Suppose all of the facts of the McKenzie case are the same, except for the following difference:

McKenzie does not make any payments to creditors or subcontractors; instead McKenzie pockets $130,000 of the $195,000 settlement (with $65,000 or 33% still going to Maynard for only 83 hours of work).

In this hypothetical scenario, does anyone else believe that McKenzie's case is significantly weakened? If so, should the Court of Appeals still enforce the contingency fee contract?

Thanks in advance for any feedback.

-- Anonymous, September 21, 1998

Answers

McKenzie Hypothetical-- my opinion

Hi Jeremy-- I would argue that based on the court's rationale in McKenzie, the change of facts in your hypothetical wouldn't make a difference. The court seemed more interested,as Baxter said in class, in preserving the integrity of the legal system than in figuring out a fair way of dividing what remains of a company's assets among the company's various creditors. Also, it seemed to me that the court's inquiry as to whether the agreement was fair or not focused more on the lawyer getting too much money, and less on the particular financial circumstances of the company. What do you think?

-- Anonymous, September 21, 1998

I think Mike is right that the court's rationale doesn't make it seem like this particular change in facts would make a difference. On the other hand, since the appeals court list "results obtained" among factors by which the lower court should determine the reasonableness of any particular lawyer/client fee contract, would it be persuasive to argue that this change in facts does significantly change "results obtained" with respect to the client? (i.e. the client's getting $130,000 as opposed to $0.) Also, if the "purpose" of the court is to shape public opinion about the legal profession, I would think that this change in facts would have some impact on the way in which the public views the case.

Tawen

-- Anonymous, September 22, 1998

I would tend to agree with Mike that Jeremy's hypothetical change in the case would not have any effect on the Court's decision. The Court wanted to examine whether the attorney in the case was being unjustly compensated for the amount of work that he did in the case. The court mentions that under the contingent fee agreement, Maynard received about $790 an hour. By highlighting this fact, the Court indicates its concern is with the lawyer's fee. The Court is not concerned about whether McKenzie is getting a sufficient settlement even though this is what motivated Mr. King to file suit in the first place.

-- Anonymous, September 22, 1998