One in a series of ethics opinions from The Florida Bar’s Professional Ethics Committee.
The question
Is it impermissible for an attorney to enter into an arrangement with a medical-legal consulting service on a contingency fee basis to provide services to the attorney’s client, including provision of an expert witness?
The situation
A member of The Florida Bar requested an advisory ethics opinion. The operative facts as presented in the inquiring attorney’s letter and prior telephone call are as follows:
The inquiring attorney’s practice includes medical malpractice cases. He has been approached by a professional medical-legal consulting service. The medical-legal consulting service would pay a medical expert an hourly fee to review the medical records of the inquiring attorney’s clients. If the medical expert determines that the client’s physicians did not meet the acceptable standard of care, the medical expert would provide an affidavit to that effect as required by Florida Statute Section 766.208. The medical expert would then serve as the inquiring attorney’s witness throughout the case.
As previously stated, the expert witness would be paid an hourly fee by the medical-legal consulting service. However, the medical-legal consulting service intends to charge a contingency fee. The inquiring attorney asks whether he may ethically enter into such an arrangement. He is aware that Rule 4-3.4(b), Rules of Professional Conduct, prohibits the payment of a contingency fee for the services of an expert witness, but questions the applicability of the rule where it is the medical-legal consulting service that will be paid on a contingency basis rather than the expert. The inquiring attorney enclosed ethics opinions from Georgia, Alabama, Mississippi, and Washington, D.C. Bar Association Opinion 55 and Florida Bar Staff Opinion TEO 87273 which seem to approve such arrangements.
There is no opinion from the Professional Ethics Committee on this matter in Florida. Further, the Florida Bar Staff Opinion cited by the inquiring attorney relied on ABA Informal Opinion 1375. That informal opinion was specifically withdrawn by the ABA in Formal Opinion 87-354. However, the ABA in Formal Opinion 87-354 and other states have addressed the use of contingency fees for medical-legal consultants.
In Formal Opinion 87-354, the ABA Committee on Ethics and Professional Responsibility was asked whether a lawyer could recommend that a client engage, or represent a client who had engaged a medical-legal consulting firm on a contingent or straight fee basis. The consulting firm would provide an initial report through its Medical Directors, consultation with its Medical Directors and, if the case warranted, assistance to lawyers at depositions and trial. The consulting firm also made expert witnesses from its independent consulting staff available.
The consulting firm offered a direct fee contract and three types of contingency fee contracts: (1) a modified contingency fee of 20 percent of the recovery where the client pays reduced fees for the report and expert witnesses; (2) a straight contingency fee of 30 percent of the total recovery and (3) a contingency fee for maximizing recovery after a settlement offer that is a percentage of the recovery that is in excess of the settlement offer. The expert witnesses themselves were not paid on a contingency basis. The client would enter into a written contract directly with the consultant. The lawyer was also to agree to distribute any recovery in accordance with the contract and to not to use any of the experts provided by the consultant in future cases without the consultant’s permission.
The ABA Committee concluded that whether such arrangements in general were permissible would depend upon all the facts and circumstances, but that under the specific facts presented the lawyer’s proposed conduct may violate the Model Rules of Professional Conduct. One concern the ABA had involved the reasonableness of the attorney’s fee in light of the work done by the consulting service.
The ABA stated that if any of the work was that normally provided by a lawyer, the lawyer would violate Model Rule 1.5 if his contingency fee was not adjusted.
The second concern the ABA had involved Model Rule 3.4(b) which prohibited payments to expert witnesses that are prohibited by law. The ABA noted that the common-law in most states forbids payment of a contingency fee to expert witnesses. The ABA found that the entire arrangement raised many of the same questions as a direct payment of a contingency fee to an expert.
The third concern the ABA had with the arrangement was the provision of the contract where the lawyer agreed not to contact or use the consultant’s experts in further cases without the consultant’s permission. The committee felt this could present a conflict under Model Rule 1.7(b) because the attorney restricted future clients with respect to the use of expert witnesses.
The fourth concern the ABA had dealt with the lawyer’s duty to exercise independent professional judgment in the selection and use of expert witnesses.
Finally, the ABA was concerned that the arrangement could be champertous under state law as involving defraying the costs of the suit for a share of the recovery.
The ruling
Of the states that have considered such arrangements, it appears that a majority conditionally approve them as long as certain ethical guidelines are met. Other states which have considered this issue have decided that the ethical problems inherent in such an arrangement are too great and have declined to allow such arrangements with medical-legal consultants.
One committee member stated:
[Rule] 3.4(b) provides that a lawyer shall not: “ . . . pay or acquiesce in the payment of compensation to a witness contingent upon the content of the witness’ testimony or the outcome of the case . . . “
The purpose of the Rule is to assure that a court and jury will hear the honest conclusions of the expert unvarnished by the temptation to share in the recovery.
Here the MFRI Corporation seeks to meet the requirements of the Rule by setting fixed fees for the work performed and the testimony proffered by the experts. The ethical question, however, rests upon still another provision of the contract: the Corporation’s requirement that the client obtain the Case Evaluation Report of its medical consultant. In this regard let us not forget MFRI’s interest in the outcome of the litigation —15 percent of the recovery.
It’s true the medical consultant is not to be the witness, but who is to doubt that he will carefully shop his Evaluation among prospective witnesses before selecting the expert whose conclusions most closely resemble his own. And consider, finally, the experts themselves and the inclination for them to accept the opinions of the medical consultant handing out the retainers.
The Corporation’s efforts to sanitize its contingency contract fall short of the mark, and the Rule says a lawyer may not acquiesce in payment to a witness contingent upon the content of his testimony.
The committee is of the opinion that the inquiring attorney’s proposal is ethically impermissible.