Page images
PDF
EPUB

LEGAL FEES

MONDAY, OCTOBER 1, 1973

U.S. SENATE,

SUBCOMMITTEE ON REPRESENTATION OF CITIZEN INTERESTS

OF THE COMMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to recess, at 9:45 a.m., in room 2228, Dirksen Senate Office Building, Senator John V. Tunney (chairman) presiding.

Present: Senators Tunney (presiding) and Cook.

Also present: Jane Frank, chief counsel; Neil Levy, assistant counsel; Joseph Dawahare, minority counsel; and Ann Hennigan, chief clerk, Matthew Schneider, staff assistant.

Senator TUNNEY. The subcommittee will come to order.

STATEMENT OF HON. JOHN V. TUNNEY, U.S. SENATOR FOR CALIFORNIA, CHAIRMAN, SUBCOMMITTEE ON REPRESENTATION OF CITIZEN INTERESTS

Today, the subcommittee continues to look into the effect of legal fees on the availability of lawyers to the average citizen. In our first 2 days of hearings on this topic on September 19 and 20, we heard that large numbers of Americans are denied their legal rights simply because no lawyer will take their case, or because the fees are too high, or because a lawyer handles their case ineffectively. We also heard that a long-standing tradition of many State and local bar associations-the minimum fee schedule-has tended to price many legal services out of the range of the ordinary consumer. We heard tales of severe financial loss, and an understandable and bitter frustration. We also heard some good suggestions for reform, and about the ongoing effort to invalidate minimum fee schedules under the antitrust laws.

Our focus now shifts to some areas where the Federal Government has regulated and subsidized legal fees. Most people are aware of the legal services program for the poor established under the Economic Opportunities Act. Few, however, know of Federal subsidies to attorneys who secure claims for miners under the Black Lung Benefits Act of 1972, or of Federal limits on fees to attorneys who recover benefits for veterans under title 38 of the United States Code. These laws are substantially different, and important questions must be asked about whether either affords a system of quality representation, or puts the taxpayer's dollar to its best use.

(245)

Last year, 11 attorneys in Kentucky each made between $100,000 and $1.08 million representing miners in obtaining black lung benefits under State and Federal programs. Some claim that these attorneys did little or no work to reap these huge rewards: They helped the miner to fill out a form which is unnecessarily complicated; they arranged for a medical examination by a doctor who always seems to find evidence of the disease; they argued what amounted to a "pro forma" motion before the State Workmen's Compensation Board. For this effort, in substantially all cases they were awarded the maximum fee allowed by State law: 20 percent of the claim awarded to the miner, or an average of $5,000 per claim. In the end, this fee award was not paid by the miner but by the general taxpayer.

Why were the fees so high? Is an attorney needed at all to do the work? Aren't there less expensive alternatives to provide the same representation to miners? If we are to keep the present system, shouldn't the State Workmen's Compensation Board, or the State Bar Association, or the Federal Government-which ends up offsetting these fees-exercise greater oversight? Today we will ask all of these questions.

Senator Cook has an opening statement.

STATEMENT OF HON. MARLOW W. COOK, U.S. SENATOR FOR KENTUCKY

Senator Cook. Thank you, Mr. Chairman.

In our first hearings, we heard testimony regarding the accessability of lawyers and the minimum fees which they charge. This week we will look at federally established maximum fees which a lawyer can receive for handling cases in certain areas. Today we will look specifically at the area of legal fees awarded in black lung cases, at both the State and Federal levels.

The entire area of miner's compensation for black lung has been a subject of much study by both Houses of Congress. It is an area which has cost the Federal and various State governments millions or dollars in benefit payments. By implementing new safety regulations, it is hoped that the occurrence of the disease will be greatly reduced. But this will not help the thousands of currently active miners who began mining before strict safety requirements were made mandatory.

We realize that the lawyers who handle black lung cases have done nothing illegal. It is not our purpose today to point the finger of guilt at anyone, and we have no intention of doing so. We are aware of what the law permits, and of the administrative procedures which have been developed to guard against overpayment. The record clearly shows that the administrative boards have often awarded less than what the attorney requested.

But it is also a fact that attorney's fees awarded in black lung cases has been a point of study and discussion in Kentucky for quite some time, and several lawyers have been in the spotlight because of the large amounts of money which they have made handling miners' claims at the State level. Many people believe that because of the

way the program is set up, the Federal Government indirectly pays a large amount of those fees.

It appears that the basic issue is the same at both the Federal and State levels: Are attorneys being overcompensated for the amount of work they do in handling a black lung claim? It was not the intent of the law to help make a few lawyers rich, but to help many miners maintain a decent standard of living after they have been crippled by black lung. The fact that some lawyers have prospered as a result of the program suggests some parts of the program might well be improved.

