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Category: Legal Malpractice

Former Client Questions Law Firm’s Billing Rate in Fee Dispute

March 23, 2021

A recent Law 360 story by Nick Muscavage, “Coffee Co. Tries To Turn Up Heat on Sills Cummins in Fee Dispute,” reports that Sills Cummis & Gross PC is facing amended claims of legal malpractice in a years-long case for allegedly misleading a New Jersey-based coffee company about its fee rate.  The Newark-based law firm originally filed a complaint in New Jersey Superior Court against Two Rivers Coffee LLC in 2017 to collect on portions of an $85,181 legal bill the firm claims the coffee company owes for 262 days of work.

Two Rivers, however, responded by filing a malpractice counterclaim against Sills Cummis, alleging the firm regularly failed to follow the coffee company's instructions, failed to communicate properly with the company and inflated its fees.  On March 12, Two Rivers filed a motion seeking to amend its answer and bolster its counterclaims against Sills Cummis.  "From the outset, Sills did not honor these billing rates and, in its purported invoices, charged Two Rivers in excess of what its purported engagement letter allowed," Two Rivers claimed in its motion.

"Our bills for professional services are based on hourly billing rates.  A different billing rate is applicable to each attorney depending upon that attorney's experience and area of expertise," Sills Cummis explained in its engagement letter, according to an exhibit.  "The firm's hourly rates for members working on this matter will be $500 and $375 for associates and $125 for paralegals. These hourly rates change annually each October 1."

But Two Rivers claims it wasn't charged at the promised rates.  Sills' first purported invoice to Two Rivers, dated March 10, 2015, and covering January 2015, billed Two Rivers $595 and $525 per hour for two members and $465 per hour for an associate, according to the motion.  In March of that same year, Sills Cummis invoiced Two Rivers $525 for a member fee, according to the motion.  The alleged overbilling did not come to Two Rivers' attention until it was going through discovery, according to the motion.

The "overcharging scheme" involved Sills Cummis "invoicing Two Rivers at hourly rates in excess of the rates set forth in the purported engagement letter," Two Rivers claimed in its motion.  The alleged overbilling "is based on documents that have always been in Sills' control — its own purported engagement letter and its own purported invoices," the coffee company said.

Sills has always known, or at least should have known, what it agreed to charge and what it in fact did charge, Two Rivers contended.  Because the documents in question are in the possession of Sills Cummis, Two Rivers believes it will be difficult for the law firm to argue against the coffee company's claims.  Discovery, Two Rivers said, would have no impact on the files already in possession of the firm.

"This outcome is all the more fair when one considers that it is based on evidence that has always been in the possession of Sills, rather than in the possession of Two Rivers or a third party," Two Rivers claimed in its motion.  "There is no credible way for Sills to argue that this amendment constitutes any unfair surprise or prejudice to Sills.  To the contrary, it is more likely that Sills has known all along that it charged excessive hourly rates and chose to keep that knowledge to itself until Two Rivers brought it up."

Two Rivers is claiming Sills Cummis committed legal malpractice by willfully breaching its fiduciary duty and damaging the coffee company.  It is seeking compensatory and punitive damages against the law firm in amounts to be determined at trial.

Article: Since When Do Attorneys Have to Pay the Opposing Counsel Fees?!

February 20, 2021

A recent article by Deena Duffy, “Since When Do Attorneys Have to Pay the Opposing Counsel Fees?! reports on how attorneys can be held responsible for opposing counsel fees in Ohio.  This article was posted with permission.  The article reads:

Attorneys can be Held Responsible for Opposing Legal Fees if Discovery Rules are Neglected

This may be a question that has never crossed your mind.  If so, then good for you. It means you’ve likely never been faced with sanctions.  However, just because you haven’t, doesn’t mean you shouldn’t be aware of the possibility.

