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Trial lawyer fees and the 9/11 compensation bill

A major fix to the original H.R. 847, the James Zadroga 9/11 Health and Compensation Act, was the placing of a hard, 10 percent cap on fees that trial lawyers can charge clients drawing on the compensation fund.

We submit that Ted Frank deserves a measure of credit for these new and very welcome provisions. On March 31, 2009, Ted testified before a House Judiciary Committee hearing on the legislation, raising the issue of excessive compensation for the trial lawyers.

From his testimony:

The original VCF [Victim's Compensation Fund] was established before trial lawyers had a large inventory of clients, and made clear that the process was designed to generously compensate September 11 victims in a nonadversarial fashion, often with the assistance of Fund officials in maximizing recovery. As a result, the vast majority of claimants were able to receive free legal assistance pro bono; axpayer money allocated to compensation went to victims, rather than to trial lawyers. (On the rare occasion when it became known that an attorney charged a contingent fee, publicity was harsh.)

In contrast, many of the intended beneficiaries of H.R. 847 are already engaged in litigation, with contingent-fee agreements with attorneys likely providing as much as 40% to 50% of recovery. This bill keeps the VCF's original structure of providing resolution within 120 days. If the VCF is to be continued as a non-adversarial program without need to prove causation, then it would be unconscionable to victims and to taxpayers to permit attorneys to charge substantial contingent fees for the ministerial task of submitting claim forms. Even if the VCF is restructured to permit
appropriate independent scrutiny of claims, the streamlined administrative procedure combined with legal ethical requirements suggest that contingent fees may need to be limited by Congress where representation contracts were designed in contemplation of a lengthy litigation process. Fees should be limited to a reasonable hourly fee for necessary work; there should be provisions to maximize victim recovery and ensure that money is paid to victims, rather than attorneys. Otherwise, billions of dollars would be diverted to trial lawyers at taxpayer expense.

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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.