Contingent fees and medical-legal consulting services. Economical or unethical?

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Contingent fees and medical‐legal consulting services Michelle M. Dillon J.D.

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Court of Appeals, Div. I, 600 University St., Seattle, WA, 98101–4170 Published online: 23 Jul 2009.

To cite this article: Michelle M. Dillon J.D. (1990) Contingent fees and medical‐legal consulting services, Journal of Legal Medicine, 11:1, 93-114, DOI: 10.1080/01947649009510820 To link to this article: http://dx.doi.org/10.1080/01947649009510820

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Commentary

The Commentary section in the Journal of Legal Medicine presents, on a regular basis, articles written by students at Southern Illinois University School of Law, Carbondale, Illinois. This feature, initiated in 1981, is designed to allow outstanding law students who have special interests in law and medicine to pursue those interests through scholarly research and publication, thereby providing readers with high-quality and timely legal commentary. The following members of the Board of Editors of Southern Illinois University Law Journal have provided editorial review for this Commentary section: Alice Noble-Allgire Editor in Chief Michelle M. Dillon Student Articles Editor W. Eugene Basanta Thomas B. McAffee Faculty Advisors Vicki Genovese Secretary


The Journal of Legal Medicine, 11:93-114 Copyright © 1990 by Hemisphere Publishing Corporation

CONTINGENT FEES AND MEDICAL-LEGAL CONSULTING SERVICES ECONOMICAL OR UNETHICAL? Michelle M. Dillon, J.D.*

INTRODUCTION Almost without exception, plaintiffs bringing medical malpractice1 and personal injury suits must retain expert witnesses2 to testify for them at trial.3 Because plaintiffs bear the burden of proof in such cases,4 and because the complexity of modern medical practice generally places proper medical skills and techniques beyond the knowledge of most judges and * 1990 graduate of Southern Illinois University School of Law. Address correspondence to Ms. Dillon at Court of Appeals, Div. I, 600 University St., Seattle, WA 98101-4170. The author gratefully acknowledges the helpful suggestions made on earlier drafts of this commentary by Ms. Rebecca Whittington, J.D., Associate at Feirich/Schoen/Mager/Green, Carbondale, IL. 1 See generally Shapiro, Medical Malpractice: History, Diagnosis and Prognosis, 22 ST. LOUIS U.L.J. 469, 471 (1978) (defines medical malpractice, focusing upon the circumstances under which a physician may be sued and the factual situations likely to result in a malpractice suit). 2 An expert witness has been defined as "one who has had special training or experience on a matter in issue . . . [who] is called primarily for the purpose of securing [an] opinion." Bomar, The Compensation of Expert Witnesses, 2 LAW & CONTEMP. PROBS. 510, 510 n.l (1935). See also Note, The Contingent Compensation of Expert Witnesses in Civil Litigation, 52 IND. L.J. 671, 673 (1977) (courts are "rigorous in their interpretation of who is an expert"). 3 D. LOUISELL & H. WILLIAMS, MEDICAL MALPRACTICE § 11.34, at 11-106, 11-120, & 11-121 (1989); Shapiro, supra note 1, 471-72 ("The general rule is that medical malpractice, as opposed to ordinary negligence, must be established by the testimony 'of those learned in such matters.' Expert testimony is required to show that the practitioner acted 'contrary to the practice in that or similar communities. . . .' " ) ; Marley, Status and Trends in State Product Liability Law: Cost-Containment Efforts, Alternative Dispute Resolution, Expert Testimony and Contingent Fees, 14 J. of LEGIS. 266, 269 (1987) (guidelines for use of expert testimony are necessary because of the importance of such testimony, given the complexity and technical nature of current product liability litigation). But cf. D. LOUISELL & H. WILLIAMS, supra, § 29.01, at 29-5, for exceptions to the requirement of expert testimony in medical malpractice cases involving: 1) the theory of res ipsa loquitur, 2) situations in which lay persons can easily recognize the gross negligence of the physician, or 3) situations in which lay persons' common knowledge is sufficient to identify a physician's error. 4 See, e.g., Shapiro, supra note 1, at 470.

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jurors,5 plaintiffs are forced to engage medical experts to identify (1) the appropriate standard of care that health care professionals must follow when treating patients, (2) whether a particular physician's conduct met that standard, (3) whether deviation from that standard proximately caused the alleged injuries, and (4) the extent of the damages resulting from any deviation from the standard of care.6 The cost of expert testimony, however, can be prohibitive, especially when added to the inevitable expenses of attorneys' fees, filing fees, and discovery costs.7 As a result, some injured plaintiffs, if unable to pay qualified expert witnesses to verify their claims, will be precluded from filing suit and will suffer their injuries without any hope of compensation from the tortfeasor.8 In response to this problem, inventive entrepreneurs have developed consulting services to provide affordable assistance to medical malpractice or personal injury plaintiffs on a contingency fee basis. The consulting services operate like brokers; for a promised percentage of any recovery obtained from trial or settlement, the services attempt to link plaintiffs with the experts they need to support their claims.9 Although these arrangements can greatly benefit plaintiffs by helping them obtain crucial expert testimony, several significant risks surround the services' contingent payment plans, including threats to testimonial reliability10 and to attorneys' adherence to professional ethical standards." Consequently, the use of these consulting services may pose more problems than they solve. 5 6

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D. LOUISELL & H. WILLIAMS, supra note 3, § 29.01, at 29-3. See, e.g., id. § 7.01, at 7-2 & § 11.33, at 11-104, 11-105; Note, An Evaluation of Changes in the Medical Standard of Care, 23 VAND. L. REV. 729, 733 (1970); Novey v. Kishwaukee Community Health Servs. Center, 176 Ill. App. 3d 674, 531 N.E.2d 427 (1988) (stating general rule that plaintiff must establish negligent medical malpractice by using expert testimony unless the negligence is grossly apparent). Lea, Expert Witnesses—Right to Pay Expert Witnesses on a Contingent-Fee Basis in Civil Cases, 80 W. VA. L. REV. 328 (1978) ("Attorney fees, witness fees, filing fees, and discovery costs cut substantially into the resources of private plaintiffs . . . [and] may prevent the litigation of some meritorious claims. . . ."). See also Note, Contingent Fees for Expert Witnesses in Civil Litigation, 86 YALE L.J. 1680, 1681 n.4 (1977).

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Note, supra note 2, at 671; Note, supra note 7, at 1681 ("The necessity of paying an expert's fee may therefore deny many potential litigants the opportunity to assert their claims in court."); Lea, supra note 7, at 329. 9 See, e.g., Schackow v. Medical-Legal Consulting Services, 46 Md. App. 179, 416 A.2d 1303 (1980). 10 Note, supra note 7, at 1682 n.9 ("Prohibition of expert contingent fees in litigation is aimed primarily at preservation of the integrity of expert testimony in court."). See also Dupree v. Malpractice Research, Inc., 179 Mich. App. 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N.J. Super. 429, 542 A.2d 947 (1987). 11 See Dupree v. Malpractice Research, Inc., 179 Mich. App. 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N.J. Super. 429, 542 A.2d 947 (1987).


