Shining a spotlight on contingency fees

Plaintiffs' lawyers are skilled at demanding accountability. That's what they do.

When there is a catastrophic accident, such as the May 12 Amtrak crash, they're among the first to point fingers. And, truth be told, the targets often richly deserve it. Such was the case in 2012 when a Common Pleas Court jury in Pittsburgh spent all of 90 minutes deciding to slam West Penn Power with a $109 million verdict, in the death of a young mother burned alive on her front lawn by a downed power line as her two children watched.

The line had come down on two prior occasions and yet the company, and state regulators, did nothing to address the problem.

It was a sickening display of corporate - and government - ineptitude and arrogance, and the company deserved to be punished.

But try to ask plaintiffs' lawyers representing victims of the May 12 Amtrak derailment, which killed eight and left 200 injured in Philadelphia, how many millions they are likely to earn and it gets so quiet you could hear a pin drop.

Two of the city's most prominent personal-injury firms, Kline & Specter and Saltz Mongelluzi Barrett & Bendesky, which are representing victims in the crash, declined to discuss fee arrangements or to disclose what they tell clients about chances of success, how they value a case, or what the overall investment will be. Nor would they discuss whether their fees in the Amtrak case should be reduced because payouts to victims are capped under federal law.

Kline & Specter and Saltz Mongeluzzi are among the nation's most successful personal-injury firms, and theirs is a world of very big fees and spectacular riches.

On its website, Kline & Specter boast of more than $2 billion in jury awards and settlements, including the $109 million verdict against West Penn Power. Saltz Mongeluzzi claims a more modest amount, at least $917 million. At the traditional rate of 33 percent - an understatement because personal-injury firms now charge as much as 40 percent - that adds up to about a billion in fees.

Not a bad payday.

Such wealth has enabled trial lawyers to become big players in political campaigns and philanthropy and even professional sports. Peter Angelos, the Baltimore trial lawyer with an office in Philadelphia, owns the Baltimore Orioles.

Drexel University law school was renamed for Kline in 2014, after he gave the school $50 million.

Given such extraordinary wealth, it seems reasonable to ask whether contingency lawyers' fees have gotten a bit out of control, or at least deserving of scrutiny.

"There has not been enough consumer-oriented thinking about contingency fees," said Victor Schwartz, a corporate defense lawyer with the firm of Shook, Hardy & Bacon, and general counsel to the American Tort Reform Association, a business-funded group pushing to restrict lawsuits. "There isn't the kind of information that consumer groups want on a bottle of grapefruit juice."

Corporate critics of the plaintiffs' bar long have raised the issue of such information asymmetry.

But the issue could be critical in the Amtrak case. Under federal law, payouts to victims of rail accidents are limited to $200 million. That amount is likely to be too little, as the 2008 crash of a commuter rail train in Chatsworth, Calif., shows. Twenty-five people were killed and more than 100 injured when the train, operated by a texting engineer, ran a red light and crashed head on into a freight train twice its size.

In his opinion parceling out damages, Los Angeles Superior Court Judge Peter Lichtman said $200 million was little more than half of what he needed. He likened his situation to the film Sophie's Choice, in which an Auschwitz prisoner is forced by a sadistic camp guard to choose which of her two children should be sent to the gas chamber.

"Whoever does this, and does it with heart, will lose part of their soul," Lichtman said in an interviewwith The Inquirer.

Quite apart from limited funds, another key fact argues for lower fees. Unlike medical-malpractice lawsuits, in which a lawyer and client face the real possibility of losing, Amtrak's responsibility for last month's deadly wreck seems clear. The train was traveling at more than double the authorized speed. The rail line, moreover, failed to install equipment that would have automatically slowed the train before it entered the curve.

Schwartz, a former dean of the University of Cincinnati law school, views the issue from an unusual perch. He spent the first 14 years of his legal career as a personal-injury lawyer. He says most clients of personal-injury lawyers don't know how the litigation system works, nor do they have a sense of what their case is worth. He acknowledges that the victims of the Amtrak crash compose a savvy group; travelers between Washington and New York often are employed in high-powered corporate or government jobs.

Even they are at a disadvantage because they've suffered a recent trauma, and are in a fragile emotional state.

"[Eli] Lilly, General Motors, they are good consumers," Schwartz said. "They know what I am doing every 10 to 15 minutes of the day. If I bill an hour for writing a letter, someone will call me and say, 'Victor, what are you doing? That letter should only take you 10 or 15 minutes.' "

Clients of contingency fee lawyers should have the same ability to question their lawyers' bills. And in cases when payouts are limited, or when, as in the case of the Amtrak derailment, a favorable result is almost certain, demand that their lawyers earn less.