Following the victory in the Missouri Supreme Court, in March, 2007, the Firemen’s Retirement System of St. Louis (“FRS”) and its Board of Trustees recently received $49.4 Million from the City of St. Louis (“City”). This payment related to the underfunding of FRS by the City of St. Louis for Fiscal Years 2004, 2005, 2006 and 2007.

The History of the Case

Prior to the disputed fiscal years, the City of St. Louis had fully paid the amount certified by the Trustees, based upon the calculations of the Pension Plan’s actuary. Relying upon various legal authorities and reacting to an alleged budget crisis, the City underfunded the Pension Plans, and provided funding based upon a percentage of payroll unrelated to the actuary’s calculations (i.e., 401(k)-like contributions were made for this defined benefit plan).

The City advanced a number of arguments in the course of this litigation. One was an argument concerning the structure of the State of Missouri’s enabling legislation and the corresponding St. Louis City Ordinances and whether the contribution amounts were mandatory or discretionary. Though there were interesting twists on the arguments advanced by the City, eventually the trial court, the Missouri Court of Appeals and the Supreme Court of Missouri rejected all of those arguments and essentially ruled that “shall” means “shall” and the contribution is mandatory. The Courts also held that the Trustees’ interpretation of the Plan language harmonized the numerous City ordinances pertaining to FRS, whereas the City was trying to argue that part of one section of one City ordinance trumped remaining ordinance provisions. The trial court also noted that the City’s proposed construction contravened actuarial soundness, an issue which became important in the Supreme Court’s ultimate analysis of the case. That issue, and its implications, will be discussed more thoroughly in the second part of this article. The City also attempted to invoke several state constitutional arguments. The trial court, in addressing those alleged constitutional issues, questioned whether the City had exhausted all administrative remedies, because the City had not challenged the amount certified by the Trustees as being incorrect or improperly calculated by the actuaries. Since the City did not argue in the litigation that the actuary’s calculations were incorrect, the trial court found that no waiver had occurred, and went on to considered the constitutional issues presented.

The City advanced a constitutional argument, based upon an alleged invalid delegation of a legislative authority. The City argued that the actuaries calculated amounts that varied from year to year and that these amounts, which had been increasing in recent years, seriously impacted the City’s budget and the City’s ability to fund other activities or important City functions. All Courts rejected this argument and, in the process, distinguished an important 1932 Missouri Supreme Court case entitled Field v. Smith, 49 S.W.2d 74 (Mo. banc 1932), which had involved the creation of the Kansas City Police Department, and in which the Supreme Court had held that unlimited delegation of discretionary spending to a non-legislative body violated the Missouri Constitution. The City also alleged a violation of Article VI, Section 26(a) of the Missouri Constitution, which mandates balanced budgets. The City argued that if the City now had to pay the amounts certified by the Trustees, as calculated by the actuary after funds had already been committed, their budgets would be exceeded. In this regard, the City relied heavily upon the Missouri Supreme Court’s decision in Tomlinson v. Kansas City, 391 S.W.2d 850 (Mo. 1965). In Tomlinson, pension plan beneficiaries attempted to argue that the ordinance which established the Firemen’s Pension Fund in Kansas City “created a contractual relationship between the cities and the beneficiaries of the fund”, so that they could challenge underfunding issues. This position was rejected by the Missouri Supreme Court in Tomlinson. Moreover, the Court indicated, probably in dicta, that the Supreme Court viewed pension benefits as “mere gratuities”, rather than a form of deferred compensation, where contractual rights existed. The Tomlinson case had never been overruled in Missouri, so the question of “contractual rights” with respect to public pensions was an open issue. As recently as 1999, the Court of Appeals, Western District, based a decision, in part, on the concept that public pensions were mere gratuities, not contractual rights. See, Fraternal Order of Police Lodge 2, et al. v. City of St. Joseph, et al., 8 S.W.2d 257 (Mo. App. 1999). The trial court in the FRS case, however, rejected Tomlinson’s logic and application to this case. As will be discussed in the next section of this article, concepts of actuarial soundness presuppose contractual rights, so the Supreme Court’s decision in Neske, et al. v. City of St. Louis, 218 S.W.3d 417 (Mo. 2007) may overrule Tomlinson by implication on this point. FRS relied upon Article VI, Section 25, of the Missouri Constitution. This constitutional provision allowed pension plans to be created as an exception to the general rule that counties or other political subdivisions could not issue a grant of public monies to private individuals under most circumstances. As cost of living adjustments (COLA) became more common in pension plans, Article VI, Section 25, was amended, so that political subdivisions “may provide for the payment of period cost of living increases in pension and retirement benefits paid under this section to its retired officers and employees and spouses of deceased officers and employees, provided such pension and retirement systems will remain actuarially sound”. The City also advocated the position that the claims asserted by the FRS were unconstitutional because they violated the Hancock Amendment. The Hancock Amendment contains many provisions which relate to limits on taxation and government spending. The portion of the Hancock Amendment invoked by the City basically provides that the State could not mandate “increased activity” resulting in increased payments by a governmental subdivision without the State providingthe revenue to fund those increased expenses or activities. With respect to the FRS, the Hancock Amendment was not applicable because FRS is ultimately a creation of The City advanced a constitutional argument, based upon an alleged invalid delegation of a legislative authority. The City argued that the actuaries calculated amounts that varied from year to year and that these amounts, which had been increasing in recent years, seriously impacted the City’s budget and the City’s ability to fund other activities or important City functions. All Courts rejected this argument and, in the process, distinguished an important 1932 Missouri Supreme Court case entitled Field v. Smith, 49 S.W.2d 74 (Mo. banc 1932), which had involved the creation of the Kansas City Police Department, and in which the Supreme Court had held that unlimited delegation of discretionary spending to a non-legislative body violated the Missouri Constitution. The City also alleged a violation of Article VI, Section 26(a) of the Missouri Constitution, which mandates balanced budgets. The City argued that if the City now had to pay the amounts certified by the Trustees, as calculated by the actuary after funds had already been committed, their budgets would be exceeded. In this regard, the City relied heavily upon the Missouri Supreme Court’s decision in Tomlinson v. Kansas City, 391 S.W.2d 850 (Mo. 1965). In Tomlinson, pension plan beneficiaries attempted to argue that the ordinance which established the Firemen’s Pension Fund in Kansas City “created a contractual relationship between the cities and the beneficiaries of the fund”, so that they could challenge underfunding issues. This position was rejected by the Missouri Supreme Court in Tomlinson. Moreover, the Court indicated, probably in dicta, that the Supreme Court viewed pension benefits as “mere gratuities”, rather than a form of deferred compensation, where contractual rights existed. The Tomlinson case had never been overruled in Missouri, so the question of “contractual rights” with respect to public pensions was an open issue. As recently as 1999, the Court of Appeals, Western District, based a decision, in part, on the concept that public pensions were mere gratuities, not contractual rights. See, Fraternal Order of Police Lodge 2, et al. v. City of St. Joseph, et al., 8 S.W.2d 257 (Mo. App. 1999). The trial court in the FRS case, however, rejected Tomlinson’s logic and application to this case. As will be discussed in the next section of this article, concepts of actuarial soundness presuppose contractual rights, so the Supreme Court’s decision in Neske, et al. v. City of St. Louis, 218 S.W.3d 417 (Mo. 2007) may overrule Tomlinson by implication on this point. FRS relied upon Article VI, Section 25, of the Missouri Constitution. This constitutional provision allowed pension plans to be created as an exception to the general rule that counties or other political subdivisions could not issue a grant of public monies to private individuals under most circumstances. As cost of living adjustments (COLA) became more common in pension plans, Article VI, Section 25, was amended, so that political subdivisions “may provide for the payment of period cost of living increases in pension and retirement benefits paid under this section to its retired officers and employees and spouses of deceased officers and employees, provided such pension and retirement systems will remain actuarially sound”. The City also advocated the position that the claims asserted by the FRS were unconstitutional because they violated the Hancock Amendment. The Hancock Amendment contains many provisions which relate to limits on taxation and government spending. The portion of the Hancock Amendment invoked by the City basically provides that the State could not mandate “increased activity” resulting in increased payments by a governmental subdivision without the State providing the revenue to fund those increased expenses or activities. With respect to the FRS, the Hancock Amendment was not applicable because FRS is ultimately a creation ofmay be in the Supreme Court’s adoption of a standard of actuarial soundness as a basis for its decision. “The statutes and ordinances relating to the PRS and the FRS, when taken as a whole, support the view that actuarial soundness is the principle at the heart of the PRS and the FRS funding provisions. Actuarial soundness requires the City to make its annual contribution of the actuarially-determined amounts certified by the PRS and the FRS boards of trustees.” Neske, at 426.