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This commentary examines the conflicting decisions reached by the courts that have addressed the propriety of medical-legal consulting services and their use of contingent fee plans.12 Consideration also is given to the American Bar Association opinions on the issue,13 particularly with respect to the ethical duties established for attorneys in the Model Code of Professional Responsibility and the Model Rules of Professional Conduct. After balancing the opposing arguments, this commentary cautions against engaging the services of consulting groups charging contingent fees. The commentary concludes with a discussion of the need for a less troublesome solution to the problems plaintiffs face in malpractice and personal injury cases. I. THE ADVENT OF MEDICAL-LEGAL CONSULTING SERVICES Although it is not clear when the first contingently paid consulting service began operating, the idea behind such services parallels the history of contingent attorneys' fees. In the past, the high costs of attorneys' fees frequently denied indigent and low-income persons access to the court system to redress the wrongs allegedly done to them.14 In response to this obvious inequity, the legal system permitted attorneys to be compensated by contingent fee payment plans in certain civil cases.15 With such an arrangement, plaintiffs of little or no means could at least enter the legal arena by agreeing to pay their attorneys a percentage of whatever damage award was received. If unsuccessful, a plaintiff owed nothing to the retained attorney.16 The contingent attorneys' fee arrangement has proven relatively

12

Dupree v. Malpractice Research, Inc., 179 Mich. App. 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N.J. Super. 429, 542 A.2d 947 (1987); Schackow v. Medical-Legal Consulting Services, 46 Md. App. 179, 416 A.2d 1303 (1980). 13 ABA Comm. on Ethics and Professional Responsibility, Formal Op. 354 (1987) (use of medicallegal consulting firm by plaintiff's attorney) [hereinafter ABA Formal Op. 354]; ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1375 (1976) (participation with lay consulting service charging contingent fee permissible) [hereinafter ABA Informal Op. 1375]. 14 Lea, supra note 7, at 328. 15 Id.; Note, Of Ethics and Economics: Contingent Percentage Fees for Legal Services, 16 AKRON L. REV. 747, 747-48 (1983) (contingent fees are "practically the exclusive method of compensating attorneys in personal injury cases" but "are generally considered unethical when applied to criminal cases, divorce cases, and arrangements for procuring or influencing legislative action" (citations omitted); Note, supra note 7, at 1684 n.12 (criminal cases may not be handled on a contingent basis because the defendant's liberty interest is at risk and because typically no res is involved from which even a successful defendant could pay the contingent fees; quasi-criminal proceedings such as involuntary commitment to a psychiatric facility may not involve contingent fees for the same rationale; contingent fees are prohibited in certain domestic cases on public policy grounds). 16 Note, supra note 15, at 747; Aronson, Attorney-Client Fee Arrangements: Regulation and Review, 68 A.B.A. J. 284, 286 (1982).


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effective—although not without significant criticisms and limitations.17 Yet, the common law has adamantly prohibited any such payment plan for compensating lay or expert witnesses.18 The main rationale for this prohibition is the threat of perjury originating from a witness' economic interest in the outcome of the trial.19 As a result, courts have found such contingent payment plans to be contrary to public policy.20 Several commentators, arguing against the common-law prohibition against paying expert witnesses contingently for their time and expertise, suggest that contingent fee arrangements could resolve the financial problem facing low-income plaintiffs.21 Their view is that the gains made in facilitating access to the court system through contingent attorneys' fees may be illusory if potential plaintiffs cannot afford to present the expert testimony required to support their individual claims.22 Aside from the problem of paying for medical experts, plaintiffs also have difficulty locating experts who possess the requisite skills and are willing to testify.23 This may be particularly true if the trial occurs in a rural locality where fewer specialists practice medicine,24 or in areas where a "silent conspiracy"25 may dissuade potential expert medical witnesses Aronson, supra note 16, at 286 (contingent attorneys' fees increase litigation and court congestion; may tempt attorneys to put their interests ahead of clients' interests; and result in successful clients paying more than they otherwise would because attorneys have to compensate for the contingent cases they have lost); Note, supra note 15, at 747-48; Note, Contingent Fees, 2 GEO. J. OF LEGAL ETHICS 233, 236 (1988) ("A contingent fee arrangement is a disincentive to an attorney to explore a favorable plea bargain or mitigating defenses which might result in a reduced sentence."). 18 See, e.g., Person v. Association of the Bar, 554 F.2d 534 (2d Cir.), cert. denied, 434 U.S. 924 (1977) (court refused to permit contingent fee payment to expert witness even though such refusal effectively prevented plaintiffs from presenting their case in court); Lea, supra note 7, at 329; Note, supra note 7, 1681-82. 19 Note, supra note 2, at 674; Person v. Association of the Bar, 554 F.2d 534, 538 (2d Cir.) (the court was "not convinced . . . that there is no danger of the inducement of false expert testimony" by contingently paid expert witness fees), cert. denied, 434 U.S. 924 (1977). 20 See Dupree v. Malpractice Research, Inc., 179 Mich. App. 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N.J. Super. 429, 542 A.2d 947 (1987). 21 Lea, supra note 7, at 332 ("The contingent-fee arrangement would provide a practical means by which the poor and persons of moderate means could pay for expert witness' [sic] services in the same manner as they presently may pay for attorneys' services."); Note, supra note 7, at 1680 ("The contingent fee would improve access to civil litigation for budget-constrained and risk-averse claimants."). 22 Lea, supra note 7, at 333; Note, supra note 2, at 681. 23 See, e.g., D. LOUISELL & H. WILLIAMS, supra note 3, § 7.02, at 7-5; Holden, Science in Court, 243 SCIENCE 1658 (1989) (discusses difficulty in finding scientific experts willing to testify in tort cases involving toxic substances). 24 See Waltz, The Rise and Gradual Fall of the Locality Rule in Medical Malpractice Litigation, 18 DEPAUL L. REV. 408, 409 (1969) ("[T]he locality rule has influenced not only the professional standards demanded of [physicians] but also the availability of witnesses to establish the physicians' culpable deviation from those standards."). 25 See generally Kelner, The Silent Doctors—The Conspiracy of Silence, 5 U. RICH. L. REV. 119 (1970); Markus, Conspiracy of Silence, 14 CLEVELAND-MARSHALL L. REV. 520 (1965). But see



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from testifying against their colleagues. In addition, an attorney's time spent searching for an appropriate expert witness and making the necessary arrangements may be better spent preparing other aspects of the case. Recognizing these concerns, the contingently paid consulting services try to connect plaintiffs in need of medical testimony with appropriate expert witnesses, while minimizing the cost of such expert assistance.26 After being consulted by a plaintiff or a plaintiffs attorney, a typical consulting service reviews the facts and issues of the case and presents those facts to one or more medical experts experienced in the relevant medical specialty.27 If, after considering the medical facts presented, an expert agrees to testify for a given plaintiff, the expert typically works as an independent contractor and not as an employee of the consulting service.28 This arrangement apparently is intended to reduce the possibility that the service will influence an expert to testify in a way contrary to that expert's professional opinion in order to maximize a client's chance of prevailing at trial and ultimately benefit the consulting service. In addition, a service typically pays the expert witness directly, with a flat rate; the testimony is not rendered with the expectation of payment contingent upon the outcome of the case.29 Regardless of whether a plaintiff wins or loses the malpractice or personal injury claim, the consulting service is responsible for paying the expert witness or witnesses procured for the plaintiff. In contrast, the consulting services generally are paid for their referral work on a contingent basis. If the plaintiff secures a judgment, the service collects a prearranged percentage of the damage award; if the plaintiff does not succeed, the service receives nothing, much like the arrangement in contingent attorneys' fees.30 Other variations of the contin-

