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Business Observer Friday, Dec. 3, 2004 14 years ago

Fight for Fees

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Voters may not have the last word. Trial lawyers find a way around Amendment 3.

Fight for Fees

Voters may not have the last word. Trial lawyers find a way around Amendment 3.

By David R. Corder

Associate Editor

Attorneys Henry Valenzuela and Tom Scarritt arenit waiting for Bill Wagner to prove his point at the Florida Supreme Court. Six days after last monthis election, Wagner, a member of the Florida Baris professional ethics committee, filed an emergency petition with the high court to exclude existing lawyer-client contracts from Amendment 3 to the Florida Constitution. Thatis the voter mandate that limits attorney fees in medical malpractice lawsuits.

Valenzuela and Scarritt agree with Wagner, but theyire taking the issue a step further. They are among a considerable number of trial lawyers who intend to test the limits of what they say is a bad law. These two Tampa attorneys and others argue the amendment violates the contacts clause of the U.S. Constitution.

To get around the amendment, theyire asking medical malpractice clients to waive their constitutional rights under the new amendment. They want clients to agree to pre-existing contingency fee guidelines governed by the state Supreme Courtis rules regulating the Florida Bar Rules of Professional Conduct. Thatis about 33% of all damages from settlement or judgment proceeds. Amendment 3 limits attorney fees to no more than 30% of the first $250,000 and 10% after that.

iAny person has the ability to waive a constitutional right,i says Valenzuela, president of Tampais Valenzuela & Stern PA. iThereis no doubt this right can be waived. Whois enforcing it? The doctors certainly have no standing. The doctors may try to go to the Florida Bar. If the Florida Bar decided they wanted to restrict fees, then they would pretty much decimate medical malpractice law. I donit see the Florida Bar doing that.i

This strategy, which trial attorneys say is essential to their survival, riles members of the Florida Medical Association (FMA) and Citizens for a Fair Share Inc., the political action committee that advocated the amendmentis enactment. So it follows that the doctorsi lobby would defend any effort by trial lawyers to contravene the new law.

The doctorsi lobby worked hard to make Amendment 3 palatable for the voters. Besides raising about $7.4 million in campaign contributions, the FMA encouraged its members to aggressively and vocally promote the amendment in their communities. They argued it was the only way to control the stateis skyrocketing medical malpractice insurance premiums and encourage physicians from relocating practices elsewhere.

iThe lawyersi lobby spent over $24 million to defeat the amendment,i says FMA spokesperson Lisette Gonzalez Mariner. iWeive always expected they would try anything and everything to stop this measure. Thatis why the Supreme Court needs to step in and make a rule.i

Evaluating risk

The doctors lobby has a tough fight ahead on the issue of contract waivers, says Scarritt, president of Tampais Scarritt Law Group and a member of the Florida Commission on Ethics. Thatis because he doesnit see much risk for lawyers who adopt the contract waiver as part of a business strategy. He offers a constitutional argument to back his reasoning.

iIf there is a risk, I canit imagine one,i he says. iWeire charged as lawyers with protecting all of the clientis constitutional rights. And what weire faced with here is a state constitutional amendment that infringes upon federal constitutional guarantees. I canit imagine a lawyer, who gives his client the option to enforce the federal constitutional right and waive the state constitutional right, is doing anything but his or her job.i

However, the contract waiver is such a complex issue that Wagner decided not to tackle the subject in the petition he filed Nov. 8 with the Supreme Court. Neither he nor his colleagues at Tampais Wagner Vaughan & McLaughlin PA have made a decision whether to adopt the contract waiver on future medical malpractice lawsuits as part of the law firmis business strategy.

iEveryone agrees the amendment shouldnit apply to existing cases,i Wagner says. He cites the support for that argument in the responses to his petition from the doctorsi lobby and Floridians for Patient Protection, the Academy of Florida Trial Lawyersi political action committee.

iAs for future cases, there are many terribly complex issues as to how this amendment would apply, such as whether you could waive; and, if you waive it, what would you have to do as a precursor,i he says.

Among the complexities, Wagner cites the potential for conflicts of interest.

iYou might need an independent lawyer to represent the client on just the waiver issue,i he says. iWhen trying to decide whether to try a case or not, the lawyer has to decide on what terms he can take it; whether he can ask a client to waive a right when (the lawyer) is involved. That puts a lawyer in a very tedious position.i

To overcome that problem, lawyers such as Valenzuela and Scarritt now encourage clients to talk with independent counsel about the contract waivers.

iTheyire generally confused,i Scarritt acknowledges. iThey donit understand that they have to go through a process of weighing out constitutional rights in order to decide which lawyer to pick.

iI tell them if they have any confusion get a second opinion, on this or any other issue for that matter,i he adds. iIf the client does not understand the waiver, then theyire best served by having separate counsel of their choosing to go over it with them.i