When an actuary calculates the amount due, the actuary makes certain assumptions which must be reasonable, based upon available information and which must be made in accordance the standards of the actuarial profession. In Missouri, a unit of government could challenge the actuarial assumptions as being unreasonable or without basis in an administrative hearing setting, but would bear a high burden in making such challenges. The actuaries’ calculations are presumed reasonable and correct and the governmental unit must show that the calculations are unreasonable or an abuse of the actuaries professional discretion. Just proving that another actuary’s calculations are different, or arguably use a superior methodology, is insufficient. In the PRS and FRS cases, the City conceded that the actuarial calculations were properly made by not challenging them. When an actuary performs these calculations, the actuary looks to the plan provisions, including retirement benefits, disability benefits and other forms of payments to retirees and their beneficiaries in order to calculate the annual funding obligation (“normal contribution”) and the annual amount needed to correct underfunding problems (the “unfunded accrued actuarial liability” or “UAAL”). This actuarial approach, approved by the Supreme Court in Neske, would not make sense unless an underlying assumption exists that the plan provisions confer a guaranteed, contractual right. If benefits are deemed to be gratuities (as in Tomlinson) or rights which are subject to divestiture and forfeiture, the Supreme Court could hardly base its decision to require funding upon grounds of actuarial soundness. Thus, the Tomlinson case, which labeled public pension retirement benefits to be a mere gratuity, should be interpreted as having been overruled by implication by Neske. Missouri seems to have joined the majority of states that, by constitutional provisions, statutes or case law decisions, have concluded that public pension benefits are vested, contractual rights which must be paid. Protestations of budgetary or financial difficulties are not, and should not be, a basis for failing to fund these pensions properly, since public pensions are legal obligations of the governmental entity.

These issues are important throughout the United States because of the underfunding problems that exist in many states, counties and municipalities. San Diego has perhaps become the poster child for such problems, but they affect many jurisdictions. In Missouri, the Joint Committee of the Missouri Senate and House of Representatives has been investigating these issues and has concluded that numerous local pension plans are significantly underfunded. In our sister state of Illinois, significant underfunding of public pensions exists at both the state and local levels. The New York Times has reported extensively concerning the problems facing New Jersey and the tremendous unfunded liabilities that are present in pension plans in that state. Perhaps because of economic difficulties relating to manufacturing, especially the auto industry, Michigan, which is typically viewed as a pro-union, pro-labor state, is also faced with significant problems in terms of the funding of its pensions.

Conclusion

The Missouri Supreme Court’s decision in Neske, binding in the State of Missouri, should also be seen, in a broader context, as an affirmation of the contractual rights of public employees to their pension benefits. Such contractual rights have little meaning if the plans are not reasonably and properly funded. Though it does not overtly address the issue of a contractual right to funding of benefits, the Missouri Supreme Court has found that there is a requirement of actuarial soundness present, and has found actuarial soundness to be at the heart of the funding obligation. It is the author’s belief that this actuarial requirement is based on the Missouri Constitution, Article VI, § 25, and not merely on the language of the FRS and PRS plans. As noted previously, Tomlinson seems to have been overruled by implication. Missouri appears to have joined the majority of states which hold public pension benefits are enforceable contractual rights. This article has not addressed what would occur, or should occur, in the event that a governmental entity is in such great financial distress that it declares bankruptcy. As noted by the Missouri Supreme Court, however, the fact that a governmental unit may have to make different budgeting choices, perhaps choices that are difficult because of alleged financial constraints, is not a valid reason for the governmental unit to allocate money to other budget preferences, at the expense of its legal obligation to fund public pensions.

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Lead counsel, Dan Tobben, assisted by colleague David R. Bohm, represent the Firemen’s Retirement System of St. Louis (FRS) in several lawsuits against the city of St. Louis and the Board of Estimate and Apportionment concerning the city’s failure to fully fund FRS.

On June 17, 2005, the Honorable David L. Dowd entered judgment in favor of FRS in the amount of $6,834,947 for fiscal year 2004. A declaratory judgment was entered, as part of the same judgment, mandating the city pay an additional $11,710,276 for fiscal year 2005.

The city appealed these judgments. The Court of Appeals stated that it would affirm the judgment but, because the case involved questions of general interest and statewide concern, the case was transferred to the Missouri Supreme Court, which unanimously affirmed the judgment. In September 2007, FRS received $49.4 million from the city to pay the judgment, interest, and money for the next two fiscal years.

Dan Tobben previously won two cases in the Missouri Supreme Court on behalf of FRS against the city of St. Louis. Dan, a member of the National Association of Public Pension Attorneys (NAPPA), represents the trustees and beneficiaries of other public pension funds on underfunding issues, and regarding more general pension related matters.

In those cases where liability is not clear, part of the strategy of keeping damages down is to present a very good defense on the issue of liability. Even if there is an eventual plaintiff’s verdict, disputed liability will probably keep the damages down. This can be in a direct fashion such as reduction of the verdict based on plaintiff’s comparative fault; or on a jury psychology level. Jurors, who really aren’t sure about defendant’s fault, are less likely to follow the recommendations of plaintiff’s counsel in closing argument to award an amount that is extremely generous to the plaintiff. Doubts about liability can also be a factor in jury room debates, where eventually nine jurors need to agree to the same verdict and the same amount of damages.

In this chapter, defense tools for minimizing damages and the use of pre-trial motions for damage control will be considered.

1. LOOKING AT DEFENSE TOOLS FOR MINIMIZING DAMAGES

Later in this section, we will look at specific legal concepts and pertinent case law that defense counsel can employ in attempting to minimize the damages awarded by the jury. There are significant numbers of pretrial and trial strategies, however, which can have a significant impact upon the eventual verdict in a case. A lot of these tactics or strategies will be discussed in detail during day two of this seminar. A brief overview will be presented here, focusing on the defense goal of minimizing damages.

(a) Investigation

The quality of investigation which is done immediately following, or shortly after, the accident or occurrence is extremely important. Usually, defense counsel does not have significant involvement at that investigative stage. The investigation is conducted either by an insurance carrier, a defendant corporation, or investigators hired by the defendant or the defendant’s insurer. Defense counsel should, however, carefully review the evidence developed by that investigation as soon as the file is sent to them. If there are gaps, defense counsel should attempt to have them filled at the earliest opportunity. This may involve something as simple as ordering a police report. However, especially if the accident is work related, there are numerous sources of information that may have not yet been pursued. Workers’ compensation files are sometimes a fruitful source of information and contradictory statements. Certain industrial accidents or accidents involving products may have been investigated OSHA, or other government regulatory groups. Those reports can be very helpful in defending the case and in minimizing damages.

(b) Jurisdiction, Venue, and Removal

When defense counsel gets the lawsuit, the initial focus should be upon issues relating to jurisdiction and venue. Myriad cases have been decided in the Eastern District Court of Appeals and the Missouri Supreme Court, relating to the ongoing battle in which plaintiffs try to file cases in St. Louis City, and defense attorneys try to have the cases transferred to St. Louis County or some other conservative forum. See generally State ex rel. Kertz v. Neill, 90 S.W.3d 467 (Mo. 2002); State ex rel. Linthicum v. Calvin, 57 S.W.3d 855 (Mo. 2001) (opinion of Judge Wolff, concurring in part and dissenting in part) (recommending the merger of city and county for jury purposes); State ex rel. BJC Health System v. Neill, 86 S.W.3d 138 (Mo.App.E.D. 2002); Krueger v. Pulitzer, Inc., 85 S.W.3d 61 (Mo.App.E.D. 2002). State ex rel. DePaul Health Center v. Mummert, 870 S.W.2d 820 (Mo. 1994).

Missouri Supreme Court Rule 51.045 requires that a Motion for Change of Venue be filed within the time allowed for responding to an adverse party’s pleading, or if no responsive pleading is permitted, then within thirty days of service of the last pleading. If these time frames and procedures are not adhered to, the Motion to Transfer Venue is not timely filed and the issue of improper venue is waived. State ex rel. Etter, Inc. v. Neill, 70 S.W.3d 28 (Mo.App.E.D. 2002). Defendants should also take care in terms of the pleadings, motions, and discovery that are filed, because they may be a basis for waiver of venue as well. . See Missouri Supreme Court Rule 55.27(g); State ex rel. Antoine v. Sanders, 724 S.W.2d 502 (Mo. 1987); see also 2 Mo.Prac., Methods of Practice: Litigation Guide § 3.15 (4th ed. 2002). Defense counsel should also note that Rule 51.045 provides that, within ten days after the filing of the Motion to Transfer for improper venue, an opposing party may file a reply denying the allegations and creating an issue for the court to decide. However, if a reply is not filed within that time, a transfer of venue “shall be ordered to a court where venue is proper.”

Though it is not as frequently used, defense counsel should also keep in mind the provisions of Rule 51.04, allowing for a change of venue based on the prejudice of the inhabitants of the county, and Rule 51.03, which allows a change of venue as a matter of right regarding suits filed in a county of 75,000 or less inhabitants.

Also, if the case presents diversity of citizenship or a federal question, prompt consideration must be given to the issue of removal to federal court. The petition for removal must be filed within 30 days or it is waived. See 28 U.S.C. §1446(b). Defense counsel should alert their clients to the need for prompt referral. Referral of a file to defense counsel on the 28th day or later, certainly increases the possibility these issues will be missed or that time will expire before the appropriate action is taken. Sometimes plaintiffs’ attorneys will offer adjusters a 40+ day extension after service in which to keep negotiating. If the file isn’t referred out in a timely manner (i.e. long before the extension expires), defense counsel may get the file after the time has passed for challenging venue or removing the case to federal court.

