Fee Dispute Arises from Largest Med-Mal Verdict in CT
A law firm in Connecticut recently recovered the largest med-mal verdict ever in the state only to be sued by their client for malpractice. How does that happen? We’ll tell you. Plaintiffs retained a well-known Connecticut law firm (“Firm”) to represent them in a med-mal claim alleging that Defendant Doctor (“Dr.”) made significant errors during childbirth which caused Plaintiffs’ son being born with cerebral palsy. In 2011, a jury returned a verdict for Plaintiffs, and awarded $58 million – the largest medical malpractice verdict in Connecticut state history. Following verdict, the parties settled for $25 million.
However, Plaintiffs recently filed suit against Firm, as well as a series of ethical complaints filed with the Connecticut Statewide Grievance Committee, claiming that Firm kept too large of a portion of the settlement, contrary to the retainer agreement between the parties. Under the terms of that agreement, Firm agreed to claim its fees in accordance with the language set out by Connecticut’s tort reform statute, which was enacted in 1986. That statute provides a “sliding scale” in which attorneys are permitted to claim 33% of the first $300,000 in damages; 25% of the next $300,000; 20% of the next $300,000; 15% of the next $300,000; and 10% of any amount in excess of $1,200,000. Under the terms of the statute, Firm would have been permitted to retain a fee of approximately $2,655,000. Plaintiffs contend that Firm instead kept $7,000,000.
The retainer between the parties also provided that “if that statute is not in effect at the time money is to be distributed to the client, [Firm] shall receive fees of 28% of the total recovered.” In 2005, two years after the execution of the retainer between the parties, the Connecticut legislature amended this statute to allow for a written waiver of this fee cap provision. Firm now claims that the 2005 amendments render the statute under which the retainer was entered as “not in effect,” and that therefore they are entitled to 28% of the $25 million dollar settlement.
Regardless of the substantive merits of the dispute as to whether the changes made to the statute by the legislature rendered the previous version of the statute obsolete, this dispute highlights the importance of client communication. Based upon the facts and allegations within this dispute, the Chief Disciplinary Counsel has filed charges with the Statewide Grievance Panel that Firm failed “to inform and explain the terms of the . . . fee agreement and any claimed changes to it in order to permit the client to make informed decisions regarding the representation.”
Though this matter is still far from resolution, it serves as a reminder as to the importance of client contact and communication. Even though a fee agreement may be explicitly detailed within the retainer, and even though that fee agreement may specifically illustrate each and every detail of how and when fees may be collected by the attorney, special care should be taken to alert each client as to any changes in the agreement, or to when certain fee schedules take effect. Though there is little, if nothing, that can be done to completely erase the possibility of a fee dispute, making the fee recovery as transparent, open, and informed as possible can only help eliminate headaches for both client and attorney during the life of the case.