August 4, 2007 (Original publish date) • By Dennis Beaver
Law school final exams are tough, and to help students understand what the test is testing, prior years’ written exams are often available. You would get the original from a binder in the law library, take it to the photocopier, make a copy and put back the original. But this day, at Loyola Law School during my first year, the Xerox machine was producing copies that could not be read.
Steve, along with his very pregnant girlfriend, made copies, kept the original, and placed the bad copies back in the binder. This put him at a great advantage, hurting other students.
When I saw this, pointing to her rather prominent tummy, I said, “What the two of you are doing is immoral. You are helping the father of your child hurt other students. The way he treats others is exactly what he will do to you. If he abandons you with your child, you can blame yourself.” Next, turning to Steve, I ordered him to put the good copies back, or I would immediately go to the dean’s office. I remained there, not budging while they replaced all the originals.
Months later, Steve flunked out of school. That was the only time I cheered another student’s failure. It was not difficult to imagine the kind of lawyer he would have become.
In private practice for well over 20 years, I’ve met a few “Steve’s,” lawyers who use their position to take advantage of clients. One of them practices not far from Eureka. This is the story of a lawyer whom I believe has clearly taken advantage of an unsophisticated client and owes her $5000 — perhaps more. Here are the facts that I have been able to determine. The names and precise location of the parties in this story have been changed.
Karen, age 40, had a boyfriend, Ron, who was a licensed contractor, and a member of her church. Relying upon his recommendation that it was in good condition, she and her mom purchased a 35-year-old cabin in the mountains south of Eureka for $35,000. But Karen was unaware that her boyfriend had failed to properly inspect the cabin, and that it was in horrible shape.
Over the course of the following year, he attempted to fix it up, and did — sort of. In her estimation, “perhaps about $7500 worth of repairs and improvements” were made, as well as a great deal of “completely unacceptable, sub-standard work, which had to be re-done.”
In 2005, Karen and her boyfriend split up, but not before he ran up a $10,000 charge on her credit card for material used in his contracting business (but not on the cabin). He refused to pay the bills.
Instead of seeing an attorney who might have been able to get the entire dispute resolved with a letter, Karen — angry and naive — used the services of a paralegal to prepare and file a lawsuit.
Ron then hired own attorney and came up with a nifty plan: Filing suit against Karen for a whopping $100,000, “representing work” allegedly done on the cabin. Realizing that she was in trouble, she retained her own lawyer.
You are the lawyer
Now, let’s stop for a moment. I want you to play lawyer. It’s clear that Ron does not want to pay the $10,000 and that he filed his own suit as a way to force Karen to cave in. This case could eat up thousands of dollars in attorney fees unless settled quickly. There is no way to justify expensive litigation. Probably you’ll suggest that, instead of litigation, mediation might be a good approach or even something a lot quicker.
Mutual dismissals, everyone walking away.
You tell Karen, “Let’s see if he will pay a portion of the credit card debt, and if not, let’s offer to just eat the ten grand and chock it up to bad judgment. You guys sign mutual releases and get on with life. Yeah, it doesn’t feel all that good, Karen, but you could spend a small fortune over a $10,000 fight, and it isn’t worth it,” you tell your client.
That’s what should have happened, but did not. After seven months of furious litigation, her lawyer finally asked Karen for a settlement proposal.
“I suggested that my ex just pay me $5,000 and we drop the lawsuits,” she wrote. “He immediately agreed.” During one of our several discussions, Karen told me that her lawyer had ordered her to have no contact with Ron, even though she felt he would agree to dismissing his suit, as the attorney fees were going to be substantial, for him, too.
So, how much in attorney fees do you think Karen had to pay her lawyer during this seven-month suit?
STOP. DON’T READ FURTHER. COME UP WITH A FIGURE BASED ON ATTORNEY FEES BILLED AT THE RATE OF $225 PER HOUR.
Would you believe $45,000 in attorney fees? But wait; it gets better. Aware that at the time she hired his law firm Karen was seriously ill with a neurological disorder and under medication that reduced her ability to think clearly, her lawyer had her sign a retainer agreement that violated California law. At that time, lawyers had to disclose if the firm was covered by malpractice
insurance. That important information was lacking from the contract. It also contained one extremely strange paragraph that said, in so many words, the following:
If the attorney settles the case without going through trial, he will be paid an additional $5,000 after the court first sets the matter for trial. This $5,000 is in addition to the payment of all of outstanding bills.
In other words, if the case suddenly is settled right after it is set for trial, but before trial begins, the lawyer gets $5,000 more. But, you ask, “Isn’t a lawyer supposed to get the case settled anyway, with or without a trial? Isn’t that his job? Doesn’t this look like he is being paid twice for the same thing?” That’s precisely correct. In my opinion, this clause is an invitation to drag the case out and then, when set for trial, to magically get it settled.
Talk about a rip off! I ran this clause by a number of attorneys, who feel it is an “unconscionable fee.” California courts have declared unjustified, excessive and unconscionable fees as illegal. In my opinion, based upon what I have seen in this case, Karen is entitled to not only the return of her $5,000 “additional compensation,” but also has a malpractice claim against her lawyer.
What does her former lawyer say?
I placed several calls to her lawyer, and had in my possession a written authorization from Karen to discuss this case, but despite many calls, he never called back.
Karen knows that she has a year from the date her lawyer concluded his representation to file malpractice charges against him. I have urged her to contact the Humboldt County Bar Association and arrange for fee arbitration. She also needs to contact the State Bar of California and discuss the filing of a formal complaint.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.