Once venue is established and pleadings and discovery commence, there are a number of motions that can be filed before the time of trial that will help limit or control damages. They will be the subject of the next section of this chapter.

(c) Jury Selection

During trial itself, the initial tool in minimizing damages is the selection of a favorable jury. Some jurors are more analytical, more suspicious and more reluctant to return large verdicts. Insurance carriers and corporations have been attempting to get out the message regarding limitation of jury verdicts for some period of time. However, recently it has become a hot political topic at both a national and state level under the banner of “tort reform”, so the questions concerning size of verdicts have received a lot more media attention. If the country is becoming more conservative, as some analysts believe, will that trend have an effect on reducing the size of future jury verdicts in Missouri? We will have to wait and see, but it is something to think about when picking juries and evaluating cases. The size of jury verdicts and their possible effects on doctors, businesses, and society is something that more jurors will have previously considered than in the past.

Some jurors may be much more sympathetic or empathetic to a person who has serious injuries; jurors may also have something in their background, which makes them more likely to “give away” the insurer’s or corporation’s money. Anger at insurers for claims denial or cancellation, or bad experiences with a corporate employer, are certainly on this list.

Since defense counsel certainly doesn’t want to talk about insurance, sometimes defense attorneys have to read between the lines when jurors respond to the insurance question or the prior claims questions to detect the biases that may be present.

Honest jurors may have belief systems or past life experiences, which significantly affect their desire or willingness to return large verdicts, even if they make their best effort to be impartial and open minded. Certain jurors will be sufficiently biased or prejudiced that they will openly express the bias in a way that allows them to be stricken for cause. Defense counsel should strike for cause any overtly hostile or prejudiced juror displaying pro-plaintiff or large verdict propensities. This promotes justice, but also saves pre-emptive strikes for the “closer calls.”

Jury selection is primarily focused on both the plaintiff and defendant trying to get the best possible jurors for their position, which in an adversary system presumably results in a fair jury being selected. However, voir dire is also a time during which attorneys can build a relationship with the jurors and a time when defense counsel can educate jurors about issues in the case. This education can include topics such as burden of proof, standard of proof, causal relationship, and the requirement that jurors follow the law as ruled by the judge and as presented in the instructions. All of these topics can be of assistance to defense counsel in limiting the size of a plaintiff’s verdict. If the jurors understand these topics, they may more clearly understand the instructions, which can then form a basis for defense counsel’s closing argument on those topics.

(d) Credibility of Defense Counsel

Both opening statements and closing arguments will be discussed in detail later in this book, but obviously they are both crucial in keeping down the amount of damages. Defense counsel should remember that the credibility or lack of credibility of the plaintiff’s attorney and the defense attorney can be crucial in determining the amount of damages. Since plaintiffs have the burden of proof, plaintiff’s attorneys sometimes make promises in opening statement as to what the evidence will show and then fail to deliver the promised evidence. Plaintiff’s counsel may also reach conclusions in closing argument based upon weak facts or testimony, which lack credibility. These occurrences present real opportunities for defense counsel to call into question the integrity of the plaintiff’s whole case. Even if there is liability, and even if a jury is going to return a plaintiff’s verdict, overstatements or broken promises by plaintiff’s counsel can have a significant impact on minimizing the verdict and keeping the jury’s verdict reasonable from a defense perspective. Overreaching by plaintiff’s counsel in hopes of a large verdict may backfire and also affect the credibility of the plaintiff’s entire case, resulting in a lower verdict. Conversely, the defense attorney who makes disingenuous arguments, or who has been obnoxious during the course of a trial, may find that the plaintiff’s verdict is substantially larger than expected, due to their own conduct.

(e) Credibility and Jury Appeal of Plaintiff and Defendant

Perhaps even more important is the credibility of the plaintiff and defendant in a case. A plaintiff who lies or conceals is doing tremendous damage to his case, and this dishonesty must be pointed out by defense counsel. The damaging testimony of a plaintiff not need consist of direct and overt lying, but can consist of the plaintiff consistently or dramatically exaggerating his injuries or losses.

The plaintiff’s background can also make a huge difference in an amount that a jury can award. A prior criminal record, if for a serious offense, a recent offense, or an offense involving truth and veracity can cast doubt on the plaintiff’s credibility and therefore raise questions concerning plaintiff’s testimony and claimed injuries. Investigation of prior claims and prior medical records is perhaps one of the most crucial tools available to defense counsel. With respect to past claims, if the case is one that has some material value, defense counsel should not rest on merely looking into those prior claims acknowledged by the plaintiff in the plaintiff’s discovery responses. Insurance companies have access to index bureaus that can retrieve past claim information. Workers’ compensation records and other public records may also provide significant information. Court records contain information regarding prior litigation. This information about a plaintiff can prove to be extremely valuable, especially if a plaintiff fails to disclose it.

In the really serious injury cases, defense attorneys will almost certainly have a consulting physician, who will probably review records, perform a medical examination, assist defense counsel and testify at trial. However, even in the less serious cases, the careful review of prior medical records can be crucial. There are many possible mitigating factors, even if the plaintiff proves that an injury was causally related to the defendant’s negligence. Pre-existing injuries to the same part of the body are the most obvious. However, there are certain systemic conditions, lifestyle choices, or other factors that may prove very important. Many people develop bulging discs or herniated discs in the absence of any trauma. If a plaintiff with seemingly minor injuries is sent to a pain management specialist, carefully examine what other health conditions or problems may exist in the person’s life that may have either caused significant pain or may render the person vulnerable to experiencing pain in an exaggerated manner. Prior medical records may also contain damaging admissions, which can be helpful to the defense.

The psychological problems of plaintiffs can be a valuable source of information to defendants, and can provide alternate explanations for exaggerated complaints of pain. However, defense counsel needs to tread very carefully when interjecting psychological issues into the case, since jurors may deem this evidence to be inappropriate, if not clearly related to plaintiff’s injuries or complaints. When a plaintiff claims psychological injury in a personal injury case, in circumstances where the injuries are not devastating, there should be a very careful investigation. A significant part of the population suffers from depression at some point in their lives in the absence of trauma. The fact that a party may be depressed following a non-devastating accident may be a matter of chance or may be a matter of other variables, which are totally unrelated to the accident. Also, when a plaintiff opens the issue of psychological damages, defense counsel should use that as an opportunity to seek very broad medical and psychological/psychiatric discovery. Since ailments and conditions throughout the body may affect a person’s mood, anxiety level, state of mind, or mental health, and since many drugs or medications have side effects, defense counsel may wish to take the position that the plaintiff’s entire medical and psychological history has been placed at issue. That opens the door to examine the plaintiff’s entire medical and psychological history or at least the complete history for a number of years before the accident to the present. This may cause even seemingly remote events to become quite relevant. If a plaintiff, who suffers from depression at a time subsequent to an occurrence, is found to have a history of sexual abuse by parents, relatives, or close confidantes, the causal relationship between the depression and the personal injury may certainly be called into question.

In addition to raising questions of credibility, prior injuries, prior medical conditions, or prior psychological problems may call into question the causal relationship between the accident and the alleged damages. These issues, questions, or doubts that are developed through evidence can be quite significant in minimizing the amount of a plaintiff’s verdict. This potential for reducing a verdict is very directly related to “burden of proof” and “verdict directing” instructions that are given at the end of a case. Casual relationship is always an element of a personal injury action. Sufficient uncertainty or doubt about casual relationship can be the basis for a defendant’s verdict in circumstances, even where the plaintiff has experienced legitimate pain and discomfort and where the defendant is negligent. Doubts regarding injury or causation also lead to argument as to whether the plaintiff has met the burden of proof. These doubts help keep verdicts down, even when the jury finds for the plaintiff.

Finally, defense counsel should always give serious consideration to the “smell test”. If a plaintiff is claiming devastating injuries in a minor impact automobile case, the defendant has an easy theme for minimizing damages. It is certainly logically possible that a person may be severely injured in a minimal impact occurrence, just like it is possible that someone may walk away without a scratch from a horrible and devastating motor vehicle collision, where the car is demolished and where it appears no one could have walked away. However, the burden of proof comes down to what jurors view as probable based on a preponderance of the evidence. Sometimes things are obvious, sometimes they are a close call, but on other occasions, the claim and the facts upon which the claim is based just don’t pass the “smell test”.

(f) Comparative Fault

Perhaps the most widely applicable legal doctrine available to defendants to reduce the amount of a plaintiff’s verdict in a personal injury case is the doctrine of comparative fault. The first aspect of the comparative fault doctrine was judicially adopted in the case of Missouri Pacific Railroad v. Whitehead & Kales Co., 566 S.W.2d 466 (Mo. banc 1978). In that case, the Supreme Court held that a joint tortfeasor could seek contribution from another joint tortfeasor, and abandoned the distinction of active and passive negligence. Subsequently, in Gustafson v. Benda, 661 S.W.2d 11 (Mo. banc 1983), the Court adopted a comprehensive system of pure comparative fault by which the plaintiff can recover from the defendants for those damages attributable to the defendant’s fault, even if the plaintiff is more negligent than the defendants.

