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Ohio is Latest State to Seek to Cap Fees for Outside Counsel

March 25, 2015 | Posted in : Contingency Fees / POF, Fee Agreement, Legislation / Politics

A recent Columbus Dispatch story, “Ohio Senate OKs Cap on Contingency Fees to Outside Lawyers,” reports that a move to make Ohio the latest to cap what the state can pay outside lawyers in contingency fee contacts passed the Ohio Senate over objections from Democrats and lawyers groups.  The legislation, called Ohio’s Transparency in Private Attorney Contract Act, would set attorney payment caps on a sliding scale, starting at 25 percent of damages up to $10 million and ending with 5 percent that exceed $25 million.

Since 2012, at least 14 states have adopted new rules that limit the use of outside counsel, and several have put caps on attorney fees.  The American Legislative Exchange Council (ALEC), a conservative organization that brings together lawmakers and business leaders to write model legislation, has called for contingency fee caps in legislation called the Private Attorney Retention Sunshine Act.  Ohio Attorney General Mike DeWine supports the bill.

Both the Ohio State Bar Association and Ohio trial lawyers oppose the bill, calling it “a cure in search of an illness.”  They said the caps hinders Ohio’s participation in multistate or national litigation – something DeWine’s office disputes – and make it harder to find lawyers with the expertise to handle what can be complex, specialized lawsuits.

The DOJ recently announced a $714 million settlement with The Bank of New York (BNY) Mellon for overcharging customers on foreign currency exchanges.  Dewine called the settlement “an extraordinary outcome to litigation that was extremely hard-fought for more than four years.”  DeWine didn’t mention the two outside plaintiffs’ law firms who led the fight, including Lieff Cabraser, that stand to earn as much as $43 million from the case.

In the BNY Mellon case, DeWine’s contract with Lieff Cabraser allows for a 13 percent fee, which works out to $43 million for the lawyers. That amount presumably would be shared with Murray Murphy Moul & Basil, which had a similar contract.  Any fee, however would have to be approved by Manhattan U.S. District Judge Lewis Kaplan.  Under the pending Ohio bill, the outside firms’ fees in the BNY Mellon case would be capped at $20 million.