The Florida Bar
(March 27, 1998)
(March 27, 1998)
It is 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.
RPC: 4-3.4(b), ABA Model 1.5, 1.7(b), 3.4(b), Illinois 7-109(c), Pennsylvania 3.4(b)
Opinions: ABA Formal 87-354, ABA Informal 1375, Alabama Opinion 83-135, Georgia Opinion 48, Illinois Opinion 86-03, Mississippi Informal Opinion 189, New Jersey Opinion 562, Pennsylvania Informal Opinion 95-79, South Carolina Opinion 81-11, Tennessee Formal Opinion 85-F-101, Texas Opinion 458, District of Columbia Opinion 55
Statutes: F.S. §766.208
A member of The Florida Bar has 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% of the recovery where the client pays reduced fees for the report and expert witnesses; (2) a straight contingency fee of 30% 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 expe rt 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 co ntract 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 suit for a share of the recovery.Of the states that have considered such arrangements, it appears that a majority conditionally approve them as long as certain ethical guidelines are met. See, e.g.; Georgia Bar Committee on Ethics Opinion 48 (attorney may recommend that client contract directly with medical-legal consultant on a contingency fee basis if the fee is reasonable, the expert witness is completely neutral, detac hed and independent of the consulting service, the consulting service does not interfere with the attorney's independent professional judgment and the attorney fully informs the client of the provisions of the contract; Ethics Committee of the Alabama Bar Association Opinion 83-135 (attorney may enter into contingency fee agreement with medical-legal consultant if consultant's activities do not constitute the unauthorized practice of law, the lawyer does not divide his fee with the consultant, fees paid to the expert witness are not contingent on the outcome of the case, the consultant's activities do not interfere with the attorney's exercise of independent professional judgment and all funds collected are put into a client trust account.); Mississippi Bar Committee on Ethics Informal Opinion 189 (attorney may recommend that client contract directly with medical-legal consultant on a contingency fee basis if the consultant does not engage in the practice of law, does not share fees wi th the attorney and the fee is not payable for the testimony of a lay person); Legal Ethics Committee of the D.C. Bar Association Opinion 55 (attorney may recommend that client contract directly with medical-legal consultant on a contingency fee basis if expert witness paid regardless of outcome); Tennessee Board of Professional Responsibility Formal Opinion 85-F-101 (attorney may recommend that client contract directly with medical-legal consultant on a contingency fee basis if the attorney retains control over the case, consultant does not engage in the unauthorized practice of law, the attorney does not share legal fees with the consultant, and the contingent fee is not paid for the testimony of a witness and South Carolina Bar Ethics Advisory Committee determined in Opinion 81-11 (1981) (attorney may allow client to contract directly with a medical doctor on a contingency fee basis as long as testimony is not a service for which a doctor receives a contingency fee, the medical doct or does not engage in the unauthorized practice of law, the lawyer does not share fees with the doctor, and the doctor does not interfere with the attorney's independent professional judgment).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. For instance, in New Jersey Advisory Committee on Professional Ethics Opinion 562 (1985), it was determined that such contracts would violate a state statute prohibiting doctors from contracting for contingency fees where medical services rendered to a client form any part of a legal claim. The ethics committee held that to the extent doctors were involved as a principal in the medical-legal consulting service, such conduct would violate the state statute and, therefore, it would be unethical for an attorney to solicit, enforce or otherwise be involved with a contract involving a medical-lega l consultant. The Texas Professional Ethics Committee in Opinion 458 (1988) considered whether an attorney may participate in or recommend that a client enter into a contingency fee contract with a medical-legal consulting firm where the firm would provide various services including the provision of expert testimony. The committee found the arrangement in its entirety gave the appearance of impropriety, beyond the problems presented with fee splitting, excessive fees, loss of attorney control over the case, the prevention of the unauthorized practice of law and the payment of contingency fees in exchange for expert testimony. Similarly, the Illinois State Bar Association in Advisory Opinion 86-03 (1986) stated that it was improper for a lawyer to hire or recommend or acquiesce in a client hiring an agency to provide expert witnesses where the agency is to be paid a contingency fee. The Illinois Bar Association found the arrangement to be an improper circumvention of the meaning and int ent of its Rule 7-109(c) which prohibited attorneys from paying or acquiescing to the payment of witnesses based on the content of the testimony or outcome of the case. Finally, the Pennsylvania Bar Association Committee on Legal Ethics and Professional responsibility disapproved a similar arrangement in Informal Opinion 95-79 (1995). 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% 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.