10 Things Your Lawyer Won't Tell You
By Brigid McMenamin
1. "You might win your lawsuit and wind up with nothing."
Expecting a bundle from a big lawsuit? Don't start spending it yet. You may be shocked to learn how little you'll get to keep.
Lawyers may not like to mention it, but federal taxes — at a rate of 25 to 35% — can easily wipe out most of the money you win in civil lawsuits; bodily injury suits are the only exemption. You'll probably even have to pay federal taxes on the part that's earmarked for your attorney, unless you live in the one of the few regions, including Alabama, Michigan and Texas, where federal appeals courts have sided with taxpayers.
"It wasn't worth filing the suit," says a midwestern sales manager who settled a discrimination case against her employer confidentially for $150,000 in January. The woman will net $14,000 after lawyers' fees, expenses and taxes, says a source close to her case. Some "winning" plaintiffs even wind up in the hole. Realizing that such grim victories chill business, members of the National Employment Lawyers Association are prodding Congress to stop taxing discrimination awards and settlements, which often take the biggest hit. So far, they've had no luck.
2. "Gee, I don't know much about the law..."
Ask an attorney about anything outside his niche and odds are he won't know. Teacher Marie Karim learned that when she decided to sue the New York City hospital where she had developed an infection and a hernia in 1999 during exploratory surgery. Karim, 27, hired Sheri B. Paige because her mother had once consulted the Norwalk, Conn., lawyer about collecting a debt. Karim says Paige assured her that she had experience with medical malpractice cases.
More than a year later, Karim discovered that Paige had virtually no such experience and that she hadn't even filed the suit. Worse yet, the statute of limitations had run out. "I wanted to kill her," says Karim, who got $325,000 from Paige's insurance company in 2002 with assistance from a specialist in legal malpractice. Paige denies all wrongdoing and blames the entire mess on Karim. But in November 2002 a Connecticut lawyer grievance panel found probable cause to believe that Paige was guilty of misconduct. A hearing is set for this month.
Karim should have hired an expert — someone who does almost nothing but medical malpractice.You can find specialists in the lawyer directory Martindale-Hubbell, available in any library or online at lawyers.martindale.com, or in FindLaw (
www.findlaw.com).
3. "...but I'd sure like to get to know you better."
Unlike doctors, lawyers in most states are allowed to have sex with clients. And many do. Nearly 20% of attorneys surveyed nationwide by the University of Memphis in 1993 admitted they or a lawyer they knew had had an affair with a client.
Lawyer-client flings, especially in divorce and family law cases, can warp the lawyer's judgment, prompting him to either prolong the dispute or sacrifice the client's interests to end it fast, notes Texas Wesleyan University law professor Malinda L. Seymore. The client may submit in the belief that if she does, the lawyer will do more to help her keep her home and children.
That's what Plantation, Fla., lawyer Steven W. Effman told two female clients to entice them to service him in his office, according to the women's sworn testimony. Not only did Effman fail to deliver on his promises, these clients say, but he actually had the nerve to bill at least one for their trysts. The Florida bar filed a complaint against Effman in 2002, and a court suspended his license for 91 days. Effman insists his affairs were consensual and denies making promises or billing for sex.
Despite such scandals, the American Bar Association didn't rule on the issue until 2002, when it noted that lawyer-client sex is generally unethical but it is up to each state whether to adopt an outright ban on the practice. Only six have.
4. "Okay, I've made some mistakes. Good luck finding them!"
Trying to learn whether a lawyer is a bad apple can be an exercise in futility. The ABA keeps a database of known ethics violators and makes the information available if you call 312-988-5321, but it relies on voluntary reports from state bar counsels. You could call the bar counsel in the appropriate state directly — listed at
www.nobc.org — but that can also be a dead end unless the attorney has been suspended or disbarred. Many states just say he's "in good standing" even if he has had lots of complaints or worse.
Take Las Vegas lawyer Kenneth L. Hall. According to the Nevada bar, Hall has no disciplinary record. Run a search on him at Google.com, however, and you'll find a newspaper story about his suspension in 2001 for videotaping an intimate encounter he had with a woman in his office in the presence of her toddler daughter. Why doesn't the bar tell you about the suspension? Hall, 54, convinced a court to set it aside, though he admits to the tryst.
Beyond Google, which is free, you can do a background search by using commercial sites such as
www.knowx.com or
www.gaprs.com, which charge a small fee — typically $10 to $30.
5. "I never win."
So your attorney has plenty of experience in his field, but has that been as a winner or a loser? How you find out depends on the situation. If you're hiring him to defend you against a criminal charge, ask him if he ever worked in the prosecutor's office and for how long, because that's where the best criminal defense lawyers typically get their training. For any court case — criminal or civil — you also want to know how many cases he's actually taken to trial in the past five years. Experts say even five or six can be plenty, if at least one win is in a case similar to yours. If he says his cases usually settle, that's a bad sign. A guy who's known for always settling can't drive a hard bargain. "It certainly helps if the defendant knows [a lawyer] is ready to go to court," says Bert Braud, a Kansas City, Mo., litigator who takes at least one case through trial each year.
6. "I won't take your chump-change case."
Just because you have a strong legal case doesn't mean a lawyer will take it on — not if it is bad for his bottom line. That's especially true with claims involving securities arbitration, usually against brokers who have churned clients' accounts or put them in unsuitable investments. Most brokers require their clients to agree to arbitration when opening an account. The number of these cases has risen more than 56% since 1998, according to NASD Dispute Resolution, the group that hears 90% of such cases.
Trouble is, the few lawyers who know about this growing field generally refuse to handle claims of less than $50,000 because smaller cases generate small fees. Henri Draznin, a retired customer-service rep, found himself in such a bind. He couldn't find a lawyer willing to help him recover $9,000 he'd lost in high-yield bonds, which his broker had put him into without mentioning they were risky for a retiree. Draznin was out of luck until he found a legal clinic at New York's Pace University Law School, where students supervised by Professor Barbara Black helped him file an arbitration claim, winning him $4,046 in February 2003.
Short of finding a law school clinic eager to help you, what can you do? Contact the Legal Referral Service at the Association of the Bar of the City of New York at
LRS@abcny.org. You can get a referral to an NYC attorney and arrange a $25 initial consultation. Or you can contact Public Investors Arbitration Bar Association (
www.piaba.org) to get the name of a lawyer in your area who is experienced in securities. Try offering him a little more than his usual percentage — say, 33%, rather than 30 — to sweeten the pot.
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