Opinion
XXXXX
07-19-2017
Jane DOE, Plaintiff, v. ROE, Defendants (intended to be Physician(s), Hospital(s), Surgical Center(s), Imaging Center(s), Pathology Lab(s), and Healthcare Facilities, Defendants.
Cynthia S. LaFave, Esq., Jane Doe, LaFave, Wein & Frament, PLLC, 2400 Western Avenue, Guilderland, New York 12084, Counsel for Plaintiff, movant
Cynthia S. LaFave, Esq., Jane Doe, LaFave, Wein & Frament, PLLC, 2400 Western Avenue, Guilderland, New York 12084, Counsel for Plaintiff, movant
Pursuant to the original decision and order, this matter has been redacted due to a confidentiality agreement between the parties in the settlement of this matter.
This is a medical malpractice matter which settled before trial for the sum of $1,750,000 and involves a breast cancer misdiagnosis. The damages included emotional injuries for the misdiagnosis as well as the increase in reoccurrence of 10% to 40%, with a 90% likelihood reoccurrence will be fatal within three years.
The matter is before the Court on a motion to increase the counsel fees. According Judiciary Law § 474–a, the present counsel fees equate to $321,633.57. Of this, Plaintiff's Counsel contends one-third is owed to the referring attorneys rendering counsel's portion to be $214,422.38, which amounts to 12% of the total recovery.
Plaintiff's Counsel argues that this is not adequate compensation and, under Judiciary Law § 474–a (4), there are "extraordinary circumstances" for the Court to increase the counsel's fee. This includes allegedly 1,400 hours in prosecuting the claim over a four-year span, 11 depositions, and consultations with five experts which involved risking more than $33,000 in expenses. Plaintiff's Counsel argues her office is only four attorneys which was a substantial risk for the firm to take given the complexity and it required the firm to "invest maximum effort" while "putting aside our other cases[.]" Further, Plaintiff's Counsel notes that Plaintiff consents to the application for an increased this—which was actually required in the retainer. Counsel concludes by stating "[o]ur office believes in good faith that the work, effort, and results achieved in the case merit an attorney's fee that is above the" fee schedule.
Judiciary Law § 474–a (2) establishes a mandatory fee schedule for attorneys who are retained to prosecute medical malpractice claims on a contingent fee basis. Such fee schedule is less than the traditionally one-third fee charged by personal injury attorneys. This fee schedule is a sliding scale which reduces the percentage of contingent compensation an attorney may receive as the sum of the victim's recover increases. This statutory formula was enacted in 1976, amended in 1985, and was part of the Legislature's intended purpose to reduce the percentages of awards to be allocated to attorneys and to ensure that "insurance premium dollars [are directed] primarily to the [victim's] compensation" and "to diminish the distortion of such high [attorney's fees] awards on the system" ( Yalango v. Popp , 84 NY2d 601, 607 [1994], quoting 1985 McKinney's Session Laws of NY, at 3022–23).
In enacting this mandatory fee schedule, the Legislature also recognized that, "on occasion the blanket fee levels could impose an extraordinary hardship on a plaintiff's attorney due to the particular ‘complexity or cost of the case’ " ( Yalango , 84 NY2d at 607, quoting 1985 McKinney's Session Laws of NY, at 3023). Therefore "[t]o mitigate any such harsh effects," the Legislature also enacted Judiciary Law § 474–a (4) to permit a plaintiff's attorney who "believes in good that that the fee schedule .... because of extraordinary circumstances, will not give him [or her] adequate compensation," he or she may apply for greater compensation to the justice of the court presiding over the matter.
