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Class Fights Personal|Injury Legal Fees

CLAYTON, Mo. (CN) - A pseudonymously filed class action claims the Missouri Bar Association and its members fix prices for personal-injury cases.

Y.M.D. sued the Missouri Bar Association, the law firm of Berger, Cohen & Brandt and its partner Corey Berger.

Y.M.D. says she retained Berger as counsel to recover damages for injuries from a vehicle accident, including loss of a leg.

"This case is about the stone-cold unfairness of a defendants' class of Missouri lawyers, acting together in a monopoly, as a cartel in order to avoid competition, and setting the price for personal injury legal services at an artificially high rate," the complaint states.

Y.M.D. is represented by Aviston, Ill. attorney Mark B. Moran in his Feb. lawsuit in St. Louis County Court. He complains that Y.M.D. Berger charged a "standard 1/3 minimum contingent fee."

"The poor people are being told that these fees are standard that they are approved and are set by the Bar, and that's just plain silliness," attorney Moran told Courthouse News.

"The standard fee is not approved or required or suggested by the Bar. But people are being told that every day in Missouri and tens of thousands of times throughout the United States every day."

The complaint cites the U.S. Supreme Court's 1975 ruling in Goldfarb vs. State of Virginia, which found that fixed contingency legal fees in real estate transactions were illegal.

"That particular type of fee is a very close cousin to the personal injury contingency fee, because in the real estate context the lawyer doesn't get paid unless the deal closes, so there's a certain percentage that was set and it was somewhat relatively ridiculously high," Moran said.

"The Goldfarb court had a case where Mr. Goldfarb sent out requests for title services to about 30 different lawyers. Nineteen of them responded, and they all cited the same rate, and they all said, 'We have to, because that's what the Bar says.' The Goldfarb court said, 'No, you can't do that.'"

Moran said he will tackle this case that same way Goldfarb proved his.

"All we have to do is get copies of all the letters lawyers had to file with insurance companies and in every one of those attorney lien letters it's going to say the rate," Moran said in an interview.

"And what we're saying is that 80 to 85 to 90 percent of those letters is going to have a rate of at least one-third, and that is a slam-dunk proof of price fixing."

Farrah Fite, media relations director for the Missouri Bar, told Courthouse News in an email that the Bar had just learned of the lawsuit and could not yet comment.

Moran said the price-fixing isn't just a Missouri problem, but a national one, whose effects are profound.

"There's some real social injustice in this, and I'm not a bleeding heart, OK, but we're talking facts," Moran said.

"There's social and financial injustice in this. People's lives are getting ruined. 'I'm either not going to get my medical treatment done or I'm going to get it done and I'm not going to be able to pay the bill.' Either way it's not good and it drives the income capacity for that family down."

Moran says statistics show that people with personal injury claims are paying $50 million to $100 million every day in legal fees. He says the problem affects 50,000 people a day in the United States: enough to fill Yankee Stadium every day.

Part of the reason the fees are at least one-third, Moran said, is lawyer referral fees. An attorney who refers a client to a fellow attorney specializing in personal injury generally gets a one-third referral fee from the specialist's contingency fee.

Many states, including Missouri, do not require attorneys to disclose referral fees in lower courts.

"It puts the clients in a black hole of non-information, so they can't make a reasoned decision about the finances of it because they aren't told all the relevant facts," Moran told Courthouse News.

"So the rules are written by the lawyers that benefit, that they don't have to explain to the client why you're getting a (part) of his tax-free money that is supposed to go to pay for his medical bills. The deck is stacked against the clients."

Moran said hopes the class action will bring more competition and information to the legal marketplace and that other states will follow suit.

"What we're talking about is more of a market rate so the people will be able to get transparency and be able to bargain and barter for a better rate," Moran said. He seeks an injunction and cease-and-desist order, corrective advertising, preservation of documents, a constructive trust, and attorney's fees.

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