These principles are, of course, of great value to a defendant in cases where fault is in dispute, and where multiple parties including the plaintiff may be deemed to have fault. It is much better for defendants if they can focus upon the plaintiff’s fault in a trial, than if two defendants are battling with each other regarding issues of their fault. Sometimes plaintiffs can exploit this situation and receive larger verdicts, because the focus of the trial becomes centered on the fight between the defendants concerning liability, and the plaintiff has a clearer shot at hammering home points to support a larger jury verdict based on the plaintiff’s damages and injuries.

The system of pure comparative fault has been modified by statutes. Section 537.067 RSMo sets forth the procedure by which the amount that is not collectible from a defendant is reallocated amongst solvent parties, when the jury has assessed a percentage of fault to the plaintiff. In medical malpractice actions, apportionment of fault is governed by Section 538.230. Section 538.230-2 states that “any defendant against whom an award of damages is made shall be jointly liable for the share of the judgment allocated to those defendants whose apportioned percentage of fault is equal to or less than such defendant.”

Attorneys should be aware that the doctrine of comparative fault is limited to claims for “damages for injury or death to persons or harm to property.” Murphy v. City of Springfield, Missouri, 738 S.W.2d 521 (Mo.App.S.D. 1987); See also Chicago Title Insurance Co. v. Mertens, 878 S.W.2d 899, 902 (Mo.App.E.D. 1994). In economic injury cases, contributory negligence remains an absolute defense. Miller v. Ernst & Young, 892 S.W.2d 387, 388 (Mo.App.E.D. 1995). Since this is a seminar on personal injury, this discussion of contributory negligence may seem like a digression. However, consider a legal malpractice case, which is based on the alleged failure of a plaintiff’s attorney to file a personal injury action in a timely manner. Legal malpractice cases are cases for economic loss, not cases for personal injury. Therefore, the negligent or wrongful conduct of the plaintiff, if determined by the jury to be negligent, may constitute an absolute bar to recovery under the doctrine of contributory negligence.

(g) Reduction of Damages Due to Settling Tortfeasor

Another tool for the reduction of damages is created in a multi-defendant case, where one party defendant settles, or where there has been a pre-litigation settlement by a potential tortfeasor. Section 537.060 RSMo states that a release given in good faith to one tortfeasor does not release other tortfeasors unless it so provides. However, a general release discharges all other joint tortfeasors as well as the party released. Rudisill v. Lewis, 796 S.W.2d 124 (Mo.App.W.D. 1990). Section 537.060 RSMo also provides that the releasing party’s claim is to be reduced by the stipulated amount of the agreement, or the amount of consideration paid, whichever is greater, and that the party who is released is discharged from liability for contribution as to all other tortfeasors.

However, defense counsel needs to conduct appropriate discovery to make sure they know of all settlement agreements, and they need to plead and prove the amount paid in order to get a reduction in the judgment. This is the holding of the recently decided Supreme Court case of Norman, et al. v. Wright, M.D., S.C. 84650, hand down date of 3/18/03. In that case, Dr. Wright sought apportionment of fault and reduction of damages, which had not been pled by Dr. Wright. Apportionment of fault issues had been waived by Dr. Wright in a pre-trial conference. Following the verdict against Dr. Wright, defense counsel moved to reduce the verdict by the $100,000.00 settlement reached with two other defendants. That settlement had been approved by the trial court a year earlier. This was granted by the trial court, but the Supreme Court reversed and remanded, saying that since Dr. Wright had failed to plead and prove the affirmative defense of reduction under §537.060 RSMo, such reduction was inappropriate. The Court said that to the extent that Julien v. St. Louis University, 10 S.W.3d 150 (Mo.App.E.D. 1999), was inconsistent with the opinion, that Julien should no longer be followed.

(h) Contractual Limitations in Uninsured and Underinsured Motorist Cases

Defense counsel should also be mindful that uninsured and underinsured motorist cases are contract cases as well as personal injury cases. Therefore, contractual defenses are very important and can reduce the amount of a potential verdict. Since uninsured motorist (UM) coverage is statutorily mandated, the courts construe uninsured motorist cases in light of public policy, Ezell v. Columbia Insurance Co., 942 S.W.2d 913 (Mo.App.S.D. 1996) and Galloway v. Farmers Insurance Company, Inc., 523 S.W.2d 339 (Mo.App.W.D. 1975), as well as in terms of the clarity or ambiguity of the policy language. Though the courts construe UM policies liberally in favor of coverage, courts should not create coverage where not exists. Ezell, supra. Since underinsured (UIM) motorist coverage is not statutorily mandated, if the insurance company uses clear, unambiguous language in its exclusions, limitations, and conditions, those insurance policy provisions will be enforced. A substantial amount of case law exists regarding contractual limitations on damages regarding UM and UIM cases, but since an extended discussion is outside the general scope of this chapter, it will not be discussed in detail. Those desiring more information can review the Missouri CLE Series, Insurance Practice, Fourth Edition, Chapter 6, supplemented in 2000 and authored by James W. Reiner and Gretchen G. Myers, as a starting point for further research.

Several other doctrines are available to defense counsel in their efforts to minimize damages and verdicts. Below are summaries of relevant Missouri case law relating to those doctrines.

(i) Mitigation of Damages

Mitigation of damages is such a doctrine, and though it is most frequently applied to contract actions, the doctrine also applies to personal injury cases. A plaintiff’s failure to mitigate will not bar her entirely from recovery. Failure to mitigate will only prevent recovery of any damages that the injured party would not have incurred had she taken reasonable steps to avoid them. See Mo. Prac., Personal Injury and Torts Handbook § 5.6 (2002-03).

A plaintiff’s failure to mitigate damages is an affirmative defense. State v. Polley, 2 S.W.3d 887, 892 (Mo.App.W.D. 1999). As such, a defendant must raise the issue in the pleadings. See Missouri Rule of Civil Procedure 55.08. Under Rule 55.08 the party raising the affirmative defense must put its opponent on notice of such defense; otherwise, the defense is waived. Polley, supra at 892. See also Greene County v. State, 926 S.W.2d 701, 704 (Mo.App.W.D. 1996). Failure to mitigate is closely related to and often discussed in conjunction with the issue of comparative fault. See Tillman v. Supreme Express and Transfer, Inc., 920 S.W.2d 552 (Mo.App.E.D. 1996). As discussed above, the Missouri Supreme Court adopted a system of pure comparative fault for personal injury tort actions. Gustafson v. Benda, 661 S.W.2d 11 (Mo. banc 1983).

The two primary opportunities for using mitigation in the personal injury context are failure to seek employment and failure to seek medical care. A injured party’s failure to seek employment typically arises when his injury prevents his continuing employment in his present capacity. The plaintiff is not entitled to recover all of his lost future earnings. He may recover only “the difference between what he was able to earn before the injury and what he earned or could have earned thereafter.” Kauzlarich v. Atchinson, Topeka, and Santa Fe Railway Co., 910 S.W.2d 254, 256 (Mo. banc 1995) (internal quotations omitted) (emphasis added). Kauzlarich involved an injured railroad employee who brought suit under the Federal Employers’ Liability Act. There, the Missouri Supreme Court commented that, “loss of wages as a consequence of the failure to return to gainful employment is the employee’s choice, rather than a proximate result of the defendant’s conduct.” Id. The evidence in Kauzlarich established that the injured employee withdrew from a training program for a new position with his current employer, that he had previous work experience in other fields, and that he owned and operated a small business. Id. at 258. Expert testimony established that he may have been able to return to desk work, and that there were other available opportunities in the marketplace. Id. The court held that this evidence supported a mitigation instruction. Id.

The injured party also has a duty to exercise reasonable care in seeking medical treatment. Love v. Park Lane Medical Center, 737 S.W.2d 720, 723 (Mo. banc 1987). To this effect, defense counsel may show that the injured party would have benefitted from a simple operation or surgical procedure. The procedure must not pose a serious risk to the injured party. See King v. City of St. Louis, 155 S.W.2d 557, 565 (Mo.App. 1941). If the injured party chooses not to undergo the procedure, his damages may be reduced in proportion to the amount his injuries would have been reduced by such procedure, less the cost of the procedure and compensation for the pain accompanying it. Id.

Evidence of a plaintiff’s failure to follow physician’s instructions also supports a contributory fault jury instruction. Stone v. Duffy Distributors, Inc., 785 S.W.2d 671 (Mo.App.S.D. 1990). In Stone, the plaintiff suffered back pain after his truck collided with three kegs of beer, which fell out of the defendant’s truck. The plaintiff’s doctors instructed him to refrain from strenuous activity. At trial, the defendant introduced evidence that the defendant did not comply with this instruction. There was also evidence that the plaintiff’s failure to comply resulted in further injury. Based on this evidence, the court held that a jury could find that the plaintiff’s failure to follow his doctor’s instructions contributed to his damages. Id. at 677. This evidence supported the contributory fault instruction.

