Should Contingent Fees Be Taken from Maintenance and Cure Recoveries?

By John Merriam

“What is the rule for taking a fee from maintenance, cure and unearned wages?” A colleague from Bellevue telephoned me one day last winter.

“There is no rule that I’m aware of, aside from the general requirement that fees be ‘reasonable’.”

“What’s reasonable?”

“Good question . . . .”

Many in the maritime legal community assume it is never proper to take a contingent fee from maintenance and cure recoveries. There is dictum to that effect from Division I of the state Court of Appeals: Barr v. Day, 69 Wn.App. 833, 842 at n. 7 and accompanying text (1993). Quite a few insurance adjusters share that assumption. At the time of my colleague’s phone call I was nose-to-nose with an adjuster over the entitlement to unearned wages for an officer taken ill on a fishing boat. Maintenance and cure includes unearned wages. Liability for how the mate got sick was thin to non-existent so unearned wages was all I could get for the guy. “Pay up or I’ll file suit,” I told the adjuster. She paid all right, but sent the money directly to my client. I didn’t get a fee for that case. The adjuster told me later that she didn’t send the unearned wages in care of my office because it is improper to take attorney fees out of maintenance and cure. My argument with her to the contrary, at that point, was purely academic. If this scenario was repeated I suppose I’d do the same thing, to make sure the mate got his unearned wages, but I would feel like a fool while I was doing it. Human nature being what it is—especially the nature of lawyers—creates an expectation of payment for one’s efforts. That includes efforts to recover maintenance and cure benefits denied by fishing and/or insurance companies.

My colleague’s phone call led me conduct an informal survey of maritime plaintiff practitioners regarding policies for taking contingent fees from maintenance and cure benefits. The results crossed a spectrum. Some lawyers took a cut of any money that came in the door, even if their clients depended on daily maintenance to pay for the basic necessities of living and even if maintenance and cure was being paid without dispute before the lawyer was retained. At the other end of the spectrum were lawyers who said they never take a contingent fee from maintenance and cure, and put that in their fee agreements. When pressed, however, those lawyers allowed as how they took a contingent fee from the entire verdict or settlement, including sums estimated as maintenance-wages-cure. The majority of practitioners felt they were entitled to a contingent fee from maintenance and cure recoveries if recovery was aided by their professional efforts. Most stated that these efforts consisted of resolving the entire case, as opposed to bringing motions for partial summary judgment when maintenance and cure got cut off in the seaman’s hour of need. Cf., Dubois v. Northern Hawk, 2000 AMC 1510 (W.D. Wash. 2000) (motion for partial summary judgment); Boyden v. American Seafoods, 2000 AMC 1512 (W.D. Wash. 2000) (same).

There is no rule about taking contingent fees from maintenance and cure. R.C.W. 4.24.005 mandates that attorney fees in tort actions be “reasonable”. Federal judges in this state will likely follow that mandate in seamen cases because they regard it as a lex fori procedural question governed by state law, to protect seamen from unreasonable fees as “wards of the court”, or simply as a use of their inherent power to run procedure in their own courts—putting a bridle on greedy lawyers.

Should this issue become forced, and a rule necessary, I suggest it be as follows: Lawyers for seamen with disputed entitlements to maintenance, cure and unearned wages are entitled to a contingent fee from those benefits received, but only if the fee will not detract from the best interests of the seamen—in a temporal financial sense. In other words, lawyers should take a fee from contested benefits they obtain for seamen, but should not do so until the seamen do not need those benefits for their day-to-day sustenance and medical attention. For example, I recently got a client’s daily maintenance increased from $20 per day to $25 by threatening to file a lawsuit. The contract of employment set maintenance at $20/day. Her basic living expenses total $31/day. I compromised with the insurance company at $25/day. I took a contingent fee from payment of extra back maintenance, because that is ‘water under the bridge’ and my client no longer depends upon it. I didn’t take a fee, yet, from the extra $5/day maintenance she gets contemporaneously because she is using that to live on. I feel entitled to a fee for all the extra maintenance, Rowell v. Tyson, 1999 AMC 2277 (W.D. Wash. 1999), but will not take it until and unless there is a gross recovery from settlement or verdict that allows me to, without compromising the day-to-day welfare of my client. To borrow from family law, the test should be ‘the best interest of the seaman’.

Taking a fee from all maintenance and cure—regardless of the lawyer’s efforts in obtaining it—is unreasonable, and probably unethical as well. To never take contingent fees from maintenance and cure recoveries serves only to benefit fishing and insurance companies. Few lawyers will challenge improper cut-off of maintenance and cure unless they are paid for their efforts.

John Merriam is a sole practitioner in Seattle representing seamen on wage and injury claims.