"Upon such application, the justice, in his [or her] discretion, if extraordinary circumstances are found to be present, and without regard to the claimant's or plaintiff's consent, may fix as reasonable compensation for legal services rendered an amount greater than" the mandatory fee schedule. (See Judiciary Law § 474–a [4 ].) However, such amount shall not exceed the fee fixed pursuant to the contractual arrangement between the claimant/plaintiff and the attorney. Since the mandatory fee schedule is "presumptively reasonable in all malpractice cases" ( Yalango , 84 NY2d at 607 ; Gair v. Peck , 6 NY2d 97, 113–14 [1959] ), "[t]o succeed on a request for excess compensation, then, the applicant bears the burden of rebutting the presumption by establishing that the fee schedule was inadequate to compensate counsel for the representation provided in the particular case" ( Yalango , 84 NY2d at 607 ). "Thus, before departing from the statutory fee schedule, the court must make a threshold finding that a departure from the fee schedule is justified because the authorized fee did not equitable compensate counsel" ( Yalango , 84 NY2d at 607–08 ). Once compensation is determined to be inadequate, the court must address whether extraordinary circumstances existed in this case before deviating from the mandatory fee schedule. (Yalango , 84 NY3d at 609.)
Counsel's application is denied. Counsel received this matter as a referral from another law firm, which she owes a referral fee based on a fee split arrangement that was negotiated between the law firms. Counsel's calculations in this application are derived after deducting the one-third owed to the other law firm. This proportionately shrinks her counsel fees, thus lowering her hourly rate and total percentage. It is not proper for her to claim inadequate compensation after subtracting the referral fee. This is against the spirit of the Judiciary Law that considers the net recovery of counsel fees siphoning insurance premium funds away from victims. Further, the Judiciary Law expressly limits the total compensation to not be more than the agreed upon amount in the retainer. (See Judiciary law § 474–a [4 ].)
It is unclear to the Court whether Plaintiff's Counsel is advocating for a total increased fee of one-third or for her portion to be raised to one-third. To the extent that she may be requesting her portion to be raised to one-third, that would violation the retainer agreement and Judiciary Law § 474–a (4) as it would increase the net attorneys' fees above what was contractually agreed upon by the client.
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Nonetheless, in calculating whether compensation was adequate Plaintiff's Counsel avers her firm spent approximately 1,400 hours on the matter. This is not broken down as to the number of hours spent by a secretary, paralegal, associate, and partner. When using the net counsel fees recovered of $321,633.57 against the alleged 1,400 number of hours, the hourly rate for all staff from Counsel's law firm is $229.74. While this may not be adequate compensation solely for a partner's efforts, this hourly rate would be more than adequate compensation per hour for all other staff; $229.74 an hour for secretarial or paralegal work would not only be reasonable, but perhaps unreasonably too high. Given this lack of explanation and detail, the Court cannot agree that Plaintiff's Counsel's compensation is inadequate warranting greater compensation.
It is also unpersuasive that Plaintiff's Counsel alleges the law firm only received a low percentage of the total recovery. First, the Court of Appeals has "long recognized that correlating legal fees with ‘financial reward’ rather than reasonableness ‘would be unprofessional’ " ( Yalango , 84 NY2d at 610, quoting Matter of Freeman , 34 NY2d 1, 11 [1974] ). Second, other matters have denied this application on less percentages. (Compare Pugliese v. Franklin Hosp. Med. Ctr. , 183 Misc 2d 252 [Sup Ct, Nassau County 1999, Lockman, J.] [denying application for greater compensation where matter settled for $2.25 million and plaintiff's counsel received $372,500, or 17% of the total recovery] with this matter of 18% [$341,633.57/$1.75 million] ).
Notwithstanding, even if the Court assumes that Plaintiff's Counsel's compensation is not adequate, the statute and case law require the Court to address next whether there were extraordinary circumstances in this case that warrant greater compensation. Here, there was no trial. No appeal. There was no need for guardianship or an estate. There was limited motion practice, of which four motions were the direct result of Plaintiff's Counsel's untenable position over Arons authorization and therefore self-inflicted.