What happens when your client is served discovery requests that require review of a large number of documents prior to production to the other side, yet, your client refuses to be involved in the review?  What if not only does your client refuse to engage in the review, but also refuses to engage in any negotiations aimed at making the review more manageable?  Quite clearly, these actions likely won’t bode well for your client.  Even more unfortunately for you, as this client’s attorney, you yourself could land in hot water with the court, even resulting in you being personally responsible for a portion of opposing counsel’s fees.

As we all know, some jurisdictions are more lenient when it comes to discovery rules while others – not so much.  To that extent, it is crucial to be familiar with not only the discovery rules for the jurisdiction you’re in.  Moreover, the growing importance of becoming aware of the potential ramifications of not complying with those discovery rules cannot be understated.

In a recent case out of Second District Court of Appeals of Ohio, an attorney learned the hard way what happens when you let the client run the show.  As attorneys, our duty is obviously to be zealous advocates for our clients and to provide them with advice and guidance related to their case.  However, we need to recognize that during the course of our representation, it becomes our responsibility to ensure that the client is doing what the court has ordered.

This particular discovery and sanctions issue arose out of a civil action where Plaintiff alleged that Defendant engaged in tortious interference with business relationships, defamation, invasion of privacy, intentional infliction of emotional distress, and civil conspiracy.  During the discovery phase, which began in December 2017, the Defense served Plaintiff with several requests for document production.  In Plaintiff’s interrogatory responses, Plaintiff identified 68 witnesses as having information related to his claims.  Defense counsel proposed that Plaintiff provide his multiple email accounts and their passwords to the Defense’s expert, who would then run searches for the 68 witness names.  The Court approved of the plan; however, the Plaintiff did not, arguing that this approach did not account for the protection of privileged information.

On appeal, the case was remanded and the parties came to an agreement regarding production wherein the first search the expert would conduct would be the names of privileged individuals.  The results of that search would go to Plaintiff counsel to review and produce a privilege log related to those documents.  The remainder of the non-privileged emails that hit on the 68 witness names would then be produced.  Defense counsel provided a list of potential search terms to Plaintiff counsel, who had no objections or modifications to the list.  Herein appears to be the end of Plaintiff’s cooperation in the discovery process.

The search for privileged names returned roughly 3,200 emails.  Plaintiff’s counsel identified roughly 2,700 of them as actually being privileged and produced a privilege log, though woefully insufficient.  The second search, for the 68 witness names, returned roughly 50,000 emails.  Following the second search, Defense counsel requested that Plaintiff modify their discovery responses.  This would assist in modifying the search term list in an attempt to cull out potentially non-responsive results to make the potentially responsive population easier to manage.  Defense counsel didn’t hear anything from Plaintiff counsel for two weeks, at which point the Plaintiff refused to modify the discovery responses.  Plaintiff did suggest that Defense counsel somehow modify the search term list to be able to discern between “material” and “relevant” discoverable information, yet provided no suggestion on how this might be accomplished.  Plaintiff counsel also informed Defense counsel that Plaintiff blatantly refused to review any emails prior to 2013, arguing that there is no way they could be relevant.  Defense counsel continued attempting to negotiate with Plaintiff to methodically deal with the large population of emails; however, Plaintiff counsel never responded to Defense counsel’s suggestions.

After roughly 15 months, the Defense filed a motion for sanctions, arguing that Plaintiff (1) refused to provide a sufficient privilege log, (2) refused to review or provide any emails from pre-2013, (3) refused to review or provide any emails related to the second search, and (4) failed to respond or negotiate regarding any suggestions made by the Defendant to move forward in the discovery phase.  At the sanctions hearing, Plaintiff counsel wasn’t in any position to help himself or his client.  Plaintiff admitted that he didn’t review a single email out of the 50,000 that resulted from the search, saying that he glanced at the list but found it overwhelming, repeatedly stating that the expert never actually ran the search terms.  In response to being asked about the pre-2013 emails, Plaintiff said, “I did not even [expletive] know the defendant during that time and it wasn’t relevant to this particular action.”  The Defense claimed they were relevant for two reasons – first to prove that Plaintiff routinely engaged in vexatious litigation, and second to prove that Plaintiff had been engaging with the witnesses as early as 2010 due to his involvement with the Defendant’s church business.

