Art. 4550. Costs and attorney fees The court may render judgment for costs and attorney fees, or any part thereof, against any party, as the court may consider fair. However, no attorney fees shall be awarded to a petitioner when judgment is granted against the petitioner or the petition is dismissed on the merits.
Full Answer
The Louisiana Supreme Court adopted this rule on January 20, 2004. It became effective on March 1, 2004, and was amended in 2006. Paragraphs (a), (b) and (d) of this proposed rule are identical to ABA Model Rule of Prof’l Conduct 1.5 (2014).
As to contingent fees, Louisiana courts have reduced large fees when a minimal amount of legal work has resulted in a large recovery. See, e.g., Thibaut, Thibaut, Garrett & Bacot v. Smith & Loveless, Inc., 517 So. 2d 222, 225 (La. Ct. App. 1st Cir. 1987) (remanding for an evidentiary hearing to determine whether a fee of $24,336 was an unreasonable fee for 26 hours of work performed to collect $243,354). Contingent fees can be unreasonable for a number of reasons. First, a contingent fee may be unreasonable due to a lopsided allocation of risk. For example, a lawyer who undertakes a case with a high probability of a large recovery without discussing the availability of alternative fee arrangements with the client might collect a fee that is adjudged to be unreasonable. See Restatement (Third) of the Law Governing Lawyers § 35 cmt. c (2000); see also Wiener, Weiss & Madison v. Fox, 971 F.3d 511 (5th Cir. 2020). Second, a contingent fee may be unreasonable if the contingent percentage is unjustifiably large or if an otherwise reasonable percentage is applied to an unreasonable base amount, such as an uncollected judgment or a nondiscounted sum of structured-settlement payments. Id. cmts. d-e. However, the reasonableness of a contingent fee “cannot be determined by simply multiplying the hours worked by an hourly rate customary in the legal community.” See Town of Mamou v. Fontenot, 816 So. 2d 958, 966 (La. Ct. App. 3d Cir. 2002). Such an “overly simplistic” formula would not properly account for the risk undertaken by the lawyer. See id.; see also Saucier, 373 So. 2d at 102.
If the lawyer and the client disagree on the unearned portion of such fee, the lawyer shall immediately refund to the client the amount, if any, that they agree has not been earned, and the lawyer shall deposit into a trust account an amount representing the portion reasonably in dispute.
When a lawyer violates Rule 1.5, the following sanctions are generally appropriate: disbarment, if the lawyer knowingly violated the rule, intended to obtain a benefit for himself or another, and the lawyer’s conduct caused serious or potential injury to a client, the public, or the legal system; suspension, if the lawyer knowingly violated the rule, and caused serious or potential injury; reprimand, if the lawyer negligently violated the rule, and caused injury or potential injury; and, admonition, if the lawyer’s conduct was an isolated instance of negligence that caused little or no actual or potential injury. See Standards. for Imposing Lawyer Sanctions stds. 7.0-7.4 (Am. Bar Ass’n 1992). Reprimand is generally the appropriate sanction in most cases of a violation of a duty owed to the legal profession. See id. std. 7.3 cmt. Nevertheless, in Louisiana, the sanction for charging an excessive fee ranges from reprimand to disbarment. See In re Bailey, 115 So. 3d 458 (La. 2013); In re Ford, 30 So. 3d 742 (La. 2010); In re Booth, 6 So. 3d 158 (La. 2009); In re Petal, 972 So. 2d 1138 (La. 2008); In re Levingston, 755 So. 2d 874, 876 n.6 (La. 2000) (citing In re Juakali, 699 So. 2d 361 (La. 1997); In re Little, No. 95-DB-009, slip op., at 3 (La. 1996); In re Watkins, 656 So. 2d 984 (La. 1995); In re Quaid, 646 So. 2d 343 (La. 1994). Notably, the Louisiana Supreme Court imposed permanent disbarment on a lawyer for multiple violations of Rule 1.5 (f) (5), holding that the lawyer’s failure to refund unearned fees to 39 clients was “essentially” conversion of the fees to the lawyer’s own use. In re Fleming, 970 So. 2d 970 (La. 2007) (stating that the lawyer “used a law license as pretext to steal money from the citizens of this state”); s ee also In re Burkart, 2018 WL 5816846 (La. 2018) (disbarring lawyer for, among other offenses, failing to return unearned fees to clients and intentionally evading clients by ignoring phone calls); In re Toaston, 225 So.3d 1066 (La. 2017) (holding that “permanent disbarment was appropriate sanction for attorney’s numerous instances of misconduct,” including several violations of Rule 1.5); In re Mitchell, 145 So. 3d 305 (La. 2014) (imposing permanent disbarment on lawyer for hundreds of unsupported expense reimbursement requests over a period of several years); In re Avery, 110 So. 3d 563 (La. 2013) (posing permanent disbarment on lawyer for, among other offenses, writing personal checks drawn on client trust account and failing to refund unearned fees); In re Bates, 33. So. 3d 162 (La. 2010) (imposing permanent disbarment on lawyer for accepting more than $51,000 in fees and failing to do any substantial work or refund the funds); In re Lester, 31 So. 3d 333 (La. 2010) (disbarring lawyer for multiple violations of Rule 1.5, among several other rules violations); and In re Gomez, 29 So. 3d 473 (La. 2010) (disbarring lawyer for failure to refund unearned fees, failure to promptly remit funds to third-party medical provider, and using client funds for unauthorized purposes).
