Davis, Chief Justice, dissenting:
In this lawyer disciplinary
proceeding, the Hearing Panel Subcommittee found that Belinda S. Morton (hereinafter
referred to as “Ms. Morton”) violated Rule 1.5(a)(1) of the Rules
of Professional Conduct by obtaining a fee of $1,500.00 from medical payments
made to her client, David E. Willis, by his own insurance carrier. The Hearing
Panel recommended that Ms. Morton be publicly reprimanded, ordered to repay
the client $1,500.00, and ordered to pay the costs of this proceeding. The
majority opinion has rejected the Hearing Panel's recommendation and dismissed
the charge against Ms. Morton. For the reasons set out below, I dissent.
The record in this case is quite
clear. Mr. Willis retained Ms. Morton to recover compensation from the party
who injured him in an automobile accident, that is, H & W Trucking
Company and its driver, Donald F. Reed. Nevertheless, the majority opinion contends
that the contract entered into between Mr. Willis and Ms. Morton permitted Ms.
Morton to retain a percentage of the medical payments remitted without dispute
by Mr. Willis' own insurer. I find no provision in the contract between Ms.
Morton and Mr. Willis permitting Ms. Morton to keep any portion of undisputed
medical payments made to Mr. Willis. On the contrary, the contract clearly demonstrates
that Ms. Morton was retained for the sole purpose of seeking compensation
from the tortfeasor. She was not hired to merely receive checks from the
insurance company on behalf of Mr. Willis, and she should not be compensated
for performing such an unnecessary service.
Mr. Willis was understandably
upset at having to pay his medical providers $1,500. He had paid insurance
premiums that entitled him to have his medical bills paid in full, and State
Farm had unequivocally provided him with the money. However, as a result Ms.
Morton's fee, Mr. Willis incurred debt to his medical providers that would
otherwise have been paid by this insurance.
Mr. Willis filed an ethical
complaint against Ms. Morton. An Investigative Panel thereafter charged Ms.
Morton with obtaining an excessive fee in violation of Rule 1.5(a)(1) of the
Rules of Professional Conduct.
(See footnote 1) The Hearing Panel eventually
issued its recommended decision finding that Ms. Morton violated Rule 1.5(a)(1)
by obtaining a fee “grossly excessive for the services actually performed.”
The Hearing Panel's finding was correct.
The resolution of this case
should have been guided by this Court's decision in Committee on Legal Ethics
of West Virginia State Bar v. Tatterson, 177 W. Va. 356, 352 S.E.2d 107
(1986). (See
footnote 2) The attorney in Tatterson entered into
a contingency fee agreement, with an elderly blind woman, that involved recovery
of life insurance proceeds. The life insurance proceeds were for the suicide
death of the woman's son. The amount of the life insurance proceeds was $61,000.00.
After the insurance company paid out the full amount of the insurance proceeds
to the woman, the attorney deducted his contingency fee of 33%. An ethical complaint
was subsequently filed against the attorney charging him with obtaining an excessive
fee, misrepresenting the degree of difficulty of obtaining the life insurance
proceeds, and engaging in unethical conduct while a disciplinary proceeding
was pending against him. This Court found the evidence supported the charges
against the attorney, who had done nothing more than assist the woman in filling
out forms to obtain the insurance proceeds. In Tatterson, we explained:
Courts generally have insisted
that a contingent fee be truly contingent. The typically elevated contingent
fee reflecting the risk to the attorney of receiving no fee will usually be
permitted only if the representation indeed involves a significant degree of
risk. The clearest case where there would be an absence of real risk would be
a case in which an attorney attempts to collect from a client a supposedly contingent
fee for obtaining insurance proceeds for a client when there is no indication
that the insurer will resist the claim. In the absence of any real risk, an
attorney's purportedly contingent fee which is grossly disproportionate to the amount of work required is a “clearly excessive
fee” within the meaning of [the rules].