Eventually, Judge Hall granted the sanctions motion, finding Plaintiff in contempt for failing to comply with the December 2018 agreed discovery order.  A few months later, a hearing was held on the matter of attorneys’ fees, of which the court ordered Plaintiff and Plaintiff counsel, jointly and severally, to pay Defense counsel’s attorney fees, totaling $11,835.00.

In its analysis, the Court routinely returned to the fact that Plaintiff not only failed to review any of the documents, but that he blatantly refused to do so.  The Court noted that the discovery order to which the parties had agreed did not give Plaintiff the option to choose to review the emails but rather the duty to do so.  Plaintiff alleged more than once that the list of documents to review was overwhelming; however, Plaintiff refused to engage in any negotiations with the Defense regarding potential modifications to make the population more manageable.

In Ohio, the civil rules allow for an attorney to be sanctioned for failing to comply with discovery orders per Civ. R. 37(B)(3).  The Court, in granting sanctions against Plaintiff counsel, argued that Plaintiff counsel continued to repeat baseless allegations about Defense counsel’s motives and that it was “especially egregious” for Plaintiff counsel to continually blame the Defendant for Plaintiff’s negligent conduct regarding discovery.

This case, while unfortunate for Plaintiff and Plaintiff counsel, should serve as a reminder to attorneys of the need to be genuine in their efforts regarding discovery.  It should go without saying that, due to attorney ethics and candor requirements, attorneys are responsible for following orders issued by the court and that failure to do so could result in the misbehaving attorney being found personally responsible for a portion of opposing counsel’s fees.

Moral of the Story

Not only is it important to understand what is required with regard to jurisdictional discovery rules, but also to understand what could happen the rules aren’t followed.

Deena Duffy is staff attorney at Spencer Fane LLP in Minneapolis.

NJ Case Has Lessons on Arbitration Clauses in Attorney Retainers

February 14, 2021

A recent Law 360 article by Hilary Gerzhoy, Deepika Ravi, and Amy Richardson, “NJ Case Has Lessons On Arbitration Clauses in Atty Retainers”, reports on arbitration clauses in attorney retainers in New Jersey.  This article was posted with permission.  The article reads:

On Dec. 21, 2020, the New Jersey Supreme Court issued Delaney v. Dickey, an opinion that severely limits the enforceability of arbitration provisions in law firm retainer agreements.  The court held that an arbitration provision in a retainer agreement is only enforceable if an attorney provides "an explanation of the advantages or disadvantages of arbitration" to a client before the client signs the retainer agreement.

The decision, which applies prospectively, tracks and builds on other jurisdictions' limitations on the enforceability of arbitration provisions in retainer agreements.  Attorneys wishing to resolve client disputes via arbitration should take close note of these heightened disclosure obligations.

Delaney v. Dickey

Delaney v. Dickey addressed whether an arbitration provision contained within Sills Cummis & Gross PC's four-page retainer agreement was enforceable.  A Sills attorney provided the retainer agreement to client Brian Delaney during an in-person meeting.  The retainer agreement contained a provision stating that any disputes about the law firm's fees or legal services would be resolved by arbitration.

The arbitration provision stated that the result of any arbitration would not be subject to appeal, and that Delaney's agreement to arbitration waived his right to a trial by jury:

The decision of the Arbitrator will be final and binding and neither the Firm nor you will have the right to appeal such decision, whether in a court or in another arbitration proceeding.  You understand that, by agreeing to arbitrate disputes as provided in this retainer letter, you are waiving any and all statutory and other rights that you may have to a trial by jury in connection with any such dispute, claim, or controversy.