Client rights

Many lawyers have expressed either an interest or an intent to request contract waivers from medical malpractice clients, says Florida Bar President Kelly Overstreet Johnson, a Tallahassee attorney.

iIive heard that as an option,i she says. iWhether theyive actually signed up clients Iim not sure.i

One thing is certain: Johnson thinks the onus for contract acceptance still falls squarely on the client.

iUltimately itis a decision the client has to make,i she says. iItis a personal choice who your lawyer is going to be.i

And thatis the problem, Valenzuela says. He argues the new law essentially restricts the clientis right to choose effective counsel. If contract waivers are forbidden, he suggests only a few lawyers will be willing to take a malpractice lawsuit that essentially produces such a low return for possibly years of work and costs.

iThe purpose of the contract waivers is designed to allow the clients to hire an attorney who gives them the best chance of winning,i Valenzuela says. iLawyers across the state, who typically take these type of cases, invest upfront from $100,000 to $300,000 of their own money on just one case. Theyire not going to be willing to continue to do that if this amendment is ultimately found constitutional and enforceable.i

Meanwhile, Johnson sees no other way to solve questions about contract waivers except through the state Supreme Court.

iI donit think the Florida Bar is going to doing anything for the moment,i she says. iI anticipate weill get guidance from the Florida Supreme Court sooner rather than later. But this has to be decided so clients and lawyers know what their rights are.i

Until then, Johnson says, the Florida Bar leadership will wait and see.

iRight now weire aware there are going to be a lot of (legal) actions over this,i she says. iSo weire in a state of flux, and we need to know what the Florida Supreme Court is going to do.i

A Florida Bar publication recently quoted Alexander Clem, president of the Florida Academy of Trials Lawyers, as preparing for a court fight over the amendment.

iI donit have the battle plan laid out on paper, but we will be meeting over the next several days and weeks to discuss our approach to challenging this amendment, but I think there are some real problems with it,i Clem says in the publication. iIf we are now going to cap lawyersi fees, can we cap business executivesi salaries, can we cap insurance policies? What about a plumbersi salary?i

Only one class of people will suffer if the Supreme Court ultimately rules against contract waivers, Valenzuela says.

iThe people whose claims are being drastically eliminated are the ones with good cases that lawyers wonit pursue,i he says. iAnybody who says different doesnit have an understanding of the legal economics. What they donit understand is there are three or four cases you pursue at your nickel that will be won or lost. You have to absorb the costs. Those costs have to come from the revenue of other cases.i

Proper forum?

Wagner says he has a simple explanation for why he asked the stateis high court to focus only on existing medical malpractice cases.

iAll I want to do is ensure that there are no conflicts of interest between me and my current clients,i he says. iI donit want to be a position of fussing with them.i

The issue becomes much more complicated considering existing medical malpractice cases on appeal may be remanded for retrial, Wagner says. He knows of instances where the appellate courts have remanded a case twice for retrial.

So itis important to eliminate any confusion because of the money trial attorneys already have invested in such cases prior to the lawis enactment, he says.

iItis a possibility that some judge could rule that I donit get any fee in such a case and the client gets all the money,i he says.

In responses to Wagneris petition, attorneys for the doctorsi lobby clearly agree with his argument on retroactivity.

iCitizens believes that any attempt to apply Amendment 3 to contracts between clients and their attorneys, which were in existence before the effective date of the amendment would violate Article I, Section 10, of the United States Constitution, which provides that no state shall pass any law impairing the obligation of contracts,i Holland & Knight LLP attorneys Stephen H. Grimes and Susan L. Kelsey wrote in the response.

While they agree with Wagner and the doctorsi lobby on the issue of retroactivity, the attorneys for the lawyersi lobby have taken a more critical view of the lawis impact on lawyer-client relationships.

On behalf of the lawyersi lobby, Jacksonville attorney Tracy S. Carlin says the new law impairs clientsi future contractual rights.

iAlthough the court has the authority to issue rules governing the professional conduct of attorneys under Article V, Section 15, of the Florida Constitution, (the lawyersi lobby) respectfully suggests that the exercise of that authority would not be the proper means through which to determine the legal effect of the amendment on future relationship between lawyers, the clients, third-party lien holders, such as Medicare or Medicaid, or insurance companies with subrogation rights,i Carlin argues. iLikewise it does not appear to be the proper forum though which to resolve the question of whether the amendment includes a fee-shifting component.i

To resolve these questions, Carlin offers the court a simple suggestion.

iInstead, the interpretation of the amendment and its impact on limitations on the attorney-client and third-party relationship in medical negligence cases should be litigated through the normal course beginning in the circuit courts,i Carlin wrote.

That may be a little ambitious in Wagneris view. He would rather the high court resolve the issue over retroactivity, first.

iIim going to file one more reply to the court to make it aware that everyone agrees this doesnit apply to existing cases,i he says. iSo letis get this one behind us, first.i

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