Tatterson, 177 W. Va. at 363, 352 S.E.2d at 113-114 (citations omitted).
Plainly, the instant case is a perfect example of the type of contingent fee
misconduct that was condemned in Tatterson.
Several decisions from other
jurisdictions similarly conclude that it is improper for attorneys to demand
fees for collecting undisputed medical payments from their clients' insurers.
For example, in Attorney Grievance Commission v. Kemp, 496 A.2d 672
(Md. 1985), two attorneys were charged with obtaining an excessive fee from
their client. The attorneys represented the client as a result of injuries
she received in an automobile accident. The attorneys had a contingency contract
agreement with the client. During the course of prosecuting the tort claim,
the attorneys obtained one-third of the medical payments the client received
from her insurer. An ethical complaint was eventually filed against both attorneys
for retaining one-third of the client's medical payments. The Maryland Court
of Appeals found that the fee was excessive and issued a reprimand against
both attorneys. The court reasoned as follows:
[I]t is manifest that Med. Pay is not dependent, for
the most part, upon the skills of a lawyer. The risk of uncertainty of recovery
is, therefore, low indeed. Under these circumstances, it would be the rare
case where an attorney could properly resort to a contingency fee for the
payment of Med. Pay. As we see it, the better course would be for lawyers
to supply the insurer with the requisite Med. Pay documentation as an accommodation
to the client or subject to a minimal charge.
. . . In our view, because there
was no dispute as to payment under Med. Pay and because the insurer made payment
upon receipt of the completed benefit form and medical report, the fee charged
by respondents was clearly excessive and thus in violation of DR 2-106(A).
Kemp, 496 A.2d at 679.
The
Supreme Court of Illinois' decision in In re Teichner, 470 N.E.2d 972,
(Ill. 1984) also supports this position. Teichner was a lawyer disciplinary
matter wherein the attorney was charged with obtaining an excessive fee.
(See footnote 3)
The attorney and his client had entered into a contingency fee agreement
for the recovery of death benefits from the client's deceased husband's insurer,
and for prosecuting a related products liability claim. The agreement permitted
the attorney to receive one-fourth of the amount recovered by settlement
or judgment from the death benefits; and one-third of the amount recovered
in exchange for representation on the products liability claim. Payment of
the death benefits was never an issue of dispute. Nevertheless, when the insurer
paid over the sum of $27,598.71, the attorney retained one-fourth of the proceeds.
An ethical complaint was later filed against the attorney. A disciplinary
hearing panel found the fee obtained from the death benefits was excessive.
The Supreme Court of Illinois agreed with the hearing panel, and commented:
There
is greater merit, in our opinion, in the hearing panel's position that no
fee was due unless recovery occurred pursuant to a “settlement”
or “judgment.” Obviously there was no judgment, and a settlement normally
presupposes a dispute or disagreement. Here, the insurer did not question
complainant's right to the insurance proceeds. Its payment was routine, and,
as the hearing panel found, complainant would have received the same amount
at the same time had she never seen respondent. Given the fact that the unquestioned,
routine payment here does not come within the normal definitions of a settlement,
and did not result from a judgment, . . . we cannot disagree with the panel's
finding that the terms of the contract do not entitle respondent to a fee.
Teichner, 470 N.E.2d at 977 (internal citations omitted).
(See footnote 4)
In the instant case, there has
been no indication that State Farm opposed the medical payments on behalf
of Mr. Willis. Thus, there was no “risk” involved that would justify
Ms. Morton obtaining a contingency fee for monies which she had absolutely no
role in recovering for Mr. Willis. Clearly, under Tatterson, Kemp,
and Teichner, Ms. Morton was not entitled to obtain $1,500.00 from Mr.
Willis' medical payment.