D. LOUISELL & H. WILLIAMS, supra note 3 , § 7.02, at 7-5 & 7-6 ("Occasionally . . . finding a physician willing to testify for the plaintiff in a malpractice case may be as simple as calling a few practitioners in the pertinent field and making a candid request."), & § 1.03, at 1-10 ("[T]he 'conspiracy of silence' does not seem so prevalent today, at least in the major metropolitan areas throughout the nation."). 26

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See also Schackow v. Medical-Legal Consulting Services, 46 Md. App. 179, 416 A.2d 1303 (1980) (the consulting service was designed " t o assist attorneys in preparing medically oriented litigation and in locating physicians willing to testify at trial; it essentially served as an educator and conduit, bringing together attorneys and physicians and familiarizing them with the critical aspects of the case"). See D. LOUISELL & H . WILLIAMS, supra note 3 , § 7.02, at 7-6 (general description of the typical medical-legal consulting service). See, e.g., ABA Formal Op. 354, supra note 13 ( " T h e expert witnesses, although members of Consultant's independent consulting staff, are not the employees of Consultant."). See, e.g., Schackow v. Medical-Legal Consulting Services, 46 Md. App. 179, 197, 416 A.2d 1303, 1313 (1980); ABA Formal Op. 354, supra note 13. See ABA Formal Op. 354, supra note 13.


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gent fee plan also are employed, so that, for example, upon recovery, the fee is a relatively smaller percentage (for example, 20%) of the total award, but the plaintiff pays the expert's reimbursable expenses and reduced fees.31 The result is to enable an injured plaintiff to meet the burden of proof through expert testimony without regard to the cost of such testimony, assuming the medical-legal consulting services are able to locate the qualified experts needed for the plaintiffs case. It would seem that this arrangement should meet with everyone's approval: plaintiffs have access to the necessary expert testimony; plaintiffs' attorneys can devote more time to preparation of the suit and avoid spending time (and their own money if plaintiffs cannot pay the costs of preparing for litigation) searching for expert witnesses; and, the medicallegal consulting services may or may not profit from their entrepreneurial efforts, well within the bounds of American capitalism. However, strong objections have been leveled against these consulting schemes for several reasons, including accusations that the referral services are merely a "subterfuge" for avoiding the prohibition against paying witnesses in a contingent manner32 and concerns about the ethical risks associated with their contingent fee plans.33 II. THE LEGAL COMMUNITY'S RESPONSE To date, only three state appellate courts have considered the propriety of using contingently paid services to obtain favorable expert testimony.34 Two of those courts have specifically prohibited the use of the services on the ground that the contingent reimbursement violated public policy.35 Similarly, the American Bar Association's most recent Formal Opinion on the matter identified numerous ethical problems that could arise from using contingently paid consulting services.36

31 32 33

Id. Polo v. Gotchel, 225 N.J. Super. 429, 4 3 3 , 542 A.2d 947, 949 (1987). Id. at 950; ABA Formal O p . 354, supra note 13; CBA Ethics Opinion No. 77: Participation with Medical-Legal Consulting Firm Charging a Contingent Fee, 17 C O L O . LAW. 875 (1988) (Colorado Bar Association notes the risks that a lawyer might encounter by using these services or by referring them to a plaintiff). Cf. ABA Informal Op. 1375, supra note 13 (discusses potential risks in employing the services but concludes that so long as certain precautions are taken, use of the services would be permissible), superseded by ABA Formal Op. 354, supra note 13 (Formal Opinion noted that at least five ethical problems arose with the use of contingently paid consulting services).

34

D u p r e e v. Malpractice Research, Inc., 179 Mich. App. 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N . I . Super. 4 2 9 , 542 A.2d 947 (1987); Schackow v. Medical-Legal Consulting Services, 46 Md. App. 179, 416 A.2d 1303 (1980).

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Dupree v. Malpractice Research, I n c . , 179 Mich. A p p . 254, 445 N.W.2d 498 (1989); Polo v. Gotchel, 225 N . J . Super. 4 2 9 , 542 A.2d 947 (1987). ABA Formal O p . 354, supra note 13.

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A. Maryland's Approval As the first appellate court to address the legal and ethical issues created by the use of contingently paid consulting services, the Maryland court in Schackow v. Medical-Legal Consulting Services37 considered whether the defendant's contingent fee collection plan violated public policy. The plaintiffs complaint included allegations that the service engaged in barratry,38 champerty,39 and maintenance40 by providing consulting services to attorneys handling suits requiring medical expert testimony. The court concluded that none of these alleged wrongdoings was inherent in the consulting service's activities because the requisite elements of each offense were not present.41 Specifically, the court found that although the defendant advertised its referral services, the advertising did not amount to the solicitation required to show barratry because the firm never initiated contact with the plaintiff or the attorney.42 On the issue of champerty, the Maryland court found its case distinguishable from Merrell v. Stuart,n a North Carolina case that held champerty exists when an agreement "contemplates litigation and, for a share of the recovery, calls for procurement of evidence essential to success."44 Influenced by persuasive authority to the contrary,45 the Schackow court chose not to follow MerreWs view of champerty and held no such arrangement existed in Schackow. For similar reasons, the court rejected the plaintiffs allegation of maintenance.46 In addition to its case law interpretation, the Schackow court also 37 38

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41 42 43 44

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46 Md. App. 179, 416 A.2d 1303 (1980). Id. at 1312. Barratry is described by the Schackow court as "the solicitation of another to make a litigious claim by one without an existing relationship or interest for his own gain. . . ." Id. (emphasis in original). Id. (The court cites BLACK'S LAW DICTIONARY 209 (5th ed. 1979) in defining champerty as "[a] bargain by a stranger with a party to a suit, by which such third person undertakes to carry on the litigation at his own cost and risk, in consideration of receiving, if successful, a part of the proceeds or subject sought to be recovered. . . .")• Id. (The court cited BLACK'S LAW DICTIONARY 869 (5th ed. 1979) to define maintenance as an act "maintaining, supporting, o r promoting the litigation of another.") Id. at 1312-13. Id. at 1312. 220 N . C . 326, 17 S.E.2d 458 (1941). Schackow, 416 A.2d at 1312 (quoting Merrell v. Stuart, 220 N . C . 326, 332, 17 S.E.2d 458, 462 (1941)). Id. at 1313. The Schackow court cited several cases from other jurisdictions, including Haley v. Hollenback, 53 Mont. 494, 165 P. 459, 461 (1917) (interpreting a Montana statute not to prohibit contingent fee arrangements between litigants and laypersons), and Barnes v. Boatmen's National Bank of St. Louis, 348 M o . 1032, 156 S.W.2d 597, 602 (1941) (holding that " a valid contract does not become invalid as against public policy because the respondent [an expert psychiatric witness] was to be paid for his services only on the contingency that the [litigation in which the expert testified] should be successful"). Schackow, 416 A.2d at 1313.


