immediate problem was averted, this could easily have had a different resolution.   If the client had been just a bit more passive and kept the first lawyer for a little while longer, there is little doubt that the one-third fee would have been collected by that lawyer once the insurance was paid (through no real effort of the lawyer. ) The only available medical coverage would have been significantly diminished. Many bills would be left unpaid, and the client would have been subject to ongoing claims by his medical creditors.  Yet  the lawyer would have collected a handsome fee for doing what the client could have done himself.  The client would have been unhappy, but likely would have been resigned to the belief that this is just how the contingent fee agreement works, and that his remaining medical debt was simply unavoidable.   The client would have never been the wiser.

This alternate scenario is the kind of thing that gives us lawyers a bad name. The Minnesota Rules of Professional Conduct clearly state that a lawyer’s fee must be reasonable.  It is manifestly not reasonable to charge one third of a large insurance policy limit that didn’t require proof of liability or any legal expertise to assure the payment could be safely accepted without inadvertently prejudicing the client’s legal rights. It does not matter that the lawyer drafted a contingent fee agreement that would seem to legitimize the excessive fee.  The ethical question of what is a reasonable fee is not defined by what you can get away with putting into a fee agreement. (Surely lawyers aspire to a higher standard of fair dealing than banks and credit card issuers!)  Payments of insurance benefits which are contractual and undisputed, or which are provided by government entitlement, are not the kind of recovery against which a contingent fee should ordinarily be charged.

There is no free lunch.  Not even for lawyers with generously worded fee agreements.  If a lawyer wants a fee, like everyone else (except banks and credit card companies), he or she should earn it first.

By Michael W. Unger.

Mr. Unger, of Unger Law Office in Minneapolis,  is a certified civil trial specialist who represents plaintiffs in personal injury, wrongful death and medical malpractice cases.

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