A mass tort lawyer named Stan Chesley was recently disbarred for receiving a $20 million contingency fee after negotiating a $200 million settlement for the plaintiffs.  The plaintiffs were allegedly injured by the diet drug fen-phen and Chesley was able to help negotiate the hefty settlement for them.  However, according to ABA Journal, the Kentucky Supreme Court was not pleased with the Chesley’s $20 million fee, referring to it as “unreasonable, especially in light of his professed ignorance and lack of responsibility for any aspect of the litigation except showing up at the mediation and going through the motions of announcing the agreement.”

How Are Contingency Fees Calculated?

Contingency fees must be reasonable taking into account the totality of the circumstances.  To determine if the fee is reasonable, courts look to the difficulty of the case, the skill and time required by the attorney and other factors.  Moreover, contingency fee agreements must be in writing, signed by client, and the lawyer's fee percentage must be stated.  Also, according to the court in Chesley’s case, “an attorney's fee in a contingency fee case that so grossly exceeds the fee provided for in the fee agreement is unreasonable per se.”

The Kentucky Supreme Court ruled that the contingency fee exceeded the contracted amount, and the clients were not appropriately informed of the distribution.

Have you ever entered into a contingency fee agreement?  Do you think the court made the right decision by disbarring this attorney?