Sunday, December 9, 2012

96th Installment. Challenge the California State Bar Court Fee Schedule in Federal Court

A legal-ethics hypothetical
Attorney charges client $17,000 for a $2,500 matter. When astounded client inquires, attorney’s billing office explains that attorney bills in $15,000 increments.
Hypothetical question on the California Rules of Professional Conduct:
Has attorney committed an ethics violation?
Attorney has gravely violated Rules of Professional Conduct, rule 4 –200(A), which prohibits charging an “unconscionable fee.”
The fee is unconscionable because when fees are based on work done, they must be based on the work done on the particular case. The fee must be based on “all the facts and circumstances” of the particular case. (Rules Prof. Conduct, rule 4 –200(B) [emphasis added].) Equivalence classes are allowed for work of equal expected amount but not when the work is highly variable within the range.

What discipline for the routine use of this despicable practice? I don’t have access to the State Bar Review Department’s deliberately inaccessible case law, but I’d estimate a one-year suspension. Other opinions?

The California State Bar’s outrageously unconscionable fee structure

In another manifestation of its ethical villainy, the State Bar charges respondents’ legal costs and fees in exactly this shameful manner, brazenly defending its prerogative to save administrative costs by overcharging. Defense attorney D.C. Carr (Kafkaesq) provides a much-needed exposure of this fee structure. Some examples. 1) A simple challenge before the Review Department costs about $15,000 if taken during the first 120 days. 2) If a trial lasts a fraction of a second day, the cost rises about $6,000.

The California State Bar Court’s state and federal vulnerabilities

There are at least two bases for challenging the fee structure—one at the state level, directed to the fees alone; the other federal level, directed against the whole action because the fee structure denies due process. The state-level challenge is based on the State Bar’s having exceeded its jurisdiction. Since the averaging method the State Bar uses is unethical under the Rules of Professional Conduct as well as under ordinary morality, Business & Professions Code section 6086.10, which provides the right to levee fees, isn’t plausibly interpreted as giving the State Bar the right to impose fees unrelated to costs. The statute allows the State Bar “reasonable costs,” a term of art in California civil procedure, requiring an account of actual costs in the particular case.

The federal challenge is based on the federal standards for due process, which focus on the right to be heard, apply to state courts, and are offended by arbitrary fees. Business & Professions Code section 6086.13 permits waiver for hardship but doesn’t compel it, where the threat of huge, disproportionate fees typically leverages settlement terms and routinely prevents respondents from being heard.

I plan future Installments to consider the procedural issues in mounting a state or federal defense based on the theory that the fee structure denies respondents the right to be heard.

1 comment:

CharltonW said...

I agree with the due process argument wholeheartedly.