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relied upon the 1976 Informal Opinion of the ABA Committee on Ethics and Professional Responsibility, which noted that, so long as particular safeguards are met, attorneys may contract with a consulting service despite its contingent fee compensation plan.47 As the court interpreted the Informal Opinion, three specific conditions would prohibit an attorney's use of the referral service: (1) if the service engaged in the unauthorized practice of law; (2) if the lawyer shared legal fees with the service; or (3) if the contingent fee represented compensation for the witness' testimony.48 A final argument made against the consulting service was that it "skirted ethical and public policy considerations"49 because the consulting service would screen experts until it located one who would testify in favor of the service's client.50 The court disagreed, stating that the preparatory work performed by the consulting service simply gave the potential expert witness an introduction to the case and did not attempt to influence the content of the witness' testimony.51 Because the court perceived the service provided by the consulting agency as critical for some plaintiffs' access to the legal system, particularly in costly medical-related cases, the court favored the medical-legal consulting service and concluded that neither its services nor its fee arrangement violated any public policy.52 B. New Jersey's Reproof and Michigan's Concurrence Seven years after Schackow, a New Jersey Superior Court held in Polo v. Gotchef3 that a consulting service's contract for contingent fees unequivocally violated New Jersey's public policy.54 Without exception, the court prohibited the use of such referral services because of the increased risk of perjury when a witness holds even an indirect financial interest in the outcome of litigation.55 The court also considered the argument that, although the consulting services provided plaintiffs with an opportunity to obtain necessary expert testimony, the contingent fees charged by the services illegally invaded individual plaintiffs' right to recovery.56 In its analysis, the court relied upon an opinion by the New Jersey 47

48 49 50 51 52 53 54 55 56

ABA Informal Op. 1375, supra note 13. Note that this Informal Opinion was recently superseded by ABA Formal Opinion 354, supra note 13. Schackow, 4 1 6 A . 2 d at 1313. Id. at 1313. Id. Id. Id. 225 N . I . Super. 4 2 9 , 542 A.2d 947 (1987). Id. at 9 4 9 - 5 0 . Id. at 9 4 8 - 4 9 . Id. at 949.



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Supreme Court Advisory Committee on Professional Ethics.57 This opinion reviewed the position of the American Medical Association (AMA) regarding physicians receiving contingent fees for their services, as expressed by the Current Opinions of the AMA's Judicial Council.58 The court noted that the applicable AMA Opinion emphasized the danger of a medical professional becoming more of an advocate than a healer if paid a contingent fee, because the fee might influence the professional's independent judgment.59 Due to this potential conflict, the Judicial Council mandated that a physician's fee may be calculated only according to the value of the services rendered.60 After reviewing the issue, the New Jersey Advisory Committee concluded that attorneys "should not contravene these medical guidelines, by assisting or participating in a contingent fee agreement with a doctor."61 Thus, participation in a contingent fee payment plan of any type involving a physician's professional services—either treatment or testimonial in nature— would violate AMA policies.62 Drawing upon its state constitutional power to administer the rules of practice and procedure in New Jersey state courts,63 the Polo court chose to view the New Jersey Advisory Committee as "an arm of the Court."64 Consequently, it followed the Committee's recommendation against attorneys' use of medical-legal professional services that charge on a contingent fee basis.65 The court bolstered this decision with a New Jersey statute prohibiting physicians from charging contingent fees,66 and cited the longstanding common law which prohibits paying witnesses on the basis of 57

New Jersey Supreme Court Advisory Opinion 562 on Professional 193 (1985).

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AMERICAN M E D I C A L ASSOCIATION, COUNCIL ON ETHICAL AND JUDICIAL AFFAIRS, CURRENT OPINIONS

Ethics, 116 N.J.L.J. (Index page)

§ 8.04 (1984) ("Contingent Physicians Fees: Prohibitions"). Note that the most recent version of this opinion is section 6.01 (1989) ("If a physician's fee for medical service is contingent on the successful outcome of a claim, there is the ever-present danger that the physician may become less of a healer and more of an advocate. Accordingly, a physician's fee for medical services should be based on the value of the service provided by the physician to the patient and not on the uncertain outcome of a contingency that does not in any way relate to the value of the medical service."). See also id. § 9.07 (1989) (in the context of providing medical expert testimony, "[i]t is unethical for a physician to accept compensation that is contingent upon the outcome of litigation"). 59

60 61 62 63

64 65 66

Polo v. Gotchel, 225 N . J . Super. 429, 4 3 1 , 542 A.2d 947 (1987). See CURRENT OPINIONS, supra note 5 8 , § 6 . 0 1 . Polo, 542 A.2d at 948. Id. Id. Id. The court referred to N . J . CONST, art. VI, ch. 2, 1 3 , which provides in relevant part: " T h e Supreme Court shall make rules governing the administration of all courts in the State and, subject to the law, the practice and procedure in all such courts. . . ." Polo, 542 A.2d at 948. Id. Id. (citing N.J. STAT. A N N . § 45:9-27.8 (West 1978), which reads: " I n any matter where medical services rendered to a client form any part of the basis' of a legal claim for damages . . ., a physician


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some future contingency, particularly the outcome of the case for which the witness testifies.67 Polo differentiated between consulting firms and attorneys with respect to the ability to charge a contingent fee. The court stated that an attorney is an officer of the court and thus the New Jersey Supreme Court could authorize the use of contingent attorney fees through its court rules.68 The Polo court also suggested that, if everyone involved in a lawsuit were permitted to charge the plaintiff on a contingent basis, little would be left of the plaintiff's recovery.69 For all of these reasons, the court concluded that without sanction by the New Jersey Court Rules, a contingent fee arrangement with consulting services violated the state's public policy.70 Schackow was summarily distinguished by the Polo court because of the clear differences between Maryland and New Jersey's court rules regarding contingent fee arrangements, and because part of the Schackow analysis involved the issue of whether the medical-legal consulting service had substantially performed its obligations under the contract.71 The Polo court also declined to consider potential actions for barratry, champerty, and maintenance because those claims no longer existed in New Jersey.72 In substantial agreement with Polo is Dupree v. Malpractice Research, Inc.,73 a Michigan appellate court decision rendered in 1989. The Dupree court held that a contract for contingently paid malpractice consultation services was void as contrary to public policy.74 The plaintiffs in Dupree had sought assistance from the defendant, Malpractice Research, Inc.,75 after being unable to locate the required expert witnesses to testify regarding injuries sustained by the plaintiffs' child during birth. The defendant agreed to provide expert witnesses and reports to the plaintiffs in exchange for the plaintiffs' promise to pay witness fees, travel costs, and other expenses before such services were rendered.76 In

or surgeon shall not contract for, charge, or collect a contingent fee."). See also CURRENT OPINIONS, supra note 5 8 , § 9 . 0 7 . 67 Polo, 542 A.2d at 948-49. 68 Id. 69 Id. at 949 ("If photographers, accident reconstruction experts, investigators, and the like were permitted to charge on a contingent fee basis, only a minuscule portion of a recovery would be left for the injured plaintiff."). 70 Id. 71 Id. 72 Id. See supra notes 38-40 (definitions of barratry, champerty, and maintenance). 73 179 Mich. App. 254, 445 N.W.2d 498 (1989). 74 Id. at 502-03 ("The incentive is just as powerful for a middleman [the contingently paid consulting service] whose compensation is tied to the size of a plaintiffs recovery to manufacture favorable testimony through selective procurement of expert witnesses."). 75 Id. at 499. 76 Id.