The retainer agreement included a one-page attachment that contained a hyperlink to the JAMS rules.  However, the Sills attorney did not provide Delaney with a hard copy of the JAMS rules at the meeting.  The attachment also stated that the arbitration would be conducted by one impartial arbitrator; that the parties waived any claim for punitive damages; that the arbitration would be binding, nonappealable and confidential; and that the parties would share the arbitrator's fees and expenses, except that the arbitrator could award costs, expenses, and reasonable attorney fees and expert witness costs.

The New Jersey Supreme Court held that the arbitration provision was unenforceable "[b]ecause Delaney was not given an explanation of the advantages or disadvantages of arbitration."

The court recognized that the Sills attorney had disclosed, in the retainer agreement and attachment, several of the differences between an arbitral and judicial forum — but it found that disclosure insufficient.  Instead, the court required that the attorney provide an "explanation" of these differences — but it did not provide clear guidance on what is required for a sufficient explanation.  Importantly, the court held that an attorney must explain the differences between an arbitral and judicial forum, even when the client is "a sophisticated businessman."

The mere recitation of these differences in the retainer agreement, and the Sills attorney's "[offer] to answer any questions" Delaney had about the retainer agreement was insufficient to meet the attorney's fiduciary obligations.  Instead, the court imposed an obligation to explain the advantages and disadvantages of an arbitration provision either orally or in writing.

Although the court did not explicitly so state, its opinion suggests that an attorney cannot merely list the differences between an arbitral and judicial forum, but rather must explain how those differences might affect the client's interests in the event of a future dispute.

What Happens Outside of New Jersey?

The New Jersey Supreme Court pointed to a string of ethics opinions and case law from other states that support heightened disclosure obligations on an attorney where an arbitration provision is included in a retainer agreement.  The court also pointed to jurisdictions that require a lawyer to go even further and advise a client to seek independent counsel before agreeing to arbitrate future disputes.  Delaney closely tracks the American Bar Association's Formal Opinion 02-425, Retainer Agreement Requiring the Arbitration of Fee Disputes and Malpractice Claims, issued in 2002.

The opinion concluded that a binding arbitration provision requiring all "disputes concerning fees and malpractice claims" to be resolved via arbitration does not violate ABA Model Rule of Professional Conduct 1.4(b), "provided that the client has been fully apprised of the advantages and disadvantages of arbitration and has given her informed consent to the inclusion of the arbitration provision in the retainer agreement" and the arbitration provision does not "insulate ... or limit the liability to which she would otherwise be exposed under common and/or statutory law."

Because a lawyer has a fiduciary "duty to explain matters to a client," she must "advise clients of the possible adverse consequences as well as the benefits that may arise from the execution of an agreement" that includes an arbitration provision.  Accordingly, compliance with Rule 1.4(b) requires that the lawyer "'explain' the implications of the proposed binding arbitration provision 'to the extent reasonably necessary to permit the client to make [an] informed decision' about whether to agree to the [provision's] inclusion" in the retainer agreement.

Unlike the New Jersey opinion, the ABA concluded that just how extensie that disclosure must be will depend on "the sophistication of the client."  However, consistent with Delaney, the lawyer "should make clear that arbitration typically results in the client's waiver of significant rights, such as the waiver of the right to a jury trial, the possible waiver of broad discovery, and the loss of the right to appeal."

For these reasons, the Sills attorney's failure to explain these differences to Delaney would similarly fail under the ABA standard.  While ABA opinions are persuasive, not binding, authority on the states, they are an important road map for attorneys seeking to understand their ethical and practical obligations.

The District of Columbia takes a similar approach.  D.C. Ethics Opinion 376, published in November 2018, concludes that an agreement to arbitrate fee disputes and legal malpractice claims is otherwise permitted by the rules, provided that the lawyer has adequately informed the client about "material risks of and reasonably available alternatives to" the proposed arbitration clause such that the client is "fully informed."

That requires, at minimum, that the attorney inform the client about differences between a judicial and arbitral forum as to (1) the fees to be charged; (2) the scope of discovery; (3) a right to a jury; and (4) a right to an appeal.  Like ABA Formal Opinion 02-425, the D.C. opinion also advises that the scope of the discussion depends on the level of sophistication of the client.