Missouri Approved Instruction 6.01 is appropriate when there is evidence of mitigating circumstances. Tillman, supra at 554; see also Shady Valley Park & Pool v. Fred Weber, Inc., 913 S.W.2d 28 (Mo.App.E.D. 1995). Expressing the failure to mitigate as a percentage of fault reducing damages is the proper method to account for the plaintiff’s conduct. Love, supra at 725. An instruction combining the elements of comparative fault and mitigation is not appropriate when the plaintiff did not cause or contribute to the injury-causing event. Tillman, supra at 554. In Tillman, the plaintiff was a passenger in a tractor-trailer collision. The case was tried only on the issue of damages, the defendant asserting that the plaintiff failed to seek employment. The trial court submitted an instruction combining the two elements, although the plaintiff did not contribute to the accident. The court reversed, recommending that the trial court should have given an instruction based on MAI 6.01. Id. Compare Tillman to Stone, where the plaintiff contributed to his injuries by ignoring doctor’s orders, and the court upheld the contributory fault instruction.

(j) Exceptions to the Collateral Source Rule

A doctrine which generally benefits plaintiffs is the collateral source rule, which prohibits introduction of evidence relating to the compensation the plaintiff receives from a collateral source, if the evidence has no other relevant purpose. Perkins v. Runyan Heating and Cooling Services, Inc., 933 S.W.2d 837 (Mo.App.W.D. 1996). The most frequently encountered examples of the collateral source rule are health insurance payments or disability payments. However, the collateral source rule is not absolute, and there are situations where a court will allow a defendant to introduce evidence of a collateral source payment in an effort to minimize damages. The first occurs when a plaintiff “opens the door” to the issue by introducing evidence regarding her financial condition. Here, the court may allow the defendant to show that the plaintiff received third party financial assistance. Moore v. Missouri Pacific Rail. Co., 825 S.W.2d 839 (Mo. banc 1992). “Whether the plaintiff injects his financial condition through inadvertence or purposefully, it is the raising of plaintiff’s financial condition with the jury that permits the opposing party to attack his claims of financial distress by showing that other financial assistance was available.” Moore, supra at 843. In Moore, the plaintiff, during cross-examination, volunteered that he could not continue therapy because he had no money. The court then allowed the defendant to inquire about his collateral source payments.

Missouri courts have split on the application of the doctrine to gratuitous services. The Western District recently commented that the collateral source rule will not apply to render evidence inadmissible when the plaintiff has “incurred no expense, obligation, or liability in securing the insurance coverage in question.” Duckett v. Troester, 996 S.W.2d 641 (Mo.App.W.D. 1999). In Duckett, the plaintiff, a collegiate cheerleader, was covered by insurance that her school provided. The court held that the defendant school official’s use of the term “we” when referring to the school’s insurance did not implicate the collateral source rule. Id.

The collateral source rule does not apply when the collateral source of payments is the defendant. Hamilton v. Slover, 440 S.W.2d 947 (Mo. 1969). A defendant’s advance payment to the plaintiff, based on possible tort liability, will be credited or deducted from any judgment in favor of the plaintiff. The law in this area is largely statutory. Section 490.710.2 is the set-off or credit provision. This rule prevents a plaintiff from obtaining a windfall or double recovery. The statute also provides that evidence of such an advance payment by or for the tortfeasor is not admissible as an admission of liability. §490.710.1 RSMo. Missouri courts, however, have held that §490.710 does not apply to payments made under a contractual obligation to pay medical expenses under the medical payments coverage of the defendant’s insurance policy. See Wegeng v. Flowers, 753 S.W.2d 306 (Mo.App.W.D. 1988).

When the defendant, or a party on her behalf, makes an advance payment of a plaintiff’s special damages, the defendant may introduce evidence that someone other than the plaintiff has paid those amounts in an effort to minimize recovery. §490.715.2 RSMo. However, if the defendant elects to introduce such evidence, she waives the set-off provision of section 490.710.2. Id.

When two or more tortfeasors are involved, payment or settlement made by one tortfeasor to the plaintiff is deducted from the plaintiff’s total damages. Haley v. Byers, 394 S.W.2d 412, 416 (Mo. 1965). In the event of such a payment by a joint tortfeasor, the court should instruct the jury to reduce the plaintiff’s damages by the funds received from the joint tortfeasor. Id. When one joint tortfeasor settles with the plaintiff, and the plaintiff discharges the joint tortfeasor from liability, the court should deduct that amount from the jury’s verdict. § 537.060 RSMo; See also Leonard Missionary Baptist Church v. Sears, Roebuck and Company, 42 S.W.3d 833 (Mo.App.E.D. 2001); § 538.230 RSMo (personal injury actions against health care providers). If the settlement exceeds the jury’s verdict, such settlement satisfies the judgment against remaining joint tortfeasors. In comparative fault situations, the court should first deduct the settlement amount from the verdict and then apportion the damages between the plaintiff and any remaining defendants. Jensen v. ARA Services, Inc., 736 S.W.2d 374 (Mo. banc 1987).

A final exception to the Collateral Source Rule arises in the rare cases when a tortfeasor provides treatment or services to the injured party. An example is Kansas City v. Martin, where the plaintiff sustained injuries as a result of the city’s negligence. 391 S.W.2d 608 (Mo.App.W.D. 1965). Doctors at the city’s own hospital treated the plaintiff at no charge. The defendant city was then relieved of any obligation for damages for those services. Id.

(k) Remittitur

Defense counsel should keep in mind that sometimes a jury is going to make a very large award for the plaintiff. If the award seems excessively large, defense counsel may file a Motion for Remittitur, which gives the trial court the opportunity to review and reduce a damage award; but don’t count too heavily on remittitur, because it is not often granted.

As a historical note, the State of Missouri adopted remittitur in 1831. McAllister v. Mullanphy, 3 Mo. 38 (1931); see also Steuernagel v. St. Louis Pub. Serv. Co., 238 S.W.2d 426 (Mo. banc 1951), MoBarCLE: Damages §23.1 (2001). The Missouri Supreme Court halted the practice in 1985, citing confusion and inconsistency of application. See Firestone v. Crown Center Redevelopment Corp., 693 S.W.2d 99 (Mo. banc 1985). Just two years later, the legislature codified both remittitur and the parallel practice of additur. §537.068 RSMo. The statute reads as follows:

A court may enter a remittitur order if, after reviewing the evidence in support of the jury’s verdict, the court finds that the jury’s verdict is excessive because the amount of the verdict exceeds fair and reasonable compensation for the plaintiff’s injuries and damages. A court may increase the size of a jury’s award if the court finds that the jury’s verdict is inadequate because the amount of the verdict is less than fair and reasonable compensation for plaintiff’s injuries and damages.

A court’s analysis of remittitur focuses on three factors:

1. Whether the award is excessive in light of the evidence and the standard of fair and reasonable compensation?
2. Whether the excessiveness is the product of passion, prejudice, or other jury misconduct or judicial error that requires a new trial rather than an adjustment to damages?
3. If remittitur is appropriate, by how much should the award be changed?

Bishop v. Cummines, 870 S.W.2d 922, 926 (Mo.App.W.D. 1994). There is no black-letter formula to determine whether the award is excessive. See Seabaugh v. Milde Farms, Inc., 816 S.W.2d 202 (Mo. banc 1991). Excessiveness can be determined by examining (1) whether the evidence supports the award, and (2) whether the award exceeds fair and reasonable compensation. See MoBarCLE: Damages § 23.5 (2001).

Remittitur is not always the appropriate remedy. It is appropriate when the verdict is excessive in light of the presented evidence. Toppins v. Schuermann, 983 S.W.2d 582, 588 (Mo.App.E.D. 1998). Remittitur is not appropriate when the excessiveness is the result of jury passion or prejudice. Id. In the later instance, only a new trial can remedy the discrepancy. See Barnett v. La Societe Anonyme Turbomeca France, 963 S.W.2d 639 (Mo.App.W.D. 1998).

The court in Othman v. Wal-Mart Stores, Inc. 91 S.W.3d 684 (Mo.App. E.D. 2002), affirmed the trial court’s refusal to remit a jury award in a personal injury case. The jury awarded $250,000 in damages and found the injured fifty percent at fault. The plaintiff received $125,000. In examining the reasonableness of the award, the court identified the following factors: (1) loss of income, both present and future, (2) medical expenses, (3) plaintiff’s age, (4) the nature and extent of plaintiff’s injuries, (5) economic considerations, (6) awards given and approved in comparable cases, and (7) the superior opportunity for the jury and the trial court to evaluate plaintiff’s injuries and other damages. The court held that the jury award was not excessive, noting the drastic changes to the injured’s lifestyle, the pain and suffering of his treatment, and his subsequent medical bills. Othman, supra. Defendants arguing in favor of remittitur should frame their arguments around these seven factors, as other Missouri courts have conducted similar inquiries in other personal injury cases. See Lay v. P & G Health Care, Inc., 37 S.W.3d 310, 333 (Mo.App.W.D. 2000); Emery v. Wal-Mart Stores, Inc., 976 S.W.2d 439 (Mo. banc 1998).