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addition, the plaintiffs were required to agree to pay a 20% contingent fee for any settlement the plaintiffs obtained, or $34,000.77 After the plaintiffs paid more than $2,700 to the defendants, and after the parties in the malpractice suit settled during the pretrial stages for $170,000, the plaintiffs sought rescission of the contracts with the consulting service.78 The trial court ruled for the plaintiffs on the ground that contingent fee contracts violated public policy; the defendant's motion for reconsideration on the basis of quantum meruit recovery was denied.79 On appeal, the Michigan Court of Appeals affirmed the trial court's determination that the contingent fee contracts were void and that the defendant should be denied quantum meruit recovery.80 The clear import of the court's decision was that no encouragement whatsoever should be given to the use of a contingent fee arrangement by the consulting service.81 In drawing its conclusion, the appellate court emphasized the importance of a Michigan statute that prohibited paying any witness more than an ordinary witness fee unless expressly permitted to do so by a court.82 That statute, and a second statute making it a misdemeanor for an expert witness to testify for a contingent fee,83 convinced the court that the state had a strong public policy against contingent witness fees.84 The court further cited Michigan Rules of Court and Rules of Professional Conduct that militated against permitting such contingent fee plans.85 C. The American Bar Association's Views In its initial review of medical-legal consulting services, the ABA concluded in Informal Opinion 1375 that the services served a worthwhile purpose, with minimal danger of violating legal ethics so long as certain safeguards were met by the attorneys using these services.86 In the opinion, written in 1976, the Committee on Ethics and Professional Responsibility noted that, under DR 3-101 (A), the consulting agency could not interfere with attorneys' decisions and actions regarding the case.87 Next, the Committee cautioned that an attorney could not in any way share legal fees with a lay person or lay agency and still comply with 77

the plaintiffs promised to

82

See M I C H . COMP. LAWS § 600.2164(1) (1986) ( M I C H . STAT. A N N . § 27 A . 2 1 6 4 ( l ) (Callaghan

83

See M I C H . COMP. LAWS § 600.2169(4) (1989) ( M I C H . STAT. A N N . § 27A.2169(4) (Callaghan 1989)).

Id. In Polo, the plaintiff had agreed to a 6% contingent fee; in Schackow, pay a 10% contingent fee. 78 Id. 79 Id. at 500. 80 Id. 81 Id. 1986)). 84

Dupree v . Malpractice Research, I n c . , 179 Mich. App. 2 5 4 , 445 N.W.2d 498 (1989). Id. 86 ABA Informal O p . 1375, supra note 1 3 . 87 Id. T h e specific Disciplinary Rules mentioned in the Informal Opinion are D R 3-101(A) ("[a]

85


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DR 3-102(A)(l)-(3).88 Finally, the Committee noted that DR 7-109(C) prohibits an attorney from paying for a witness' testimony with a contingent fee.89 After reviewing the facts of the specific situation presented to it, the Committee concluded that the contract entered into by the attorney's client and the medical-legal consulting service was proper and enforceable.90 In 1987, however, soon after the Polo opinion, the Committee had a second opportunity to analyze the propriety of the medical-legal consulting services.91 Formal Opinion 35492 superseded Informal Opinion 1375 and conveyed a much less tolerant view of the contingently paid consulting services. In particular, the Committee observed in its Formal Opinion that at least five ethical problems tainted the services: 1. the potential for unreasonable contingent attorney's fees, in violation of Model Rule 1.5(a)(7) and (8),93 and of DR 2-106(A) and (B),94 because using the services would reduce the work performed by the attorney, who might fail to reduce the applicable billable hours; 2. the possible improper inducements to expert witnesses in violation of Rules 3.4(b) and 8.4(a),95 and DR 7-109(C);96 3. the possibility that attorneys' obligations to future clients could be adversely affected, in violation of Rule 1.7(b)97 and DR 5-

88 89 90 91 92 93

94

95

lawyer shall not aid a non-lawyer in the unauthorized practice of l a w " ) ; D R 3-102(A)(l)-(3)("[A] lawyer or law firm shall not share legal fees with a non-lawyer. . . , " with certain exceptions); and DR 7-109(C)(l)-(3) ("[A] lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of [the] testimony or the outcome of the case[;] [b]ut a lawyer may advance, guarantee, or acquiesce in the payment of . . . [e]xpenses reasonably incurred by a witness in attending or testifying . . . [and a] reasonable fee for the professional services of an expert witness."). ABA Informal Op. 1375, supra note 13. See supra note 87 for the text of DR 3-102(A)(l)-(3). ABA Informal Op. 1375, supra note 13. See supra note 87 for the text of DR 7-109(C). ABA Informal Op. 1375, supra note 1 3 . ABA Formal Op. 354, supra note 1 3 . Id. M O D E L RULES OF PROFESSIONAL CONDUCT Rule 1.5(a)(7) & (8) (1987) ( " A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include . . . the experience, reputation, and ability of the lawyer or lawyers performing the services . . . and . . . whether the fee is fixed or contingent."). M O D E L C O D E O F PROFESSIONAL RESPONSIBILITY D R 2-106 (A) & (B) (1987) prohibits an attorney

from agreeing to charge or collect " a n illegal or clearly excessive fee," and describes what factors should b e considered in determining whether a fee is "clearly excessive"). M O D E L RULES OF PROFESSIONAL CONDUCT Rule 3.4(b) & 8.4(a) (1987). Rule 3.4(b) states that " [ a ] lawyer shall not . . . falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law. . . ." Rule 8.4(a) states that "[i]t is professional misconduct for a lawyer to . . . violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or d o so through the acts of another. . . . "

96

M O D E L C O D E O F PROFESSIONAL RESPONSIBILITY D R 7-109(C) (1987).

97

MODEL RULES OF PROFESSIONAL CONDUCT Rule 1.7(b) (1987) ("[A] lawyer shall not represent a


105

98

101 (A), because of contractual limitations placed on the attorneys using certain services; 4. the influence the services might have over the exercise of the attorney's independent judgment, in violation of Rules 2.1 and 5.4(d)(3)" and DR l-102(A)(2) and (5);100 and


5. the possibility of creating a champertous relationship among the parties in violation of Rule 1.8(e).101 Consequently, the Committee concluded that an attorney might violate the Model Rules of Professional Conduct "by recommending to a client that the client engage, or representing a client who engages, a medical-legal consulting firm . . . on a contingent or straight fee basis to work with the client's lawyer in a medical malpractice or other personal injury case, and by working with the consultant on the case."102 Although one consulting service has claimed that many state bar associations have concurred with the ABA's 1976 Informal Opinion 1375,103 it is unclear whether those bar associations would maintain the same position after the ABA's more recent Formal Opinion. At least one state bar association has reviewed the risks inherent in the use of contingent fee consulting services after the ABA Formal Opinion was rendered and has not condoned the use of the services.104

98

99

100

101

102 103

104

client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests. . . . " ) . MODEL CODE OF PROFESSIONAL RESPONSIBILITY DR 5-101(A) (1987) ("lawyer[s] shall not accept employment if the exercise of [their] professional judgment on behalf of [a] client will be or reasonably may be affected by [the lawyer's] own financial, business, property, or personal interests"). MODEL RULES OF PROFESSIONAL CONDUCT Rule 2 . 1 , 5.4(d)(3) (1987). Rule 2.1 mandates that an attorney "shall exercise independent professional judgment and render candid advice" in representing a client. Rule 5.4(d)(3) prohibits an attorney from practicing with any corporation or association authorized to practice law for profit if " a nonlawyer has the right to direct or control the professional judgment of a lawyer." M O D E L C O D E O F PROFESSIONAL RESPONSIBILITY D R l-102(A)(2) & (5) (1987), which prohibit an

attorney from circumventing a Disciplinary Rule through the actions of another o r engaging in conduct "that is prejudicial to the administration of justice." M O D E L RULES O F PROFESSIONAL CONDUCT Rule 1.8(e) (1987) ( " A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that . . . a lawyer may advance court costs a n d expenses of litigation, t h e repayment of which may b e contingent on the outcome of the matter; and . . . a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client."). A B A Formal O p . 354, supra note 13. Materials distributed b y T h e Medical Quality Foundation (104 Elden Street, Herndon, VA 22070; 1-800-336-0332) included a list of 16 state b a r associations that generally agreed with the A B A Informal O p . 1375, supra note 13. CBA Ethics Opinion No. 77, supra note 33.