Counsel's claims that the work, effort, and results warrant a higher fee have expressly been held to not render a case extraordinary. (See Yalango , 84 NY3d at 609 ["The adjustment provision was not designed to reward successful result, nor diligent, thorough or even exhaustive preparation on behalf of a client."]; see also Matter of Clinton , 157 Misc 2d 506, 509–10 [Sup Ct, Bronx County 1993, Holzman, J.] ["Although many attorneys appear to be under the impression that they can receive additional compensation whenever they have achieved an extraordinary result or have performed extraordinary services, the statute is much more limited in scope."].)
Nor is it persuasive that Counsel's law firm diverted efforts from other matters to provide "maximum effort" on the subject matter, as all counsel are not only encouraged but expected to zealously represent all clients. (See Yalango , 84 NY3d at 609–10; see also New York Rules of Professional Conduct Rule 1.1, n 5 ["The required attention and preparation are determined in part by what is at stake; major litigation and complex transaction ordinarily require more extensive treatment than matters of lesser complexity and consequence."]; New York Rules of Professional Conduct Rule 1.3 [governing diligence].) Plaintiff's Counsel notes her firm's vast experience and that medical malpractice matters are fiercely defended and rarely settle before trial or without trial preparation. This evinces her understanding of the costs, efforts, and risks involved with medical malpractice matters—just as the Legislature did in enacting Judiciary Law § 474–a.
Nor is it to be considered that Plaintiff-client consents to the increased fee, as the Legislature specifically excepted from the Court's consideration the consent of a client. (See Judiciary Law § 474–a [4 ] ["without regard to the claimant's or plaintiff's consent"].)
Nor is the "technical complexity or the medical issues nor the existence of a dispute concerning proximate cause will render the case ‘extraordinary’ " (Yalango , 84 NY3d at 610 ["Medical malpractice actions are by their nature complex, warranting extensive and sophisticated preparation."]; accord Matter of LaFave, Wein & Frament, PLLC , 34 Misc 3d 586, 588 [Sup Ct, Essex County 2011, Meyer, J.] ["In fact, it is quite routine and ordinary in a medical malpractice action for causation to be in dispute or attributed to multiple defendants."] ).
Nor is the necessity for various expenses required for expert testimony, as virtually all medical malpractice cases typically hinge on this necessity. (See Yalango , 84 NY3d at 610 ["Moreover, it is customary for parties to ‘produce the testimony of various experts and to be technically well prepared to develop that testimony or to cross-examine witnesses produced by the opposite side"], quoting Morse v. Palatine Ins. Co. , 33 Misc 2d 205, 205–06 [Sup Ct, King County 1961, Friedman, J.] ; see also Matter of LaFave , 34 Misc 3d at 588 ).
While the outcome is laudable and Plaintiff's Counsel spent considerable efforts herein, Plaintiff's Counsel has not satisfactorily rebutted the presumption that the mandatory fee schedule is inadequate to compensate her firm. Moreover, while the medical malpractice was severe and the injuries severe, this does not by itself result in a finding that extraordinary circumstances exist to warrant greater compensation. There are no indications that this was different than a typical cancer misdiagnosis case which, by its very nature upon the experience of this Court, requires an extensive medical record review, several experts, and several depositions. Therefore, in the Court's discretion ( Judiciary Law § 474–a [4 ] ), Counsel's application is denied in its entirety.
To the extent not specifically addressed above, the parties' remaining contentions have been examined and found to be lacking in merit or rendered academic.
Thereby, it is hereby
ORDERED that Plaintiff's Counsel's motion is DENIED , and all other relief requested therein is denied in its entirety.
This constitutes the Decision and Order of the Court DENYING Plaintiff's Counsel's application for increased fees. Please note that a copy of this Decision and Order along with the original motion papers are being filed by Chambers with the County Clerk. The original Decision and Order is being returned to the prevailing party, to comply with CPLR R. 2220. Counsel is not relieved from the applicable provisions of this Rule with regard to filing, entry and Notice of Entry.