What Should an Attorney Explain to a Client, and How?

While the Delaney case is only controlling in New Jersey, it provides useful guidance for attorneys hoping to create binding arbitration provisions in retainer agreements.  As the Delaney court noted, the differences between resolving an attorney-client dispute in arbitration or before a judicial forum can be communicated orally, in writing, or both.

The New Jersey Superior Court's Appellate Division stated in Delaney that it did not hold that the "reasonable explanation" required of an attorney cannot be contained in the written retainer agreement.  However, the New Jersey Supreme Court's opinion did not directly address that question, suggesting that an attorney can sufficiently explain the advantages and disadvantages of the arbitral forum within the retainer agreement.

Rather, the court held that the disclosure in the case before it — which merely recited several of the differences between a judicial and arbitral forum, with no additional explanation provided orally or in writing about these or other differences — was insufficient.  Recognizing that not all arbitration provisions are alike, the court enumerated several differences between an arbitral and judicial forum about which a client might need to be advised including the following:

1.  An arbitration resolves a dispute before a single arbitrator and not a jury of one's peers.

2.  The arbitrator's decision is final and binding with no right of appeal.

3.  Unlike court proceedings, arbitration proceedings are conducted privately and the outcome will remain confidential.

4.  Unlike court proceedings, the arbitration process offers a more limited right to discovery.

5.  The client may be responsible, in part, for the costs of the arbitration proceedings, including payments to the arbitrator.

6.  A plaintiff prevailing in a judicial forum may be entitled to punitive damages, but that right may be waived in an arbitral forum.

7.  A judicial forum generally does not permit reasonable attorney fees to be imposed against a nonprevailing client in a nonfrivolous malpractice action, whereas an arbitral forum may permit an award that imposes costs, expenses and reasonable attorney fees against the nonprevailing party.

However, the court was silent as to how an attorney is to translate that list into a compliant explanation to a client.  Practically then, attorneys should, at a minimum, explain — not merely recite — these differences to a client prior to the client agreeing to a mandatory arbitration provision.

The attorney's explanation should include, for example, that applicable arbitration procedures offer limited discovery — for instance, the JAMS procedures "limit each party to 'one deposition of an opposing [p]arty or of one individual under the control of the opposing [p]arty'" whereas judicial rules do not have a set limitation on the number of depositions available.

The attorney should also explain that, unlike a court proceeding where neither party pays for a judge's time, parties in arbitration often split the cost of the arbitrator's hourly rate, which can be costly.  And, at least in New Jersey, an attorney must provide a hard copy of the rules governing the arbitration — but note that neither D.C. Ethics Opinion 376 nor ABA Formal Opinion 02-425 imposes that requirement.  And, perhaps most importantly, an attorney must understand the relative benefits and disadvantages of arbitration so as to answer any client questions.

Conclusion

While agreements to arbitrate attorney-client disputes are routinely permitted, attorneys' ability to enforce such agreements will turn on the client's ultimate understanding of the implications of agreeing to arbitration.  Attorneys should, as always, consult the ABA Model Rules of Professional Conduct and related guidance in their jurisdiction — and when in doubt, should err on the side of explaining, both orally and in writing, the benefits and disadvantages of an arbitral forum.

Hilary Gerzhoy is an associate, and Deepika Ravi and Amy Richardson are partners, at Harris Wiltshire & Grannis LLP.

Attorneys Seek $2.5M in Fees in Legal Malpractice Case

February 1, 2021

A recent Law 360 story by Nathan Hale, “Attys Seek $2.5M Fees For Jay Peak-Linked Malpractice Case”, reports that attorneys who helped investors land an $8 million settlement in a malpractice suit against their former counsel in litigation over the failed Jay Peak EB-5 immigrant investor project have asked a Florida federal court to approve distribution of $2.45 million in attorney fees.

