Page Five November 5, 1973 In March of 1972 the Board of Governors suspended the schedule and in May of 1972 the schedule was abolished. Nothing has been devised as a substitute in this state. I am certain that the forces of competition in certain types of legal work, such as the handling of divorce cases where the court frequently sets the attorneys' fees, may produce certain similarities in charges from one law office to another in any given community. Generally I find a substantial difference from law firm to law firm in the communities with which I am familiar in the basis on which they charge for services. FEE ARBITRATION COMMITTEES With one or two exceptions, all of the District Bar Associations in this state have established Fee Arbitration Committees to handle disputes over fees between lawyer and client. These committees consist of one lawyer and two laymen. The decision of the Committee is not binding except that the parties can agree in advance that it will be binding if they so choose. If the parties don't agree that the decision is binding, the Committee offers to lend assistance by way of expert testimony in court, should the matter go that far. PREPAID LEGAL PLANS The State Bar Association has had an active Prepaid Legal Committee working on problems surrounding the various types of Prepaid Legal Plans. We are in the process of petitioning the Minnesota Supreme Court for a procedure whereby all such plans must be registered with that court. Rules and regulations covering such plans are also in the process of being drafted for submission to the Supreme Court. The Bar Association assisted in legislation adopted in the 1973 session of the state legislature to permit insurance companies to write prepaid legal insurance policies in the state of Minnesota. Policies may now be written to provide coverage for services which are neither accidental nor unforeseen, such as the writing of a Will. With the amendment of the Taft Hartley Act to permit labor organizations to bargain collectively for paying the cost of legal services as part of the fringe benefits of employment, our Bar Association believes that a giant step has been taken toward funding the cost of legal services for those who might not otherwise be able to pay for them. Page Six November 5, 1973 PERCENTAGE AND CONTINGENT FEES Our Association has sponsored legislation at every recent session of the legislature to improve and simplify probate practice. For most of the 25 plus years that I have been a lawyer, lawyers in Minnesota charged for probate work on the basis of a percentage of the value of the estate. The 1971 session of the legislature adopted a statute providing that the value of the estate should not be the controlling factor in determining legal fees. Another bill pending before the legislature permits the setting up of a public office of probate counsel in each of our counties where the fees to be charged would be based on the costs of that office. I am not at all certain that the statute mentioned above dealing with fees and the size of estates is entirely beneficial. Lawyers formerly expected to lose money on the smaller cases but could make it up on the larger estates, which could probably afford to pay the extra fee. Now it is my impression that smaller estates are being charged more because the fees tend to be determined with greater reference to the amount of time involved. The lawyers of this state have not found the answer to this problem but I am sure they all agree on one thing: Setting up of a public office to handle probate cases is universally opposed. Minnesota lawyers are generally of the opinion that the efficiency in the practice of law is not going to be promoted by turning over substantial areas of practice to the public sector. Contingent and percentage fees have come in for attack in many areas of the practice of law. Much of the enthusiasm for no-fault auto insurance has come from references to the relatively small number of lawyers who have specialized in handling plaintiff's personal injury cases. Undoubtedly the legal profession deserves criticism for not having devised ways to place some restrictions on fees earned in personal injury cases. On the other hand, the finest of legal talent has been available to the most humble of our citizens in personal injury cases precisely because substantial fees are potentially available in handling their cases. Many lawyers would have no particular objection to handling all cases on some sort of hourly basis. The keeping of time records among Minnesota lawyers on a systematic basis has become standard practice in this state during the past twenty years. However, most personal injury plaintiffs would be unable to hire a lawyer on a time basis, win, lose or draw. This of necessity introduces the contingency factor into the fee setting process. Page Seven November 5, 1973 There is nothing inherently bad about charging for fees on a percentage basis. Selling life insurance is a dignified calling. The basis of paying the agent is almost entirely based on commission. The same is true in the advertising business, the real estate business and in many other fields of endeavor. Percentages are used to determine earnings in such a wide spectrum of our economy that it is hardly fair to single out lawyers and forbid their fees being set in this way. CONCLUSION: The public image of the legal profession is not good. Some candidates can run for public office in this state and have gotten a lot of political mileage out of attacking lawyers. Nonetheless, the lawyers of this state will continue to be public spirited in their communities and will try to do a good job for their clients. My great hope for the lawyers of this and future generations is that it will be possible for members of this profession to make a reasonably good living without being unduly beholden either to government or to big business, to big labor or to big anything else. Lawyers as a group must have the same freedom to attack injustice and dishonesty wherever it appears as do the members of the press. Such freedom will best be served if lawyers can continue to find it economic to practice in all sizes of firms, from the individual practitioner to the small law firm to the medium size law firm to the large metropolitan law firms. Every citizen should have access to competent legal representation. He should not have to fear either that his lawyer's bill will bankrupt him or that his lawyer's independent position is compromised. Sincerely yours, GH:ly Gene W. Halverson, President I have your letter of October 15, 1973, with enclosure containing your remarks as chairman of the Subcommittee on Representation of Citizens Interests. I have delayed answering until such time as the members of our Board of Directors had an opportunity to comment thereon to me. At the outset, I most respectfully suggest that some of the statements in your remarks do not appear to me to be susceptible of factual proof. An example is your initial sentence: "More than 30,000 legal questions each I do not see how a determination could be made that there are that number of legal questions to be resolved each day, nor can I see how it can be determined that the people who don't have them resolved didn't do so because they couldn't afford legal counsel. Many, many persons who can well afford legal counsel simply do not consult attorneys because they don't care to spend the money, they don't like lawyers, it is too much trouble, or they simply delay until it is too late. Many questions could be resolved by legal counsel at a very modest fee which, when neglected, eventually result in massive legal problems which require a much larger fee. Honorable John V. Tunney November 2, 1973 In a hearing such as yours, you are certain to have complaints from people who say they were overcharged, they can't afford lawyers, they weren't helped by lawyers, etc. Of necessity, you are going to hear the negative side. Those who saw lawyers and were well satisfied won't appear, nor will any steps be taken to see that they do appear. The result is that the version your subcommittee hears will not be a complete picture, nor will it be a true picture. Many of the remarks you make are not applicable at all to the state of Montana. The citizens of this state do have access to lawyers at reasonable fees. It is, of course, true that the better the lawyer is, the more his services are in demand, and the more he charges for them. This is as true of lawyers as it is of any other kind of business. I am quite confident, however, that lawyer fees are, comparatively speaking, lower than medical fees. The difference between the medical profession and the legal profession is that methods have been devised for persons to pay medical fees more easily while little has been done in this area for legal fees. We are, in Montana, trying to do something to increase the deliverability of legal services. We are trying to devise methods and means whereby lawyers become more available to the public. One of our programs which is in the process of being implemented is a lawyers referral service. Under this plan, persons who do not have a lawyer may call the Montana Bar Association, on a toll-free number, and be referred to an attorney. They will be given an appointment, and the attorney will charge only $10 for an appointment of one-half hour's duration. That is, I am sure you will concede, a very reasonable fee. We are also working on a plan for group prepaid legal services whereby a person can join such a group (which operates somewhat similar to Blue Shield or Blue Cross), pay a premium, and then when he needs legal services, his fee, on an underwriting basis, is paid by the group. The plan may also operate on an insurance basis and we are looking into that as well. We hope to be able to establish a plan whereby a substantial number of interested persons in Montana will have prepaid legal services so that the impact of the cost of such services will be substantially reduced as far as the individual is concerned. On an underwriting basis, of course, the cost will be spread amongst the members of the group. |