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III. ANALYSIS As noted by the case law and the ABA opinions above, the use of medical-legal consulting services has generated numerous concerns, many of which are directly linked to the use of contingent fee arrangements. To evaluate whether the benefits of the services outweigh their drawbacks, several of the major concerns are analyzed below. A. Arguments Favoring the Consulting Services 1. Services Assure Plaintiffs' Access to Court A persuasive argument supporting the use of consulting services that charge contingent fees is that such services enable plaintiffs with little or no income to engage an expert witness whom the plaintiff could otherwise not afford.105 Implicit in this assertion is the idea that the right to have a complaint heard before an impartial factfinder becomes meaningless if the necessary expert witness cannot be retained.106 Indeed, some have argued that a right to have an expert testify to support one's claim is a constitutional right,107 much like the right to counsel has been recognized and actively supported.108 However, this argument has not been uniformly received. For example, in Person v. Association of the Bar,m the plaintiff challenged the constitutionality of New York Disciplinary Rule 7-109(C), which is identical to DR 7-109(C) of the Model Code of Professional Responsibility."0 The plaintiff, an attorney handling an antitrust action, contended that, because the New York rule proscribed the contingent payment of expert witnesses, the 10 plaintiffs he represented could not afford to hire the necessary expert witnesses and thus were effectively denied access to the court. In upholding the constitutionality of the disciplinary rule, the Second Circuit reversed the lower court's decision that expert witnesses may be retained on a contingent basis whenever the effective prosecution of a civil

105 106 107

108 109 110 111

Note, supra note 7, at 1684 n.12; Lea, supra note 7 , at 328. Lea, supra note 7 , at 328. See, e.g., Person v. Association of the Bar, 554 F.2d 534 (2d Cir.), cert. denied, 4 3 4 U . S . 924 (1977). See, e.g., Gideon v. Wainwright, 372 U . S . 335 (1963). 554 F.2d 534 (2d Cir.), cert. denied, 4 3 4 U . S . 924 (1977). See supra note 87 for the text of D R 7-109(C). Person, 554 F.2d at 535.



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action required, and that an attorney's clients have a fundamental right to access the judicial system.112 The appellate court criticized the district court's reliance upon two cases,"3 and concluded that access had not been denied because the attorney's clients actually were in court and already had engaged in extensive litigation."4 The court did not address the point that failure to procure a supportive expert would likely cause the attorney's clients to lose."5 Although the debate continues about whether access to the courts is a constitutionally protected right,"6 it is generally accepted that expert testimony is imperative for any hope of victory in most medical malpractice or personal injury cases due to the technical and complex nature of those cases and the plaintiffs' burden of proof."7 This point alone makes the use of contingently paid consulting services appealing; however, an alternative exists that carries none of the risks inherent in using the services. That alternative is embodied in DR 7-109(C), which permits a lawyer to "advance, guarantee, or acquiesce in the payment of . . . [e]xpenses reasonably incurred by a witness in attending or testifying . . . [and] a reasonable fee for the professional services of an expert witness."118 Thus, even indigent plaintiffs have at least a potential means of obtaining an expert so long as an attorney agrees to advance the costs involved in pretrial and trial preparation. Difficulties will arise, however, if a plaintiff is unable to locate an attorney who is willing or financially able to make such advances or guarantees. Consequently, some injured parties could be prevented from going forward with a complaint without the assistance of an "affordable" consulting service. But because of a variety of troublesome factors surrounding contingently paid consulting services, the accessibility argument, without more, is insufficient to justify the use of such services. Another aspect of the accessibility argument is the notion that it is often difficult, if not impossible, for a plaintiffs attorney to locate a qualified expert willing to testify. In some locations, this may be an insurmountable problem."9 However, while recognizing that it is generally more difficult for plaintiffs to engage expert witnesses than for heavily insured 112

Id. at 537. See Boddie v. Connecticut, 401 U.S. 371 (1971); Winters v. Miller, 446 F.2d 65 (2d Cir.), cert. denied, 404 U.S. 985 (1971). 114 Person, 554 F.2d at 537. 115 See Note, supra note 2, at 681 (the court in Person may have accurately stated that the plaintiffs had not technically been denied access to court, but the quality of the access was the key issue; without expert witnesses, plaintiffs had no chance of prevailing). 116 See Lea, supra note 7, at 336-39. 113

117

See, e.g., D. LOUISELL & H. WILLIAMS, supra note 3, § 7.01, at 7-2.

118

See supra note 87 for the remaining text of DR 7-109(C). See generally Kelner, supra note 25; Markus, supra note 25.

119


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medical malpractice defendants to do so,120 some authors note that securing the services of a medical expert may no longer be as difficult as it was years ago.121 Physicians' expert testimony in a medical malpractice case or personal injury suit has become a commonly accepted practice needed to resolve a wide variety of legal claims.122 Thus, despite the desirability of providing assistance to injured persons who might otherwise never receive compensation for their injuries, these potentially mitigating factors, along with some significant risks accompanying the use of the services,123 limit the persuasiveness of the accessibility argument. 2. Experts' Fees Are Not Actually Contingent A second argument made on behalf of the consulting services is that the expert witnesses are not actually paid a contingent fee; they are paid a flat rate by an intermediary—the consulting service—that is reimbursed by the plaintiff on a contingent basis.124 The inference to be drawn from this arrangement is that the witnesses are adequately insulated from the temptation to commit perjury because their fees are guaranteed by the consulting service.125 In some cases, the experts allegedly have no knowledge of the contingent arrangement between the consulting service and the client, and thus are presumably even further removed from the temptation to perjure themselves.126 Commentators have noted that, even under the accepted practice of paying expert witnesses a flat rate, those witnesses are in effect paid a "de facto contingent fee," because unsuccessful plaintiffs and their attorneys may never be able to fully compensate the witness.127 Accordingly, all expert witnesses can be said to be susceptible to the temptation of tailoring their testimony to the needs of the party ultimately compensating them, whether the compensation is directly or indirectly contingent. However, in further appraising the variables typically involved in the use of medical-legal consulting services, it becomes clear that the experts referred by the services retain significant financial and nonfinancial inter120

121

D . LOUISELL & H . W I L L I A M S , supra note 3 , § 7 . 0 2 , at 7 - 5 .

Id. at 7-6. 122 Id. 123 See supra notes 5 3 - 7 0 , 7 3 - 8 5 , & 9 1 - 1 0 2 and accompanying text. 124 See ABA Formal O p . 3 5 4 , supra note 13. 125 See Schackow v. Medical-Legal Consulting Service, 4 6 M d . A p p . 179, 197, 4 1 6 A . 2 d 1303, 1313 (1980). 126 Id. But see A B A Formal O p . 354, supra note 13 ( " I t appears obvious . . . that the expert witnesses, w h o a r e a part of the 'independent consulting staff of the Consultant, must know that the Consultant contracts with clients o n a contingent fee basis."). Lea, supra note 7, at 332 ("While witnesses a r e now paid a fixed fee in theory, they are paid on a contingent-fee basis in reality because the expert often goes unpaid when the employing party loses."); Note, supra note 7, at 1683 n.10.



