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In re Abrams & Abrams

Paging Lester Brickman:

Kelly McKiernan and Mark Pellegrin were drinking after work at Pellegrin's home; McKiernan went to leave in his company truck; Pellegrin tried to stop him, and was grievously injured when McKiernan ran him over. Pellegrin got a $75 million default judgment against McKiernan, and then sought to recover from their employers' insurance company, which had refused to defend on the grounds that the policy did not cover McKiernan's decision to drive drunk.

Before any significant litigation took place, there was a one-day mediation, and the parties settled for $18 million. Given that the brain-damaged plaintiff was incompetent, the parties asked for settlement approval from the federal district court judge, who held that $600,000 was a reasonable fee for an $18 million settlement given typical North Carolina hourly rates for attorneys. Pellegrin v. Nat'l Union Fire Ins. Co., 598 F. Supp. 2d 724, 730-31 (E.D.N.C. 2009). The Fourth Circuit, after amicus briefing from a number of trial-lawyer lobbying groups, vacated, demanding that the district court consider the possibility of a one-third contingent fee of $6 million, working out to thousands of dollars an hour. After all, there were affidavits saying that other lawyers charged as much as 40% contingent fees. [via ABA Journal via Daily Record]

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.