TCS Daily

Bluegrass Brass

By Stephen Schwartz - June 7, 2004 12:00 AM

Trial lawyers continue to work the American courts as if they were their private ATM machines, shaking down the public for abusively large sums of money, even in the face of attempts to reform the system. In most cases, clients also benefit. But a recent instance in Kentucky shows what happens when trial lawyers are allowed free rein.

On May 25, Bob Barr, former U.S. attorney and ex-congressman from Georgia, filed an ethics complaint in Frankfort, capital of Kentucky, against Kentucky Bar Association member John O. Morgan, Jr., of Lexington.

Mr. Morgan is accused of charging unreasonable fees in a series of lawsuits against check-cashing businesses in Kentucky. In reality, this innocuous language diverts attention from an extraordinary sequence of events.

Mr. Morgan represented bankruptcy trustees in six class action suits. The suits were filed against check-cashing businesses operating in Kentucky between 1998 and 2001.

In southern states like Kentucky and Tennessee, as in big cities like New York, check cashing services have become a mainstay of the working poor, since they advance money on paychecks as well as cashing benefit checks.

In the cases he settled, Mr. Morgan gained a total of $1.32 million in fees while 49 of 52 clients he represented received nothing. Not penny one for nearly all of the plaintiffs, and more than a million for the lawyer.

The three clients that were paid received a total of $2,206.66. Eight were promised "some unknown amount in the future."

In addition, the bankruptcy trustees that were supposed to monitor the cases, to protect the interests of the creditors, allegedly winked and let Mr. Morgan run away with his loot.

According to Mr. Barr's ethics complaint, the cases were run-of-the-mill lawsuits. They were neither so difficult nor novel in nature as might have justified such a large take by Mr. Morgan. All six cases were virtually identical as to legal issues and underlying facts. The litigation was indistinguishable from that pursued in similar cases across the United States.

Further, the work expended to litigate these cases was made even less burdensome for Mr. Morgan's practice, since some of the clients disengaged themselves from them. Letting clients drop out of the action worked to Mr. Morgan's advantage in allocating nearly all the cash in the settlement to himself.

By Kentucky standards, Mr. Morgan's fees were so high that he "collected more fees in his litigation against check cashers than the average Kentucky lawyer makes in a decade," according to the ethics complaint. Finally, Mr. Morgan had shown no particular talent for this kind of litigation -- except in spotting rich benefits from little work, to paraphrase the complaint.

Once upon a time lawyers represented victims. Today, they claim to be victims themselves of vicious smears, because they harvest grandiose fees while delivering meager sums, or nothing, to their clients.

The Morgan case represents a case unto itself -- it sounds like a lawyer joke gone bad. Yet the courts, and indolent bankruptcy trustees, permit such practices to continue.

Mr. Morgan has insisted that he has been wronged by manipulative use of the math and "mudslinging" against his profession. After all, he argues, if there was something wrong with his action, the court would not have approved his fees. He describes criticism of him as a trick to switch the focus of attention from the facts to his fees. But considering the size of his fees compared with the almost-trivial facts, it's no trick.

Mr. Morgan has accused his detractors of desperation in their complaint against him, but desperation is more to be found among his clients who were left penniless.

Put bluntly, the American legal system is increasingly upside-down, backward, and characterized by pretzel logic.

Many Americans must have quietly snickered when a golfer collected $40,000 after a ball ricocheted off a railroad track running through a course, and struck the player's nose. Even more secretly delighted in the collection of millions in damages by a woman who was burned by McDonalds' hot coffee she spilled on herself. But at least in those cases the plaintiffs, not the lawyers, made fools of the system. Congressional action for tort reform in the federal courts is needed -- sooner rather than later.


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