109

ests in the outcome of the litigation. Certainly, at a fundamental level, a consulting service would be in a better position to pay the referred experts if more of the service's clients prevailed than lost. This factor alone may motivate dishonest testimony from experts desiring to be referred frequently and compensated accordingly by the consulting services. Yet, even if it could be proven that direct compensation from a contingently retained consulting service would never influence an expert's testimony, the expert still would have an indirect financial interest in having the service's client succeed. Some expert witnesses may rely primarily—or solely—upon consulting fees as their source of income.128 Such dependence upon referrals from the consulting service or from several consulting services129 casts a shadow of impropriety over a witness' testimony. Too great a potential exists for the expert to formulate an opinion to meet the needs of the client and of the consulting service rather than offer somewhat equivocal testimony. This is particularly true when the attorneys who use the consulting services must agree not to contact any experts referred to them by a service without first securing that service's written consent.130 The experts become more dependent upon the service's referrals if attorneys cannot contact them directly. Likewise, because the consulting services directly depend upon their clients' success at trial or in settlement negotiations to receive the arranged contingent fees, an incentive exists for the services to locate witnesses who will structure their testimony in ways the services believe will be most beneficial to the clients. This strikes against the traditional notion that the experts are to evaluate impartially the facts of a situation and then form an independent conclusion that will aid the trier of fact.131 Despite the "insulation" afforded by the flat payment plan for expert witnesses, and the safeguards suggested by several authors,132 contingently paid consulting services still create the risk of perjury and could conceiv128

129

130

131

132

A B A Formal O p . 3 5 4 , supra note 13 ("[T]o the extent that the expert witnesses a r e used regularly by the Consultant . . . and receive substantial payments for their service as expert witnesses, they may be substantially dependent on the Consultant, particularly in light of the contract prohibition imposed by the Consultant against lawyers contacting or using the same expert witnesses in other cases without written consent of the Consultant."). Presumably an expert can be connected with more than one consulting service because the experts are typically considered to be independent contractors and not the employees of the services. It is unclear from the available information from the services whether an attorney must abide by such an agreement if it is the attorney's client w h o contacts the witness, whether or not at the attorney's suggestion. T h e enforceability of such an agreement is also questionable for lack of adequate consideration on the part of an attorney. See, e.g.,

H . ROGERS, T H E LAW O F EXPERT TESTIMONY 4 2 0 , 4 3 4 (1981). See also

Schroeder,

Problems Faced by the Impartial Expert Witness in Court: A Continental View, 34 TEMP. L . Q . 378 (1961). But see Note, supra note 7 , at 1690 (selection bias is a common occurrence). Note, supra note 7 , at 1680; Lea, supra note 7 , at 3 2 8 . T h e safeguards noted by these authors include judicial scrutiny of the reasonableness of contingent witness fees and the opportunity to


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ably exacerbate the problem of the limited availability of expert witnesses. Sanctioning these ill effects is difficult to justify, given the opportunity for attorney-advanced witness fees available through DR 7-109(C).133 Thus, it appears that the contingently paid consulting services, while providing a necessary "commodity"134 to plaintiffs, significantly add to the already existing potential for perjury by expert witnesses; at the very least, an appearance of impropriety is created by the terms of the fee arrangements. Further, several arguments in addition to the possibility for perjury suggest that the contingently paid consulting services ought to be very carefully regulated, if they are to be permitted at all. B. Arguments Opposing the Consulting Services 1. Attorneys' Independent Judgment Is Diminished A significant concern of the ABA as expressed in Formal Opinion 354135 was that the consulting services would interfere with an attorney's control over the case in violation of Model Rules 2.1136 and 5.4(d)(3).137 This could occur because the consulting service, rather than the attorney, selects the experts for referral, and the attorney is not necessarily privy to the qualifications and opinions of the experts who are not referred. Because preparing a medical malpractice or personal injury case frequently requires extensive consultation with a medical professional,138 an attorney using a referral service might inadvertently slight clients by limiting the pool of experts from which to choose. Granted, experts not connected with a consulting service could be consulted in addition to those experts referred by the service, but the client then would owe additional witness fees, defeating the economic benefits of using contingently paid consulting services. Further, use of a consulting service could violate Model Rule 1.7(b)1J9 by impairing an attorney's ability to procure effective expert witnesses for future clients if the attorney must agree not to contact an expert referred by

133 134

135 136

137

impeach an expert during cross-examination on the basis of the fee arrangement. Further, contingent witness fees, like contingent attorney fees, would b e impermissible in cases where n o res w a s involved from which the party could pay t h e fee. See supra note 87 for the text of D R 7-109(C). D . LOUISELL & H . WILLIAMS, supra note 3 , § 7 . 0 2 , at 7-7 ("[I]t must be remembered that today the physician w h o h a s prior courtroom experience is a valuable commodity to trial lawyers."). A B A Formal O p . 3 5 4 , supra note 13. M O D E L RULES O F PROFESSIONAL CONDUCT Rule 2 . 1 (1987). See supra note 9 9 for the relevant text of the Rule. M O D E L RULES O F PROFESSIONAL CONDUCT Rule 5.4(d)(3)(1987). See supra note 9 9 for the relevant text of the Rule.

138

D . LOUISELL & H . W I L L I A M S , supra note 3 , § 7 . 0 2 , at 7 - 5 .

139

M O D E L R U L E S O F PROFESSIONAL C O N D U C T Rule 1.7(b) (1987). See supra note 9 7 for t h e relevant text of the Rule.


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the service without the service's consent.140 This could materially hinder the attorney's ability to zealously represent some future clients.


2. Attorneys' Fees Could Become Unreasonable If the consulting service undertakes some of the activities that the attorney typically would perform, such as screening potential expert witnesses and explaining the nature of the case to the expert, the attorney's fees, if not reduced proportionally, could be unreasonably high in violation of Model Rule 1.5.141 Although this problem would appear easy to alleviate, it might cause a conflict between the attorney and the consulting service if the plaintiff were to prevail, potentially leading to the plaintiffs involvement in further litigation concerning an appropriate division of the recovery as occurred in the three cases discussed earlier.142 3. American Medical Association Policy Violation As noted in Polo,m an opinion of the Council on Ethical and Judicial Affairs of the American Medical Association precludes physicians from collecting fees on a contingent basis.144 Instead, physicians must calculate their fees according to accepted medical standards and in specific relation to the medical services provided.145 Addressing the issue of physicians rendering medical testimony, Opinion 9.07 of the Council specifically states that "[i]t is unethical for a physician to accept compensation that is contingent upon the outcome of litigation."146 Because this stance taken by the AMA clearly forbids direct contingent arrangements with physicians as expert witnesses, it is possible that a physician's indirect involvement with the contingently paid consulting service would be viewed similarly. 4. State Court Rules May Forbid the Arrangements The two state appellate cases that expressly banned the use of consulting services on a contingent fee basis relied in part upon their respective state court rules to arrive at their decisions.147 In both Michigan and New 140 141

142

143 144

ABA Formal O p . 354, supra note 13. M O D E L RULES OF PROFESSIONAL CONDUCT Rule 1.5 (1987). See supra note 93 for the relevant text of the Rule. See Dupree v. Malpractice Research, Inc. 179 Mich. A p p . 254, 4 4 5 N.W.2d 4 9 8 (1989); Polo v. Gotchel, 2 2 5 N . J . Super. 429, 542 A . 2 d 947 (1987); Schackow v. Medical-Legal Consulting Service, 4 6 M d . App. 179, 4 1 6 A.2d 1303 (1980). 225 N . J . Super. 4 2 9 , 542 A . 2 d 947 (1987). CURRENT OPINIONS, supra note 5 8 , § 8.04 (1984) (now § 6.01 (1989)), noted in Polo, 542 A.2d at

948. 145

CURRENT OPINIONS, supra note 5 8 , § 6.12 (1989) (discusses factors to use in determining whether a physician's fee is illegal or excessive). 146 Id. § 9 . 0 7 (1989). 147 Dupree v. Malpractice Research, I n c . , 179 Mich. A p p . 2 5 4 , 4 4 5 N.W.2d 498 (1989); Polo v. Gotchel, 225 N . J . Super. 4 2 9 , 542 A . 2 d 947 (1987).