One court’s surface examination of a jury award included comparisons to other wrongful death awards and the plaintiff’s damage request during closing argument. Coggins v. Laclede Gas Company, 37 S.W.3d 335 (Mo.App.E.D. 2000). In Coggins, plaintiffs brought a wrongful death suit after their son died as a result of an explosion. The jury awarded the plaintiffs $4.5 million in damages. Finding that the award was not excessive, the court focused first on the son’s pain and suffering and the relationship with his parents. It also noted that the award was less than what plaintiff’s counsel requested in closing argument. The defendant argued that remittitur was appropriate, because this award was the largest in the state in a wrongful death case. The court countered that only verdicts much larger than $4.5 million have been remitted on appeal in Missouri. It concluded by asserting that the award was not so grossly excessive as to shock the conscience.

In Crawford v. Shop ‘n Save Warehouse Foods, Inc., a child suffered injuries after falling from a shopping cart in defendant’s store. The jury returned a $100,000 award for the child and a $25,000 award for the parents. The trial court remitted the parent’s award to $7,907.10 (which was likely the amount of medical bills). On appeal, the court held that the trial court abused its discretion in granting defendant’s motion for remittitur. Here, the court focused its inquiry on the child’s future medical expenses and care, and the enduring trauma associated with the injuries. Crawford, 91 S.W.3d 646, 654 (Mo.App.E.D. 2002).

In Section 1, a number of legal principles, evidentiary tools, and trial tactics have been considered that defense counsel can use to minimize plaintiffs’ damages and minimize plaintiffs’ verdicts.

2. USING PRE-TRIAL MOTIONS FOR DAMAGE CONTROL

This section will primarily focus on those motions which are filed near the end of the discovery phase, at the time of a pre-trial conference, or at the meeting in chambers on the day of trial.

It should be understood, however, that discovery related motions, which occur earlier in the case, may be very important to defense counsel in minimizing damages. If a plaintiff is proving recalcitrant concerning discovery, where normally plaintiffs provide answers or documents, defense counsel should have a heightened sense of awareness as to what is not being disclosed and pursue those issues either by motions or by follow up questions at the time of depositions. Motions concerning the ability of experts to testify and the permissible scope of their testimony have increased in significance during the last ten years. This is especially true in federal court, given the parameters of Federal Rule of Evidence 702 and the United States Supreme Court decisions in Daubert v. Merril Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999). Under Daubert, expert testimony is admissible if the trial judge can insure that the evidence is based on scientific, technical, or other specialized knowledge or is reliable, and that the evidence will assist the trier of fact or is relevant. Scientific knowledge must be more than belief or conclusions. It must be fact or theory grounded in methods and in the proper application of the procedures of science. Daubert makes federal judges gatekeepers, whenever expert testimony is offered.

In a Daubert hearing, the federal judge applies Rule of Evidence 104(a) to qualify the expert witness and make a preliminary finding as to whether his or her reasoning or methodology is scientifically grounded and can properly be applied to the facts of the case. See “Getting Your Security Expert over the Daubert Hurdle” Clifford Britt, Trial Magazine, December, 2001. Kumho makes clear that the Daubert test is not a definitive checklist. There must be a case by case determination of reliability and admissibility with the trial judge being given “considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable.” Kumho at 1176.

The courts in Missouri have not adopted Daubert. Expert testimony in Missouri is governed by Section 490.065 RSMo, which allows admission of expert testimony if the scientific, technical, or otherwise specialized knowledge will assist the trier of fact to understand the evidence or determine a fact at issue. Section 490.065 provides as follows:

1. In any civil action, if scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.
2. Testimony by such an expert witness in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.
3. The facts or data in a particular case upon which an expert bases an opinion or inference may be those perceived by or made known to him at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reasonably reliable.
4. If a reasonable foundation is laid, an expert may testify in terms of opinion or inference and give the reasons therefore without the use of hypothetical questions, unless the court believes the use of a hypothetical question will make the expert’s opinion more understandable or of greater assistance to the jury due to the particular facts of the case.

The statute requires testimony to be reliable and based on facts or data ‘reasonably relied upon by experts’ in the field, but it does not require the expert’s principles or techniques to be widely applied in the relevant scientific community. Section 490.065.3 RSMo; State Board of Registration for the Healing Arts v. McDonagh, D.O., W.D. No. 60501, hand down date, March 25, 2003 (subject to motion for rehearing or transfer).

The Court, in Long v. Missouri Delta Medical Center, 33 S.W.3d 629,643 (Mo.App.S.D. 2000), stated as follows: No Missouri appellate court has considered since the United States Supreme Court’s decision in Kumho, whether to apply the Daubert multi-factor test to non-scientific evidence. However, it seems apparent that applying Frye to scientific evidence and Daubert to non-scientific evidence would only create more confusion for trial judges in determining whether to admit expert testimony Until the Missouri Supreme Court dictates otherwise, we think the admissibility of expert testimony regarding non-scientific evidence can be assessed under Section 490.065 RSMo without applying any of the Daubert factors.

The Court in McDonagh, D.O., analyzed these issues in detail: In Frye, 293 F. at 1014, the court held that, to be admissible, expert testimony must be based on scientific principles generally accepted in the relevant scientific community. The Frye rule has been adopted in civil and criminal cases in Missouri. State v. Stout, 478 S.W.2d 368, 371 (Mo.1972); Alsbach v. Bader, 700 S.W.2d 823, 828-30 (Mo.banc 1985). The rule was modified by the Missouri Supreme Court in State v. Biddle, 599 S.W.2d 182, 191 (Mo.banc 1980), which held that “wide scientific approval” of the reliability of the scientific method employed is required for admission of expert testimony… Since the enactment of the statute in 1989, the Missouri Supreme Court has declined to directly decide whether section 490.065 supercedes application of the Frye rule in the same manner that Daubert changed the admissibility requirements for expert testimony in federal courts. See Callahan v. Cardinal Glennon Hospital, 863 S.W.2d 852, 860 (Mo.banc 1993). In Lasky v. Union Elec., 936 S.W.2d 797, 801 (Mo.banc 1997), the Court gave remand instructions that the trial court was to “be guided by section 490.065… in evaluating the admission of expert testimony.” Notably, the Court did not discuss either Frye or Daubert in directing application of the statute. All three districts of the court of appeals have expressed confusion about the applicable standard in the wake of Lasky and the absence of a clear directive that Frye has been overruled. See Long v. Mo. Delta Med. Ctr., 33 S.W.3d 629, 943 (Mo.App.S.D. 2000); M.C. v. Yeargin, 11 S.W.3d 604, 618-19 (Mo.App.E.D. 1999); McReynolds v. Mindrup, No. WD 60747, 2002 WL 31162729, *6 n. 2 (Mo.App.W.D. Oct. 1, 2002). There is uncertainty about whether section 490.065 supplants the Frye rule in civil cases and whether an evaluation of expert testimony under section 490.065 requires consideration of Frye or the Daubert factors.

The possible evolution of the standards applicable to experts is, of course, an area which deserves monitoring. However, if you believe that the plaintiff has an expert that is acting far outside of his area of expertise, is grossly exaggerating damages, or is unreliable and rendering opinions which are not of the type rendered by other experts in the field, a motion based on §490.065 RSMo should be filed. Practically, many Missouri courts will not rule on these issues until the expert testifies at the time of trial. However, an effort should be made to have a pre-trial hearing on the issue, or at a minimum, it should be part of the pre-trial

Motions in Limine that are filed, so that the trial judge has sufficient time to consider and research the issue and to be made clearly aware of the legal arguments for the exclusion of the expert’s testimony.

Motions in Limine cover a very broad range of subject matters. Pre-trial motions in limine allow parties to ask the court for a preliminary ruling, typically on an evidentiary matter, before the proponent attempts to introduce the evidence during trial. The Missouri Supreme Court has repeatedly maintained that such in limine rulings only represent a “preliminary expression of the court’s opinion as to the admissibility of evidence.” Wilkerson v. Prelutsky, 943 S.W.2d 643, 646 (Mo. banc 1997), Brown v. Hamid, 856 S.W.2d 51, 55 (Mo. banc 1993). When a court grants a motion in limine, the proponent of the excluded evidence must make an offer of proof at trial. Wilkerson, supra at 646. There are two reasons for the offer of proof. The primary reason is to preserve the record for appeal. The second reason is to allow the court to further examine the evidence and the proponent’s claim of admissibility. As noted above, the court’s in limine ruling is only its preliminary expression and the court is not bound by its previous ruling during trial. Evans v. Wal-Mart Stores, Inc., 976 S.W.2d 582, 584 (Mo.App.E.D. 1998). Unforeseen circumstances or events during trial may effect the court’s decision on the admissibility of evidence previously excluded. Id.

Defense motions in limine may seek to exclude evidence relating to liability, damages, or both. A motion to exclude the testimony of a plaintiff’s expert may accomplish both of these goals. In Wilkerson, supra, a medical malpractice suit, the trial court granted the defendant’s motion in limine, excluding a physician’s testimony relating to standard of care, causation, or damages. The physician treated the plaintiff and the court only allowed him to testify as to the plaintiff’s treatment. Wilkerson, supra at 646. The court affirmed a judgment in favor of defendants.

