Friday, April 10, 2009

When Are Profitability Measures Unethical?

An interesting, lengthy (126 page) hearing officer report and recommendation from Arizona considers ethics charges against three lawyers for the operation of a so-called "consumer law" firm that targeted unsophisticated clients. The firm had approximately 33,000 clients over a three year period. The charges involved, in the main, allegations of excessive fees and failure to supervise lawyer and support personnel.

The hearing officer rejected all charges against the most junior lawyer but found that the two more senior lawyers had engaged in misconduct that warranted suspension. The two had "violated the ethical rules mainly as a result of the practices which incentive unprofessional behavior by [non-legal support staff]..."

The hearing officer noted that there was expert testimony that suggested a need to develop standards for the consumer law firm model, a view that the hearing officer endorsed. The hearing officer found some of the charged violations but was troubled by the application of the rules prohibiting excessive fees: "Hyperbole aside, I do find that [the law firm's] practices--its retention practice, its use of [support staff], and attorney caseloads--are all implemented to improve profitability. But the ethical rules do not prohibit law firms from employing measures to improve profitability." (Mike Frisch)

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