First, a contingent fee may be unreasonable due to a lopsided allocation of risk. For example, a lawyer who undertakes a case with a high probability of a large recovery without discussing the availability of alternative fee arrangements with the client might collect a fee that is adjudged to be unreasonable.
First, unlike the model rule, paragraph (e) (1) of this proposed rule makes no distinction between fees divided “in proportion to the services performed” and fees divided otherwise . In all cases, the client must agree in writing to the “representation” by all of the lawyers involved.
In Scheffler v. Adams & Reese, the Louisiana Supreme Court held that lawyers serving as co-counsel and sharing fees have no fiduciary relationship vis-a-vis one another:
Attorney’s fees in Louisiana workers compensation must be approved by the workers compensation Judge and are to be paid from the amount awarded to the injured employee in the manner allowed by the workers compensation Judge.
As noted above, attorney’s fees in Louisiana workers compensation are limited to twenty percent (20%) of the total amount of recovery.
In addition to attorney’s fees, Louisiana workers compensation claims involve other out-of-pocket costs.
A qualified, experienced Louisiana workers compensation attorney can drastically improve an injured employee’s situation and claim.
In other words, when attorney fees are separately awarded to the employee to be paid by the workers compensation insurance company, the twenty percent (20%) limit on attorney’s fees does not apply, and the employee’s attorney can accept and keep the fee award even if it is greater than twenty percent (20%) of all recovery in the case, provided that the written contract between the employee’s attorney and the employee allows this.
However, in order to keep the award for attorney’s fees, even if it is greater than 20% of the total recovery in the claim, the written contract between the employee and the employee’s attorney must state that the attorney’s fee awarded will be in addition to the 20% contingency fee (and not in lieu of the 20% contingency fee), and the total amount of attorney’s fees must be both reasonable and approved by the workers compensation Judge.
One exception to the twenty percent (20%) attorney’s fees in Louisiana workers compensation is that an employee’s attorney can not take his or her fee out of the seed payment in the employee’s structured Medicare Set-Aside Account (MSA).
Under Louisiana law, attorney fees are not awarded unless expressly provided by statute. Section 1973 does not specifically provide for recovery of attorney fees for prosecution of a section 1973 action. Hence, attorney fees are not recoverable under a Section 1973 cause of action. However, Section 1892 expressly provides a claim for attorney fees.
Are punitive damages recoverable? No. Under Louisiana law, punitive damages may only be awarded if provided by statute. The Louisiana bad faith statutes provide that a claimant may be entitled to general damages, penalties, and attorney fees, but do not provide for punitive damages.
A plaintiff can assert a La. R.S. 22:1973 bad faith penalty claim against a tortfeasor’s insurer, but only where the plaintiff can prove that the insurer committed one of the bad faith acts specifically set forth in subsection B, supra. Following Theriot, subsequent courts have held that a third party claimant does not have an action against an insurer under Section 1973.B (5) for failing to pay the amount of any claim “due to any person insured by the contract,” within 60 days of receipt of satisfactory proof of loss, because the term “due to any person insured by the contract” is strictly construed to mean that only an “insured” can have a Section 1973.B (5) cause of action. See Woodruff v. State Farm Ins. Co., 767 So.2d 785 (La. App. 4 Cir. 2000).