In addition to this, we must consider the counterargument. Should an attorney who has become very efficient in a particular area be penalized because of his efficiency? I think the witnesses we have called today will help to answer these questions by giving us a true insight into the actual operation of the system. It is always interesting to see how the written laws are carried out.

At a meeting with GAO last week, they reported to me that their findings indicate that under the law which is soon to go into effect, the coal industry will be in trouble. We cannot afford to let this industry, which is not only vital to the mining States such as Kentucky, but the entire Nation, falter at a time when energy resources are at a premium.

Though we are only focusing on the aspect of attorney's fees, it is my hope that this will be the first step toward making the entire black lung program one which is workable for everyone.

Thank you, Mr. Chairman.

Senator TUNNEY. Thank you, Senator Cook.

Today we have a long list of witnesses. The subject is deserving of the kind of attention that would ordinarily comprise 2 or 3 days of hearings but, unfortunately, we can only spend today on this hearing.

Our first witness is Congressman Ken Hechler, Democrat, West Virginia.

It is a great pleasure to have you with us this morning, Ken. Thank you very much for traversing the Capital and giving us the benefit of your wisdom on this matter. I know how deeply interested you have been through the years, and were the main sponsor of the black lung legislation in the House, as I recall.

It is wonderful having you here. Thank you so much.

STATEMENT OF HON. KEN HECHLER, REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. HECHLER. Thank you, Mr. Chairman.

I am outraged by the sharp practices of some attorneys in collecting unconscionably large legal fees out of the black lung payments which rightfully belong to coal miners and their families.

I am equally shocked by the failure of the Social Security Administration to take aggressive steps (1) to render the necessary service to applicants so they need not feel so dependent on attorneys; or (2) to make a thoroughly critical examination of what some attorneys are getting away with.

24-625-74- -17

When the black lung payments first started in January 1970, the sky was the limit for attorneys. Social Security Administration regulations governing black lung awards were so strict that the intent of Congress was violated, and in Kentucky and West Virginia thousands of claims were not paid. This naturally forced many worthy claimants to rush to hire attorneys, and the fees charged were exorbitant. Under the "Black Lung Benefits Act of 1972", section 206 of the Social Security Act was applied to black lung benefits, thereby setting a ceiling on the attorney's fee of 25 percent of back benefits, with the proviso that the attorney had to submit for approval a detailed description of each type of service rendered and the amount of time spent on each. The Social Security Administration then notifies the attorney and the claimant what it considers to be a reasonable legal fee, and if either the attorney or claimant objects, the legal fee is reviewed.

On the face of it, this sounds like a reasonable procedure for the protection of the black lung claimant.

But a slick operator can abuse this system and really take advantage of the coal miner for whom the payment is intended. Make no mistake about it: This black lung benefits program was not established for the bureaucrats, for the lawyers, or for the politicians; it is designed primarily to benefit the coal miner and his family and it is our obligation in Congress to make sure that the program really works that way.

I have received many letters from and have talked with many coal miners who have related their experience with lawyers. Let us take the case of Mr. Harm Hall of Dingess, W. Va. He goes into the law office of Attorney Amos Wilson of Logan, W. Va., to ask Mr. Wilson about handling his case. The first thing Mr. Wilson does is to have Mr. Hall sign the following form:

I, the undersigned, do hereby employ AMOS C. WILSON as my attorney to represent me in my Social Security Black Lung Claim No. I agree to pay Amos C. Wilson twenty-five (25%) per cent of all past due benefits or back pay that might be due me and my dependents by virtue of such claim. Dated this the 1972.

day of

Harm Hall

Attorney Wilson handles hundreds, perhaps thousands, of similar cases. He will not handle or initiate a case unless the black lung claimant signs a form such as the above, which is immediately stapled into his claim folder.

After a period of time, the Social Security Administration may notify me that Mr. Hall or some other claimant has been awarded his claim, and that 25 percent of the total amount of back pay is being withheld pending a decision on whether Mr. Wilson or some other lawyer has actually earned his fee. I notify Mr. Hall or other successful claimants that although 25 percent of the back pay has been withheld, the Social Security Administration will eventually rule on what is a reasonable fec. Mr. Hall then goes in to see Attorney Wilson, having my Congressional letter, and Mr. Wilson makes a xerox copy of my letter, mutters darkly that Congressman Hechler is besmirching his integrity as an honorable member of the legal profession, and then he writes the following letter and enclosure to Mr. Hall or the successful black lung claimant.

« PreviousContinue »