November 18, 2008
A Fee Too High
The Illinois Review Board found that an attorney had charged an unreasonable fee and improperly divided the fee with another lawyer, but rejected charges of incompetent representation and recommended a 30 day suspension. The Administrator had not appealed the finding regarding incompetent representation but had sought a one year suspension. The lawyer had represented a client in a "large scale, high profile" federal criminal matter and had charged fees totaling $150,000. The Administrator called an expert witness to establish that the fee was unreasonable:
Attorney Marc Kadish testified as an expert witness for the Administrator. Kadish has an extensive background in criminal law. However, much of his practice has been devoted to representing poverty-level clients, either through a law school clinical program or as director of a large law firm’s pro bono program.
Kadish considered $150,000 to be a significantly excessive fee. In his opinion, it should have been apparent when Nagelberg was retained that Winniczek should have continued to cooperate with the government and plead guilty, rather than go to trial. Kadish opined that $25,000 – 50,000 would have been a "very handsome" fee for the case.
Kadish acknowledged, however, that a client had a right to change his mind and decide to go to trial. He also testified that it was not always apparent at the outset of representation whether a case would go to trial or end in a guilty plea. Kadish had not seen Nagelberg’s file and did not know the extent of Nagelberg’s work.
Kadish testified that criminal attorneys usually charge a flat fee, typically in whatever amount the market will bear. Hourly rates for the partners in Kadish’s firm, as well as some independent attorneys, were in the range of $400 – 600.
The attorney had charged a flat fee and kept no time records. He had returned $50,000 to the client after the bar charges were filed. The board concluded that the isolated incident did not warrant a period of probation. The fee was not excessive when charged but "[i]n hindsight, and only in hindsight, the fee proved excessive." (Mike Frisch)
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Limitations on fees interfere with the client’s right to retain the counsel of his choice. There is the potential that better counsel may not be available to client because of limitations on what that counsel can charge.
Limitations on fees are also protectionist as it tends to equalise fees among all counsel, both good and bad.
To the extent that these rules are really intended as consumer protection legislation, I would think that there is a more artful way of achieving the same end.
Posted by: FixedWing | Nov 18, 2008 11:44:45 PM