The Wall Street Journal (via the Baltimore Sun) has an interesting look at contingency fees at large corporate law firms.
The featured firm is Faegre & Benson, who represented fishermen in the Exxon Valdez oil spill case. Last year, a federal appeals court upheld a verdict for the plaintiffs that included $2.5 billion in punitive damages. Fees for Faegre and other firms could approach $900 million. The WSJ Law Blog covered the case late last year.
As the paper reports:
Traditionally, the nation’s top corporate law firms have shunned contingency-fee work — often cases that target big corporations for punitive damages — for fear of alienating their core clients. But driven by pressure to boost profits, more such firms are crossing over to what some lawyers call the “dark side.”
There is also plaintiffs work in more pedestrian cases involving antitrust or patent claims.
“Expenses are increasing for firms, while at the same time their clients increasingly seek discounts” on lawyers’ hourly rates, says legal consultant Ward Bower of Altman Weil Inc. “The opportunity for upside at many firms is limited, and these plaintiffs cases provide enormous upside opportunity.”
In my mind, there is a big difference in representing business plaintiffs in commercial disputes, versus representing individual plaintiffs in mass tort (or economic damage) cases. The fact that a corporate firm would be seeking punitive damages (and forced to argue for them on appeal) could rub many GCs the wrong way.
Good luck to Faegre divvying up the spoils; no word on whether this case has affected its energy practice.
One comment provides some context:
Most of the firm’s partners don’t expect a big windfall from the case, Faegre partner John Hinderaker says. “I’m hoping to remodel my kitchen. That is the level of expectation I have.”