In
order to justify Ms. Morton's attorney's fees in this case, the majority opinion
had to combine “apples and oranges.” There was no dispute in this
proceeding that Ms. Morton put in roughly forty hours working on Mr. Willis'
claim against the tortfeasor. Because she was retained to litigate a case against
the tortfeasor, I do not oppose Ms. Morton receiving monies, based upon
her contingency fee contract, for this work. Indeed, our court, along with
the majority of other courts, has consistently upheld contingency fee contracts.
See Kopelman and Assocs.,
L.C. v. Collins, 196 W. Va. 489, 496 n.7, 473 S.E.2d 910, 917 n.7 (1996)
(“[C]ourts in West Virginia will uphold contingency fee arrangements
voluntarily entered into by the parties as long as they are not excessive,
overreaching, and do not take inequitable advantage of a client.”). Accord
Johnson v. Guardianship of Ratcliff, 34 S.W.3d 749 (Ark. Ct. App. 2000);
Brunswick v. Safeco Ins. Co., 711 A.2d 1202 (Conn. App. Ct. 1998);
Arabia v. Siedlecki, 789 So. 2d 380 (Fla. Dist. Ct. App. 2001);
Sosebee v. McCrimmon, 492 S.E.2d 584 (Ga. Ct. App. 1997);
Lewsader v. Wal-Mart Stores, Inc., 694 N.E.2d 191 (Ill. App. Ct., 1998);
Revere Transducers, Inc. v. Deere & Co., 637 N.W.2d 189 (Iowa 2001);
Baugh v. Baugh, 973 P.2d 202 (Kan. Ct. App. 1999);
Francis v. Hotard, 798 So. 2d 982 (La. Ct. App. 2001); Brown &
Sturm v. Frederick Road Ltd. P'ship, 768 A.2d 62 (Md. Ct. Spec. App. 2001);
Cambridge Trust Co. v. Hanify & King Prof'l Corp., 721 N.E.2d 1 (Mass.
1999); Goldstein & Price
v. Tonkin & Mondl, 974 S.W.2d 543 (Mo. Ct. App. 1998);
Lozano v. GTE Lenkurt, Inc., 920 P.2d 1057 (N.M. Ct. App. 1996);
Speken v. Columbia Presbyterian Med. Ctr., 726 N.Y.S.2d 652 (2001);
Robinson, Bradshaw &
Hinson, P.A. v. Smith, 532
S.E.2d 815 (N.C. Ct. App. 2000);
Ryan v. Terra Vista Estates,
Inc., 657 N.E.2d 522 (Ohio Ct. App. 1995)
Transcontinental Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658 (Tex.
Ct. App., 2000); Gravel & Shea v. White Current Corp., 752 A.2d
19 (Vt. 2000).
However, a contingent fee should be collected only for work contemplated in the contingent
fee contract. The majority opinion in this case has determined that the forty
hours Ms. Morton worked on Mr. Willis' claim against the tortfeasor should
be used to justify her retention of the $1,500 in undisputed medical payments.
This commingling is unjustified and unsupportable. The majority opinion cited
to no prior decision of this Court, nor any court in the country, that has
combined an attorney's legitimate work hours under a contingency fee contract
with the improper retention of a client's medical payments. IV. The Majority Opinion Undermines
the
In my concurring and dissenting
opinion in Bass v. Coltelli-Rose,
(See footnote 5) I addressed the propriety
of a contingency fee arrangement for medical payments as follows: Neither the public nor the
legal profession is served by allowing lawyers to collect a percentage of
noncontested medical payments from their client's insurer. Under the
majority opinion, in situations where a client's insurer does not dispute
coverage, every lawyer in this state may now pick up the telephone and say
to their client's insurer, “send me the money.” This is wrong.
In this case, Ms. Morton received
$1,500 for simply saying “send me the money.” What happens when a
client's medical bills are $100,000 or more, and the client's insurer intends
to pay the bills without dispute? The client will be saddled with an outstanding
medical debt that, but for the opinion in this case, would have been paid in
full by the client's insurer. The public should not be subjected to such overreaching
by the legal profession. See Anderson v. Kenelly, 547 P.2d 260, 261 (Colo.