In Evans, supra, the plaintiff suffered injuries when a box fell off of a shelf at a department store. The plaintiff sought to introduce the testimony of an expert-a manager of other various department stores. The expert was to testify regarding the “custom and practice” of stacking merchandise. The court granted the defendant’s motion to exclude this expert testimony. On appeal, the court upheld a jury verdict in favor of the defendant. Evans, supra at 584-85.

Defendants can also use motions in limine to exclude otherwise damaging evidence. One Missouri court granted a defendant’s motion to exclude evidence of the defendant’s marijuana use before an automobile accident. Choate v. Natvig, 952 S.W.2d 730 (Mo.App.S.D. 1997). The defendant driver tested positive for marijuana use after the accident. The court granted the defendant’s motion, excluding the defendant’s deposition testimony regarding her marijuana use and her invocation of the Fifth Amendment. The jury verdict assessed no percentage of fault to this defendant. Like many other appellate cases reviewing motions in limine, the appellate court did not review the exclusion, because the plaintiff failed to make a sufficient offer of proof at trial. Id. at 733.

There are very many issues or subject matters that can be addressed in a Motion in Limine. Sometimes the issues will be clear, and the judge will express an unequivocal opinion regarding the issue. If that opinion is concerning exclusion of evidence, defense counsel needs to remember to make the objection at the time of trial, since Motions in Limine are only preliminary rulings. If the objection is not asserted during the course of the trial, the issue will probably be deemed to have been waived. Frequently, judges will reserve rulings on Motions in Limine until they see how certain facts develop at the time of trial. Even under such circumstances, the Motions in Limine are extremely valuable, because they raise the issue in a clear way, where there is an opportunity for an extended discussion. This is not always possible in the heat of trial with a jury present. It is also a courtesy to the court, because it allows the court time to seriously consider the issue and to have the ability to place the legal or evidentiary issue in the context of the case as a whole.

CONCLUSION

We have considered the various tools, strategies, and pre-trial motions available to defense counsel in the effort to minimize plaintiff’s damages and minimize the verdict, if the plaintiff prevails. These materials do not purport to be exhaustive. Creative defense counsel may utilize many different legal principles, evidentiary tactics, trial strategies, and pertinent motions to achieve the defense goal of minimizing the plaintiff’s recovery at trial.

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There are several other very valuable sources of information, which should be considered and consulted when ethics issues are encountered. The Missouri Bar website has significant practice resources relating to different aspects of legal ethics. Go to www.mobar.com and in the left column, click on “Lawyers” This will lead you to a page labeled “Lawyer Resources,” which contains a section called “Practice Resources.” Practice Resources contains a “clickable listing,” which leads to an abundance of valuable information regarding topics such as: fee agreements, fee dispute program information and rules, informal advisory opinions, risk management information, and information about the Office of Chief Disciplinary Counsel (OCDC). This wealth of legal ethics information is just several clicks away from your internet icon.

The Legal Ethics Counsel for Missouri is Sara Rittman, at 217 East McCarty, Jefferson City, MO 65101. Her phone number is (573) 638-2263. The legal ethics counsel has been separated from OCDC, so that advice or opinions can be obtained from an office that is separated from the group that pursues bar discipline against attorneys alleged to have significantly violated the Code of Professional Responsibility. Informal advice can be obtained as well as formal or informal written opinions, if necessary. See Rule 5.30 for the procedures and criteria for written opinions.

Another excellent resource for practical legal ethics information is the Risk Management consultant for your legal malpractice carrier. (You are insured, aren’t you?) The Bar Plan Mutual Insurance Company insures more law firms than any other malpractice insurer in Missouri. Chris Stiegemeyer heads their risk management department. If you are a Bar Plan insured, contacting Chris about an issue before there is a serious problem is a very wise idea. If you are insured by a different malpractice carrier, that carrier will almost certainly also have someone to assist you, when you are confronted with ethical or potential legal malpractice issues. If the issue has developed to the point that a claim is possible, the risk manager, or the attorneys in the claims department, can give you advice which may eliminate or minimize the potential claim. If the ethics questions are commingled with legal malpractice questions, you may wish to consult Mallen & Smith’s excellent five volume treatise, Legal Malpractice, Fifth Edition.

I would also encourage everyone to occasionally take a look at the Oath of Admissions, which each attorney took when they were “sworn in.” The Oath, which is probably hanging in your office, contains the shorthand and quintessential summary of the ethical rules and the aspirations of the legal profession. A copy of the current Oath of Admissions and previous Oath of Admissions are both provided as attachments at the end of this chapter. The specific topics, which will be primarily considered in these materials, are conflicts of interest, fee setting arrangements, and client contacts.
A. CONFLICTS OF INTEREST
Though the concept of conflict of interest impacts a number of the sections and the comments to Rule 4, the primary provisions are embodied at 4-1.7 through 4-1.9.

The dangers in suing a client or former client are probably understood by most practitioners. However, the rule barring suits against clients is not absolute. If the lawyer reasonably believes that the representation of one client will not adversely affect the relationship with the other client; and each client consents after meaningful consultation, even some direct conflicts can be waived. If an attempt is made to waive a conflict of interest, there should be a clear writing demonstrating that the possible adverse effects on the client and the attorney-client relationship have been explained in detail, and the writing should also demonstrate that the clients’ consent is given knowingly and with true understanding. However, waivers are often difficult to sustain, if challenged. Defenses to waiver include: failure to inform the client of the exact conflict or the nature and extent of the conflict; failure to notify the client in a timely manner; and failure to advise clients of their right to obtain separate counsel to advise them regarding the conflict. Also, some conflicts are not waivable. See 4-1.8 (c)(d)(e) and (h). Others are waived only within narrowly prescribed limits. See 4-1.8 (a), (b), (f), (g), (i), and (j).

Conflict issues may also arise in connection with multiple representations. I’ll give you some auto claim examples, since they are probably most easily understood and are frequently encountered. When the driver and three passenger relatives come to your office, it is certainly tempting to “sign up” all of them as clients. However, careful thought should be given to the possibility of a conflict existing at that time, or developing in the future. The most obvious danger is that the driver of the vehicle may be deemed to have been a contributing cause of the injuries, which were sustained by the passengers. In these days of mandatory insurance, it is often difficult to rationalize a refusal to pursue that additional source of funds as well as the insurance carrier for the primary tortfeasor.

Even when conflicting liability evidence does not appear from a reading of the police report or the initial description of the matter when the clients call to schedule an appointment, evidence of a conflict may develop as the attorney is learning more about the case from the clients. It also may arise when discovery is propounded, or depositions are taken. In those regards, see Informal Advisory Opinion 20000213:

QUESTION: Attorney represents Driver 1 and two passengers in a personal injury suit against Driver 2. Driver 2 has filed a counterclaim against Driver 1. Attorney has informed all three clients that information has developed that indicated that Driver 1 was at fault. The clients that were passengers would, in that event, have a personal injury claim against Driver 1. All three clients believe that Driver 2 was at fault and want Attorney to continue to  represent all three in their claim against Driver 2 without making a claim against Driver 1.

Question 1. May Driver 1 and passengers waive any claim of conflict of interest and request that Attorney continue to represent all three in the action against Driver 2 and direct attorney not to file an action against Driver 1?

Question 2. If the passenger clients wish to proceed in the pending action against Driver 1, may the clients, upon full disclosure, waive any potential claim of conflict of interest to allow Attorney to continue to represent (a) passengers in their claim against Driver 2; (b) passengers in their claim against Driver 1; and (c) passengers and Driver 1 in their claim against Driver 2?

Question 3. Is it mandatory for the clients to have independent legal advice regarding their respective rights in this regard, or may they rely on Attorney to advise them, which includes advising them of their right to consult other counsel?

ANSWER:

Question 1. Yes, if Attorney fully discloses the conflict and the effect of the clients’ decision.

Question 2. The answers to this question are based on the information that Attorney would make full disclosure and obtain waivers of any conflicts. Attorney may represent the passengers in their claim against Driver 2, if they are suing Driver 1, regardless of whether Attorney is representing them against Driver 1. However, Attorney cannot represent them against Driver 1, and represent Driver 1 in claims against Driver 2. If some other attorney represents them in their claim against Driver 1, it might be possible to represent the passengers and Driver 1 against Driver 2, depending on the issues that arise. Joint representation of the passengers and Driver 1 against Driver 2 is not advisable if the passengers are suing Driver 1.

Question 3. Attorney should advise the clients that they may consult independent counsel. If they decline to do so, Attorney should fully advise them. If Attorney believes that any conflicting interests would interfere with Attorney’s ability to fully advise them, Attorney must withdraw from the representation.

The authorization for contingent fees as an exception to the general rule forbidding a lawyer acquiring an interest in litigation is found in Rule 4-1.8(j)(2). The ability of a lawyer to advance or pay costs is found in Rule 1-1.8(e)(1) and (2). But a lawyer may not otherwise finance the litigation or make a loan to the client. Rule 4-1.8(e).