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Jersey, court rules specifically prohibited the payment of contingent fees to anyone other than attorneys, primarily because an attorney works "as an arm of the court"148 and thus could be regulated more easily than private companies or individuals offering services to litigants. Although the courts arguably could monitor the use of contingent fee contracts for services rendered from someone other than an attorney, the costs inherent in such an undertaking would be prohibitive and undesirable from a taxpayer's perspective, given the numerous and disparate services that could conceivably assist with trial preparation.149 In addition, allowing a variety of services to collect payment by contingent fees would result in whittling away the bulk of a plaintiffs recovery, to the point where it may not have been cost-effective for the plaintiff to have brought suit in the first place.150 C. Suggestions for Change Contingently paid consulting services are a creative attempt to solve some of the difficulties plaintiffs can encounter in bringing a medical malpractice or personal injury suit. Unfortunately, while having the potential to help plaintiffs redress their injuries, the services generate a significant number of problems, all of which threaten the integrity of the legal system. Because of these problems, contingently paid consulting services should not be permitted to participate in the administration of justice. If, however, the consulting services are allowed to operate in certain states, some effective and economical monitoring system must be developed to protect plaintiffs' recoveries and control the threats to the legal system. For example, state laws or court rules could establish methods of exposing potential bias of expert witnesses during the discovery process.151 Allowing the use of specific interrogatories would be one way to enable attorneys to determine how frequently an expert witness has testified in the past, whether the expert has consistently testified only for plaintiffs or only for defendants, and the total amount of compensation the expert has received for all previous instances of providing expert services to other litigants.152 If parties know in advance that the production of such information 148 149 150

151

152

Polo v . Gotchel, 2 2 5 N . J . Super. 4 2 9 , 542 A.2d 947, 9 4 8 - 4 9 (1987). Id. See supra note 69 and accompanying text. See Welch, Medical Malpractice, 292 N E W E N G . J. M E D . 1372, 1375 (1975) (estimates that only 1 8 % - 2 0 % of the total malpractice dollars actually reach the injured patient). This suggestion w a s offered by Rebecca Whittington, J . D . , Associate at Feirich/Schoen/Mager/ Green, Carbondale, Illinois during a conversation with the author in October 1989. See Trower v . Jones, 121 Ill. 2d 2 1 1 , 5 2 0 N . E . 2 d 2 9 7 (1988) (overruling prior common law, the Illinois Supreme Court permitted opposing counsel t o inquire about how often the plaintiff's expert witness h a d testified for plaintiffs in other medical malpractice suits a n d about t h e expert's annual income from services related to rendering expert testimony; such information w a s relevant for determining possible bias of the expert).



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was mandatory and that it would be presented for the factfinder's consideration, the possibility exists that "hired gun" experts153 would no longer be such a valuable "commodity"154 to litigants because of their potentially reduced credibility. Perhaps then, experts more willing and able to provide testimony based upon their independent judgment would be retained by parties instead of experts whose skill at courtroom testifying outshines any specific medical expertise. In addition, given the relative ease with which a witness could refuse to reveal such information, or could present it is such vague terms so as to reveal very little about a possible source of testimonial bias, sanctions must be made available. For instance, if while being deposed an expert claims an inability to recall or to obtain information regarding the number of prior occasions an expert witness has assisted with litigation and the total compensation received from providing these services, that fact should be admissible at trial for the factfinder's analysis. When blatant refusals to comply with such discovery requests occur, the recalcitrant witness' testimony should be barred entirely upon motion by opposing counsel.155 Because testimonial bias could result from a wide variety of sources involving direct or indirect financial incentives, professional esteem, or even personal pride in being deemed "an expert," merely disallowing contingently paid consulting services will not eradicate the potential for perjury by expert witnesses. The use of discovery tools is a significant component of the adversary system and is one means of exposing bias whenever expert witnesses are relied upon to identify the relevant standard of care in malpractice and personal injury litigation. CONCLUSION At first glance, contingently paid consulting services appear to resolve plaintiffs' problems of locating and compensating the required expert witnesses to testify in their favor in medical malpractice and personal injury suits. Through the contingent fee plan, plaintiffs can retain the necessary expert services that they might have been unable to afford otherwise. Despite their practical entrepreneurial appeal, however, the medicallegal consulting services create too many opportunities to violate an attor-

153

154 155

G . S P E N C E , W I T H JUSTICE FOR N O N E : DESTROYING A N A M E R I C A N M Y T H 2 7 0 (1989) ("Today, most

personal-injury cases become contests between experts hired at great expense b y all sides, the object o f the contest being to determine w h o can most convincingly call the other a liar."). See also D. LOUISELL & H . WILLIAMS, supra note 3 , § 7.02, at 7 - 8 n . 8 ( " I t is common knowledge among trial lawyers that there a r e certain witnesses whose testimony, frankly, can b e bought . . . . " ) . See supra note 1 3 4 . See supra note 151.


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ney's professional ethics and the integrity of the witness system. Consequently, their use should be discouraged. Nonetheless, the appearance of these contingently paid services in medical malpractice and personal injury lawsuits have served the important function of highlighting the flaws contained in the American expert witness system, including the uneven accessibility to qualified experts156 and the significant potential for perjury by expert witnesses regardless of the payment scheme.157 So long as expert testimony is required in most cases involving standard of care determinations, it is imperative that alternative arrangements of obtaining such testimony be created so that plaintiffs can gain access to court while, at the same time, the integrity of the legal profession is preserved. 156 157

See supra notes 2 3 - 2 5 a n d accompanying text. See Dupree v. Malpractice Research, Inc., 179 Mich. App. 254, 4 4 5 N . W 2 d 4 9 8 (1989); Polo v. Gotchel, 225 N . J . Super. 4 2 9 , 542 A.2d 947 (1987); Person v. Association of the Bar, 554 F.2d 534 (2d Cir.), cert. denied, 4 3 4 U . S . 9 2 4 (1977).

Extra fees for uninsured services.

Professional fees for clinical pharmacy services.

A proposal: OR consulting team.

Outreach surgical consulting services in North East Victoria.

Myth: user fees ensure better use of health services.

Fees for information services to hospitals: a California experience.

Randomized controlled trials in environmental health research: unethical or underutilized?

Under the counter, underground or unethical medicines? An African perspective.

Fees.

Common sense and consulting.

Medical Fees.

[Differences in the use of health care services--is everything unethical?].

Medicaid primary care physician fees and the use of preventive services among Medicaid enrollees.

Unethical approach.

The characteristics of ideal routine newborn care: services, fees, and goals.

Assessing the elimination of user fees for delivery services in Laos.

Authorship inflation is unethical.

Anxious, threatened, and also unethical: how anxiety makes individuals feel threatened and commit unethical acts.

Medical Fees.

Fancy Fees.

Medical Fees.

Medical Fees.

Dental anaesthetic fees.

Dental anaesthetic fees.