In their motion, the law firms Cheffy Passidomo PA, Hanley Law and the Barr Law Group specified how they would divide the attorneys' fund established in the deal between the 25 investors and lawyers Edward J. Carroll and Mark H. Scribner and their firms, seeking to demonstrate the value of their work and convince U.S. District Judge Darrin P. Gayles to approve the payments.

Judge Gayles last month granted a request for preliminary approval of the settlement filed by Michael I. Goldberg, the court-appointed receiver for about two dozen entities related to the Jay Peak ski resort in Vermont.  In his motion, Goldberg noted that the immigrant investors' action had gone into "meaningful" discovery, and early last year the parties to the private malpractice litigation asked him to get involved to help settle it.  The resulting settlement agreement was reached after a few months of negotiations, he said.

In the motion, the three firms elaborated on their work for the investors.  They said they participated in depositions of all 25 plaintiffs as well as Carroll and Scribner.  They also retained three experts who were deposed by the defendants' counsel.  Additionally, they engaged in written discovery, substantial motion practice and two mediations, they said.

"Attorneys' fees for plaintiffs' counsels' hourly fees to date and the rate of the contingency fee arrangements between plaintiffs and plaintiffs' counsel in this case both exceed the total attorneys' fees fund provided for by the settlement agreement," the firms said.

Following Judge Gayles' preliminary approval of the settlement, the three firms submitted a letter to the receiver's counsel saying they had agreed that the Barr Law Group should be paid $1.47 million, and Cheffy Passidomo and Hanley Law should each be paid $490,000.

The group of investors filed their suit, Cason et al. v. Carroll et al., in Vermont federal court in February 2018, and a slightly different group filed an amended complaint in August 2019, according to the settlement approval motion.  The investors brought claims for legal malpractice, breach of fiduciary duty, breach of contract, and breach of good faith and fair dealing, alleging that Carroll and Scribner mislead them and withheld information and were conflicted because they had represented some of the investors and Jay Peak receivership entities at the same time.

"Defendants were aware, or should have been aware, of information suggesting that Jay Peak was being severely mismanaged, including that investor funds were being misappropriated to backfill shortfalls in the projects," the investors claimed, accusing the Jay Peak-linked attorneys of "designing and executing" the very fraud that injured the investors.

Among the damages the investors sought was disgorgement of the attorney fees they paid to Carroll and Scribner's firm, according to the motion.  After the parties failed to resolve the case in mediation in April 2019, they called upon the receiver to help negotiate a settlement.

In the motion for settlement approval, the receiver told Judge Gayles that the agreement "provides outstanding recoveries for the Cason plaintiffs," noting that after payments to the plaintiffs and attorney fees, the receivership entities would still recover $5.2 million to be distributed to other investors and would obtain a "bar order" barring all nongovernmental claims that could be filed between the receiver and Carroll and Scribner's former firms.

Demand for Contingency Fees Grows Amid Pandemic

November 30, 2020

A recent Law.com story by Dan Roe, “Demand for Contingency Fees in Business Litigation Grows Amid Pandemic,” reports that contingency fees are not only confined to personal injury matters.  In the midst of the recession and pandemic, some firms are increasingly taking on contingency fee matters in business litigation and commercial cases.  Business owners who don’t have the cash on hand to front litigation costs are turning to law firms that work on contingency and are willing to absorb case costs, say firm leaders, who report a rise in contingency fee inquiries since the beginning of the pandemic.

Morgan & Morgan is one of the largest personal injury firms in the country, but it also has a 24-lawyer group dedicated to business disputes.  William B. Lewis, the firm’s business trial group co-managing partner, said the practice has seen a 20% to 25% increase in contingency cases — the only type they do — since the pandemic began.  The firm recently hired an associate out of law school to join the group and plans to hire three or four additional attorneys in the next six months.

