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Don't Confuse Hourly Fees With Knowledge and Skill
On July 17, 1999, State Bar President-elect Gary Bakke was quoted in
the Wisconsin State Journal as saying that if the State of
Wisconsin had hired a $75 an hour lawyer for the tobacco lawsuit, all
the state would have received is a bill. The reader was left with the
impression that a $75 an hour lawyer lacks the knowledge and skill that
a more expensive lawyer possesses. As a small town lawyer whose hourly
fee is significantly lower than my big city counterparts, I felt as if I
had been slapped in the face by Mr. Bakke and the State Bar.
I am proud of the fact that my hourly fee is relatively low. It
allows me to serve factory workers, farmers, disabled veterans, and
others who otherwise wouldn't be able to afford legal representation. My
reward is not a fancy home or car. My reward is the $5 miniature
Christmas tree I received from a battered woman whom I had helped to
leave her husband. My secretary ran into her at the post office and
asked her if she had read my letter - the one in which I told her I was
writing off her bill. She said no, she hadn't opened it yet, as letters
from law offices always made her nervous. When my secretary summarized
the contents of it for her, she started to cry with gratitude. A few
weeks later, she presented me with the Christmas tree.
So please, Mr. Bakke, don't confuse hourly fees with knowledge and
skill. I find it ironic that at a time when the State Bar is running
full page ads promoting Team Pro Bono and the Equal Justice Coalition,
the president-elect is publicly insulting those of us who are trying to
make legal representation more accessible. To those law firms that
represented the State of Wisconsin in the tobacco lawsuit, I offer my
kudos for a job well done. However, in the end, we all have the same
diplomas and certificates of bar admission on our walls.
Nancy A. Thome
Baraboo
I appreciate your feedback. Apathy is the worst enemy of our
association. Thoughtful criticism of me or other Bar leaders is
appropriate and will serve to strengthen us all in the long run.
If I inadvertently insulted you or any attorney who labors day in and
day out to serve the real needs of real people at a fair price, I am
truly sorry and I apologize. Such lawyers are the backbone of the Bar.
Their efforts and dedication are a true mark of professionalism, and I
truly respect and admire their accomplishments. For more than 30 years I
too have represented primarily individuals who pay their legal fees from
their own pocket. I really do understand the importance and value of
reasonable fees.
Finally, please allow me to explain the thought that I intended to
convey to the Wisconsin State Journal reporter, and the context
in which it was done. I was asked to provide the Bar's perspective for
an article about the tobacco fees. The specific topic was whether the
members of the Bar association thought that $3,000 per hour was a
reasonable fee. I have heard enough comments from members to know that
we are divided on this issue. Some feel strongly that the fee request by
the plaintiff's attorneys has tarnished the reputation of us all and has
contributed to the decline in public confidence in lawyers and the legal
system. Others feel equally strongly that the plaintiff's lawyers had a
valid contract to undertake a very large risk and are incensed that the
State of Wisconsin would fail to honor its agreement. With that wide
divergence of opinion, I declined to comment on behalf of the
membership, but I did agree to provide my own personal comments.
Is $3,000 per hour reasonable? That's the wrong question. Clearly the
parties contracted for a fee that was not to be calculated by the hour.
The contract was value based. Frequently, a contingent fee produces a
fee that is unreasonable, too high or too low, if viewed as hourly
compensation. If the plaintiff had spent four years in discovery, tried
the case for 10 months and prosecuted an appeal, only to ultimately lose
and recover nothing, would the economic loss the attorneys incurred be
reasonable? Not if measured by time and effort, but obviously reasonable
if contracted on a value basis.
Unlike many plaintiffs, the State of Wisconsin had some real choices.
It could have assigned this task to the Attorney General staff. If there
was insufficient existing staff, it could have funded new positions to
handle this case. Another option would have been to hire private
attorneys on an hourly basis. It could have offered $75 per hour to
those attorneys. The State did not opt for any of those alternatives.
Presumably it was not willing to take the risk that it would end up with
a large bill for attorneys' fees and nothing to show for it. Remember
that this suit was a long shot and that plaintiffs had a very poor track
record in prior suits against the tobacco industry. Facing the prospect
of very expensive and protracted litigation, it chose to contract that
risk, including the risk of costs, to private attorneys. No one
questioned this arrangement when it was made and no one would have
complained about the unfairness of the agreement if the case had been
lost. Based upon value, more than $5 billion to the State, the fee is
reasonable.
In our society we frequently choose to pay based upon value, not
time. Michael Jordan, Oprah Winfrey, corporate CEOs, financial risk
takers - all are paid based upon their value or at least a perception of
value. In order to evaluate any value-based or contingent fee, we have
to first ask the right question. The question is whether or not value
was provided, not how much time it took.
I am not a personal injury lawyer and do no contingent fee work. Yet
I can clearly see the magic of a contingent fee in the appropriate
cases. In almost all situations, the client is best served when the
hourly equivalent is high. An early favorable settlement results in
handsome compensation and a happy client. Countless hours in
preparation, trial, and appeal may bring down the hourly rate, but it
does so at the expense of the clients' interests.
On balance, Reporter Brinkman's article fairly presented both sides
of this issue. Many of the thoughts I expressed to him were included in
the article, but attributed to others. To the extent that I was not
successful in communicating my views, the failure was not due to bad
motives, but to lack of skill.
Again, thank you for writing. I have learned from your comments.
Gary L. Bakke
State Bar president-elect
New Richmond
Hurray for Plain Language Initiative
I loved Ms. Ray's article, "How to Use Legalese." I am a
nonlawyer working in the General Counsel's office at a federal
government agency who happens to be working on the President's "plain
language" initiative. One of my colleagues had your magazine, and I
happened to be flipping through it when I came across this article.
Believe me, I've had my hands full trying to convince lawyers about the
virtues of simpler language.
If you don't know already, the Vice President's National Partnership for
Reinventing Government (NPR) is leading the effort to get the
federal government to use plain language (there was a Presidential
Memorandum last June).
Name Withheld by Request
Washington, D.C.
Wisconsin Lawyer
