Ethics Up In Smoke

By Lester Brickman
Professor of Law at the Bejamin N. Cardoza
School of Law in New York
The U.S. Senate recently rejected an amendment to the anti-tobacco bill that would have limited fees for plaintiffs' lawyers to $1,000 an hour. Sen. Slade Gorton (R., Wash.) plans to introduce a bill to limit fees, this time to $4,000, $2,000, $1,000 or $500 an hour, depending on when the work was done and the consequent degree of risk assumed.

To put the matter into perspective, $4,000 an hour is 16 times what tobacco companies pay their lawyers on average, and eight times the fee of their highest-paid lawyers. Tobacco opponents would argue that the plaintiffs' lawyers deserve to be rewarded for toiling in the public interest --- but compare the proposed $4,000-an-hour limit with the $125-an-hour maximum for lawyers bringing civil rights cases under the Equal Access to Justice Act, the $100-an-hour cap for lawyers in successful taxpayer suits against the Internal Revenue Service and the $75-an-hour limit set out in the Criminal Justice Act.

For Senate Minority Leader Tom Daschle (D., S.D.), however, a fee cap of even $4,000-an-hour is too stingy. "A lawyer is a legal businessperson", Daschle says; he argues that since we don't limit company profits, we shouldn't cap attorney fees either. Thus Mr. Daschle, almost all his Democratic colleagues and a dozen Republican senators are untroubled that lawyers in the tobacco litigation stand to collect fees of $15,000, $30,000, even $90,000-an-hour.

When lawyers first brought suits against Big Tobacco, they were taking significant risks. For that they deserve to be richly compensated. But as states changed their laws to make tobacco companies easier to sue, and as incriminating documents tumbled out into public view, the degree of risk dramatically declined. The lawyer who organized Florida's suit against the tobacco companies has said that the case was a "slam dunk". A 25 percent contingency fee, amounting to $2.8 billion, in a "slam dunk" should be considered a crime against the people of Florida. In Texas, the Wall Street Journal has reported, Attorney General Dan Morales is suspected of demanding $1 million each from attorneys wishing to work on the state's team. Why would lawyers be willing to pay that kind of money unless they were virtually assured of a big payoff?

Whether or not the tobacco bill passes, it is likely that, as a group, lawyers suing tobacco companies will be getting fees of $3 billion to $5 billion a year --- perhaps $100 billion over the next 25 years. If Mr. Daschle is right that this is all just a legitimate business, why not let Merrill Lynch sell stock in the business of tobacco litigation? People would be trampled in the frenzy to buy. But don't rush to call your broker. This kind of financial transaction isn't allowed. You can't buy even a small piece of one of these lucrative lawsuits. Only lawyers are allowed to.

What kind of business is it from which the public is excluded? Actually, the law isn't a business --- it's a profession. As such, it is governed by professional rules of ethics. The governing ethics rule once stated that lawyers' fees could not be "clearly excessive". This wasn't restrictive enough, so the profession promulgated a stricter rule: Fees have to be reasonable. If the standard of reasonableness has any meaning, it is surely violated by fees of tens-of-thousands of dollars an hour.

If Mr. Daschle prevails, he and his colleagues will have stripped the requirement of reasonable fees from lawyers' codes of ethics. Maybe they're on to something. Eliminating legal ethics may have some appeal. Lawyers' rules of ethics are pretty messy --- all this stuff about conflicts of interest and confidentiality; why not just get rid of them altogether? Well, lawyers wouldn't like that, because it would undermine the principal basis for their right of self-governance. Eliminate legal ethics and lawyers are no longer professionals --- they become mere mercenaries.

The public has a compelling interest in preserving legal ethics, including that rule that fees must be reasonable. The higher the fees tort lawyers get, the greater the share they take of injured-clients' recoveries. Moreover, the higher the fees, the more tort litigation and the more cost that are imposed on society. The civil justice system, which generates the fees that Mr. Daschle does not want curbed, exists to serve citizens. Lawyers are not businesspeople; they are professionals entrusted with the people's business.

Commentary reprinted with the permission of the author.

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