Are Contingency Fee Profits “Reasonable”?

Abstract

IN VIRTUALLY ALL STATES – NEW YORK AND CALIFORNIA BEING notable exceptions – state supreme courts exercise nearly exclusive control over the practice of law. In some states, this power is conferred by a specific provision in their constitutions. In most states, however, state supreme courts claim the exclusive authority to regulate the practice of law simply by fiat. The courts use this purloined power to fend off regulation of lawyers by state legislatures and to advance lawyers' interests in a variety of ways. As part of their exercise of control over the legal profession, states' high courts have promulgated codes of ethics, which are typically adaptations of model codes of ethics drafted by the American Bar Association (ABA). The ABA adopted its first code, the Canons of Ethics, in 1908. As noted, Canon 13 recognized the validity of contingency fees, provided they were reasonable in light of the risk borne by the lawyer. In 1963, the ABA replaced the Canons of Ethics with the Model Code of Professional Responsibility. In 1983, the ABA extensively redid the Model Code and titled the new version, The Model Rules of Professional Conduct. Today, every state but California has adopted, through judicial approval, the Model Rules in full or in substantial part. The ABA has extensively modified its code since 1983, and state supreme courts have adopted many of these modifications, albeit with changes.