A handful of law firms representing plaintiffs in mass tort litigation have been sued for malpractice for allegedly charging excessive contingency fees in their retainer agreements.
The class-action lawsuit alleges that several New Jersey and Texas firms overcharged clients in approximately 1,450 transvaginal mesh cases brought in New Jersey state courts. According to the complaint, the firms signed clients to fee contracts that didn’t comply with New Jersey laws and ethics rules.
The plaintiff alleges her retainer agreement paid a 40% contingency fee, which was illegal under New Jersey law, according to law.com. The complaint alleges other violations of New Jersey’s fee rules as well.
“On information and belief, defendants collectively paid themselves substantial attorney’s fees and expenses from the settlements of the plaintiff’s and the proposed class members’ cases, in violation of New Jersey law,” the complaint says.
The complaint was filed in Bergen County, New Jersey, where mesh lawsuits against C.R. Bard Inc. and Johnson & Johnson’s Ethicon Inc. have been coordinated. It asserts claims for malpractice, breach of fiduciary duty and unjust enrichment. Read it here.
Mass Tort, Melee Over Fees
From Law.com: “The suit is the latest skirmish over attorney fees in transvaginal mesh devices, surgically implanted in women to treat pelvic organ prolapse and incontinence. Lawyers have filed more than 100,000 lawsuits across the country over the devices, with verdicts reaching multimillion dollars, but many cases have settled.”
The plaintiff’s firm in the malpractice case is one of four firms challenging an estimated $550 million in fees awarded to attorneys who worked for the ‘common benefit’ in the transvaginal mesh litigation, according to law.com. The multidistrict litigation is pending in the U.S. District Court for the Southern District of West Virginia.
A partner at one of the firms sued for malpractice slammed the action as “ridiculous” and “pathetic,” and accused the plaintiff’s lawyers of “whining” about getting only a “minuscule share of the $500 million fees in the mesh MDL” as reported at Reuters and here.
NC State Bar Rule of Professional Conduct 1.5
(a) A lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee or charge or collect a clearly excessive amount for expenses. The factors to be considered in determining whether a fee is clearly excessive include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
(b) When the lawyer has not regularly represented the client, the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
(1) a contingent fee for representing a defendant in a criminal case; however, a lawyer may charge and collect a contingent fee for representation in a criminal or civil asset forfeiture proceeding if not otherwise prohibited by law; or
(2) a contingent fee in a civil case in which such a fee is prohibited by law.