Class Action Lawyer Fees Targeted By Kyl Bill

by Glen Shapiro, LawAndTax-News.com, New York

20 May 2003

Although Senator Jon Kyl's (R-Arizona) proposal to limit the amounts earned by lawyers in suits resulting in huge financial settlements failed in the Senate last week, the campaign is still very much alive, according to a report from the National Law Journal.

During the debate over tax cut legislation, Senator Kyl and co-sponsor, Senator John Cornyn (R-Texas) put forward the so-called 'tobacco-tax lawyers' amendment, which would allow lawyers to charge fees of up to 500% of reasonable hourly rates in certain cases (such as those which represented a significant financial risk for the law firm, or in which the lawyer in question performed exceptional services which greatly benefited the plaintiff), but would impose a 5% excise tax on amounts above those fees, and a 200% tax on top of that if the excess is not returned to the client.

'Some attorneys are receiving fees, if we can believe this now, in excess of $150,000 an hour,' Senator Kyl revealed recently, continuing: 'It is unconscionable, and no contract that provides for that can be enforceable in law. It is clearly a breach of the (attorney's) fiduciary responsibility.'

According to the NLJ, the proposal was rejected by the Senate over concerns about involving the IRS in establishing lawyers' fees. However, the Arizona Republican has pledged to continue to press the issue in a bill introduced by himself and Senator Cornyn to the Senate last month.

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