The cost of hiring an hourly law firm or trying a case can exceed the cash positions of many businesses with legitimate disputes, said Lewis in an interview.  “Trying a case can cost almost as much as everything leading up to it,” Lewis said.  “Even in a two year litigation cycle, it could be $300,000 in attorney’s fees to try a case.  There are pressure points for folks to settle even if they have a valid, strong claim.  We allow clients to try cases because they don’t have to pay huge amounts to get cases in front of a jury.”

Commercial litigation boutique Cain & Skarnulis in Austin, Texas, is also taking an increased number of cases on contingency.  “There are some good business contingency fee cases coming,” founding partner Steve Skarnulis said in an interview.  “I’d estimate that over the last six months we’ve seen inquiries for at least twice as many contingent fee cases and have probably taken 25% more than we normally would.”

And in New York, the commercial litigation boutique The Stolper Group is also seeing more contingency fee questions than usual.  “There’s definitely been an uptick in inquiries,” founding partner Michael Stolper said in an interview.  “Those who do commercial contingency have to be very selective in cases so I wouldn’t say we’re doing more or less than before, but there have been a lot more inquiries now during the pandemic.”

Financial hardship and disputes that stem from it are driving demand for contingency fee arrangements, firm leaders say.  “We’ve had investment loss cases, securities cases where brokers mismanage money and dump everything into an account after the pandemic when they didn’t have the authorization from the client to do so, an uptick in legal malpractice, and real estate commission cases,” Lewis said about the type of matters Morgan & Morgan has handled on contingency.

The firm’s business trial group is also representing community associations in construction defect claims because of the high costs involved in litigating and the fact that community associations hesitate to shift those costs onto their members, Lewis said.  At Cain & Skarnulis, landlords are turning to the litigation firm to handle disputes with commercial tenants on a contingency fee basis, Skarnulis said.

Firms that specialize in commercial contingency may offer a number of fee arrangements, based on the details of the case.  Tiered fee arrangements such as those at Morgan & Morgan’s business trial group may charge 25% to 35% for an early resolution, whereas a more time-consuming trial may net the firm 35% to 45% of a judgment.  Other firms engage in hybrid arrangements, where attorneys charge a reduced hourly rate and a smaller percentage of a recovery.

Clients may look to firms to absorb case costs as well.  Court costs and associated fees such as electronic document management can cost in the hundreds of thousands of dollars, Lewis said, so firms may also agree to front those costs in exchange for a higher percentage of the recovery.

Big Law firms may not be promoting contingency arrangements, but that doesn’t mean they aren’t doing them, said Davie, Florida-based legal consultant Joe Ankus.  “I do think some of largest firms in the world will take on a contingency case if they believe at the outset the odds of recovery or settlement justify taking the risk,” he said.  “Twenty-five years ago, that wouldn’t have happened at Am Law 100 firms.  Now, people have adjusted to the new normal.”  The prospect of collecting significant damages against a major corporate defendant — and the possibility of punitive damages — may entice large firms that have historically abstained from contingency cases, he added.

Meanwhile, Skarnulis said he’s seeing traditional plaintiff’s firms — more adept at selecting contingency cases than hourly firms — get involved in contingency business litigation, as well as mid-size firms that specialize in commercial litigation.

The 18-attorney Miami litigation boutique Podhurst Orseck is handling contingency cases related to the pandemic, such as business interruption cases against insurance companies.  “It’s a huge financial and time commitment, putting our resources into claims on a complete risk basis,” partner Steven Marks said in an October interview.  “On the opposite side, if we’re successful, it’s very good for the firm.”

Marks said the firm’s historical contingency revenues make up 70% to 80% of the firm’s total revenue, while comprising about 50% of cases.  Overall, the economic downturn from COVID-19 has accelerated an ongoing trend, paved by personal injury firms, to extend the realm of contingency work, said Ankus.  “If you were to talk to me 25 years ago and say, ‘Joe, how many law firms are doing contingency work?’ I’d have told you none or less than 5%,” he said.  “Today, the number has exponentially increased to where many firms, more often than not, will readily take on a contingency matter.”