Ct. App. 1976) (“Caveat emptor is not a legal maxim attributable to the
attorney-client relationship.”). Nor should the legal profession be allowed
to conduct itself on such a low ethical level permitting this type of client
abuse. For the reasons stated,
I dissent. I am authorized to state that Justice Maynard joins me in this
dissenting opinion.
Integrity of the Legal Profession.
The greatest problem I have
with the majority opinion is the long-term negative impact this decision will
have on the legal profession in this State, and on the people served by our
legal profession. Prior to the instant case, the law espoused by this Court
has been that “a contingent fee is clearly excessive if the skill and labor
required of the lawyer are grossly disproportionate to the fee.” Committee
on Legal Ethics of the West Virginia State Bar v. Gallaher, 180 W. Va. 332,
335, 376 S.E.2d 346, 349 (1988) (citations omitted). No skill or labor was required
for Ms. Morton to obtain medical payments from State Farm. Ms. Morton simply
picked up her telephone and said, in effect, “send me the money.”
In Tatterson, this Court affirmed that it was “the duty of the courts
to guard against the collection of a clearly excessive fee, thereby . . . protecting
the public and maintaining the integrity of the legal profession.” 177
W. Va. at 363, 352 S.E.2d at 114 (citations omitted). See also In re
It
is most unusual for lawyers to seek fees from medical payments. In fact, the
majority of the plaintiffs' bar does not take a contingency fee on medical
payment recoveries obtained from their client's own insurer.
Bass, 207 W. Va. 730, 735 n.3, 536 S.E.2d 494, 499 n.3 (2000) (per curiam)
(Davis, J., concurring and dissenting). The proprietary concerns I expressed
in Bass were expanded upon in the dissenting opinion of Justice Scott
as follows:
Unfortunately,
the majority deemed it unnecessary to engage in discussion of the reasonableness
or excessiveness of the fee charged. . . It is clear to me that these fees
should have been found to be excessive. Basically, [the lawyer] charged and received
an exorbitant amount of attorney's fees for collecting medical payments coverage
under a contract which was not in dispute and which was paid by the insurer
without major controversy.
Not
only is the contingent fee in this case unreasonable, it is potentially unethical
as well. Rule 1.5 of the West Virginia Rules of Professional Conduct, which
governs attorney's fees in general, dictates what elements comprise a reasonable
fee for the provision of professional legal services[.]
.
. . .
Under
the[] rules of professional conduct, as well as the standards enunciated by
this Court interpreting those rules, the contingent fee charged by [the lawyer]
is excessive, unreasonable, and, at a minimum, raises the question that said
fee might be unethical as well. Not only was the time, labor, legal skills
and experience put forth by [the lawyer] to receive the medical payment proceeds
de minimis, at best; but, the fee was simply not based upon any contingent
event.
Bass, 207 W. Va. at 736-738, 536 S.E.2d at 500-502 (Scott, J., dissenting).
Rule
1.5(a)(1) states as follows: (a) A lawyer's fee shall
be reasonable. The factors to be considered in determining the reasonableness
of a fee include the following:
(1) the time and labor required,
the novelty and difficulty of the questions involved, and skill requisite
to perform the legal service properly[.]
Tatterson
was a disciplinary proceeding where a recommendation was made that the attorney's
license be annulled.
There
was also a charge of converting and commingling client funds.
The
attorney was disbarred.
The decision in Bass involved a lawsuit that was filed against an attorney by a client. The client sought to recover a contingent fee that the attorney obtained from the client's automobile insurance medical payments. The circuit court granted summary judgment in favor of the client. On appeal, this Court addressed the sole issue of whether the contract between the attorney and client permitted recovery of a contingent fee from the client's medical payments. We found that the wording of the contract permitted such recovery and, therefore, reversed the summary judgment order.