The possible conflicts issue concerning multiple representation is presented to defense counsel on occasion, though not as dramatically. Can the same attorney defend a negligent and allegedly impaired driver of a vehicle at the same time he is defending someone, who allegedly was negligent in entrusting the vehicle to that driver? It depends on the facts, but the possibility of conflict seems reasonably apparent.

A frequently recurring conflict of interest issue from the defense perspective is that which may arise when the lawyer is defending an individual or corporation, but is being paid by an insurer. In most cases, this does not present any conflict. However, “when an insurer and its insured have conflicting interests in a matter arising from a liability insurance agreement, and the insurer is required to provide special counsel for the insured, the arrangement should assure special counsel’s professional independence.” See Comment to Rule 4-1.7 “Interest of Person Paying for Lawyer’s Services.”

This concerns the often discussed tri-partite relationship. A lawyer defending a case on behalf of an individual or corporation needs to always remember that ultimately the client, within the scope of the case, is the defendant, and not the insurance carrier. If, for example, there are coverage issues present, counsel for the defendant should not become involved in rendering opinions or doing discovery relating to coverage issues, which could adversely affect the existence or extent of insurance present. Clearly, the presence of insurance or the scope of coverage can significantly impact the ability of a defendant to pay a settlement or judgment and can threaten the financial well-being of the individual or corporation the attorney is defending. Most insurers have a different claims person handle the coverage issue than the claims professional handling the claim itself, and insurers usually retain separate counsel to deal with those coverage issues. It may occasionally be tempting for defense counsel to try to assist an insurer on coverage related matters, arising in connection with the matter being defended. However, this is a temptation which must be avoided, because of both the well-being of the defendant and the ethical obligations of defense counsel. Most insurers recognize the need for defense counsel to be independent and ethical in these regards; and insurers also realize the potential danger of acting in bad faith, if the lines get too blurred or if the lines of propriety are crossed by the insurer or defense counsel concerning conflict of interest issues. The Supreme Court’s decision in In re Allstate Insurance Company, 722 S.W.2d 947 (Mo.1987), confirms that in Missouri a defense attorney can represent both the insurer and the insured. In house attorneys at Allstate could be retained by Allstate to defend insured individuals, where there was no question of coverage, and no real danger of excess verdict or any other demonstrable conflict. See dissenting opinion of Judge Rendlen, joined by Judge Billings, and of Special Judge Greene. (Contra see Gardner v. North Carolina State Bar, 341 S.E.2d 517, 316 N.C. 285 (N.C. 1986).

The 1988-1998 Report of the Missouri Department of Insurance notes that 138 malpractice claims were made regarding conflict of interest allegations. Of these, 30 were paid with an average payment of $319,127.00. As you can see, conflict of interest issues are also a fertile ground for malpractice claims, as well as potential disciplinary complaints. It is perhaps wise to err on the side of avoiding conflicts of interest.

Another valuable and necessary way of minimizing conflict of interest issues is by establishing office systems to check for such problems immediately at the beginning of each new representation. In highly controversial matters or matters of extreme urgency (TRO’s), a preliminary check, before even meeting with the client, is suggested. If you aren’t in a large firm, a manual system may work. Given the developments of technology and clients’ increased expectations for prompt action, even smaller firms may want to consider computerized conflict checking systems. Often, they are included in office management/time and billing packages. Check with your technology consultant or your malpractice carriers’ risk manager regarding alternatives, and possible recommendations.

B. FEE SETTING ARRANGEMENTS

Numerous ethical considerations impact the representation of a plaintiff in a personal injury case. Such cases are almost universally handled on a contingent fee basis. Many larger personal injury cases are handled on a split fee referral basis (i.e. wrongful death, medical malpractice, products liability, toxic tort, etc.) Also, many plaintiffs in personal injury cases are poor or middle class, and have trouble paying for the costs associated with the prosecution of a contested personal injury lawsuit. These circumstances give rise to a number of questions.

As we have seen in the previous section regarding conflicts of interest, Section 4-1.8 contains provisions relating to attorney compensation, costs, and contingent fees. However, the primary code section dealing with these is 4-1.5. That provision begins with the phrase “A lawyer’s fee shall be reasonable..” Section (c) deals specifically with contingent fees and provides as follows:

A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial, or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of thematter and, if there is a recovery, showing the remittance to the client and the method of its determination.

4-1.5(e) deals with discussions of fee splitting: A division of fee between lawyers who are not in the same firm may be made only if:

1. the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
2. the client is advised of and does not object to the participation of all the lawyers involved; and
3. the total fee is reasonable.

The comment to Rule 4-1.5, relating to division of fees, provides as follows:

A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee on either the basis of the proportion of services they render or by agreement between the participating lawyers if all assume responsibility for the representation as a whole and the client is advised and does not object. It does not require disclosure to the client of the share that each lawyer is to receive. Joint responsibility for the representation entails the obligations stated in Rule 5.1 for purposes of the matter involved.

The Missouri Appellate Courts have dealt with fee related issues that have arisen in the last three or four years. Within a matter of months in 1999, two cases were decided by the Missouri Appellate Courts. In Risjord v. Lewis, 987 S.W.2d 403 (Mo. App.W.D. 1999), claimant John Rousseau was injured as a result of an exploding tire rim. A court appointed his wife, Janice, as guardian of her husband’s estate. Lewis did not have a contract with clients when he contacted Risjord to act as lead counsel. The contract between the three parties stipulated that Lewis was to assist with the case and advance expenses. Lewis would also share forty percent of any contingent fee. Lewis failed to assist with any part of the case beyond the initial investigative work. He also failed to advance any expenses. The client removed Lewis as attorney and Risjord later settled the case. Risjord brought a declaratory judgment action.

The court held that Lewis was not entitled to any of Risjord’s fee from the settlement. The court noted that a division of fees is only proper based on a division of service or responsibility. Id. at 405. “Merely recommending another lawyer or referring a case to another lawyer, and failing to do anything further in the handling of the case cannot be construed as performing service or discharging responsibility in the case.” Id. (internal quotations omitted). The court recommended that if Lewis wanted a share of the fee, he should have performed a share of the work. Id. at 406. Regarding Lewis’ removal, the court emphasized that a client’s right to discharge an attorney is greater than an attorney’s right to a fee split. Id. (Emphasis added.)

Given the referring attorney’s failure initially to obtain a written contract, and his failure to perform under the eventual fee contract, the result in Risjord is not surprising. Some practitioners may, however, have been surprised by the decision of the Eastern District in Londoff v. Vuylsteke, 996 S.W.2d 553 (Mo.App.E.D. 1999).

The underlying lawsuit was an action for wrongful death. Londoff’s contract with clients provided for a forty percent fee of any settlement. It also provided that Londoff could associate additional counsel at no cost. Londoff referred the clients to Vuylsteke. Londoff testified that he only spent a few hours researching the case and talked to Vuylsteke about his investigation. Vuylsteke and another attorney later settled the case. Londoff initiated this suit to recover his fee.

The court, relying on Risjord, first noted that fee division agreements between attorneys are only acceptable when they are based on a division of services or responsibility. Id. at 557. Merely recommending or referring a client to another attorney and doing nothing else in furtherance of the case does not meet this requirement. Id. The services or responsibility referred to by the court and in the rule “must relate to an actual participation in or handling of the case.” Id. Furthermore, Rule 4-1.5(e) requires a written agreement with the client. Londoff also failed to satisfy this requirement. Id. at 558.

It will be interesting to hear the comments of plaintiffs’ attorneys on this topic, but I suspect that there are a significant number of referral attorneys, who do not do much after the referral other than talk to the client infrequently, and perhaps review correspondence and key pleadings filed by trial counsel.

Note also the requirement of Rule 4-1.5(e), discussing a written agreement with the client, where each lawyer assumes joint responsibility for their representation.

Other authorities advising or regulating lawyer ethics have taken different positions on this matter. The ABA issued an opinion in 1985, indicating that substantial services did not need to be performed by the referring lawyer. That opinion focused more on the joint responsibility for the representation in the sense of assuming financial responsibility, if malpractice were committed and the client was damaged. Illinois seems to follow this line of thought.

There is also a proposed draft revision to ABA Model Rule 1.5, indicating that assuming joint responsibility for the representation requires each lawyer to assume civil liability for any malpractice of the other in the matter. The comments and explanations to the proposed changes contain the following statement: “The present language implying that the referring attorney is to look over the other’s shoulder is wrong as a matter of law and practice.”

This may be a matter that is undergoing reconsideration or change at the national level; but in Missouri at this time, the referring attorney had better be involved in a material way in the representation. This is both for reasons of compliance with the rules of ethics and in order to protect and preserve the referral fee.

Since the split fee referrals typically involve cases of serious injury or death, the malpractice exposure may be significant. The 1988-1998 report of the Missouri Department of Insurance indicates that during that time frame there were 34 claims based upon referral to another professional. Fortunately for the plaintiffs’ bar, only six of those resulted in payments, but the average payment was $550,792.00. (Do you have enough malpractice insurance?)

Issues can also arise concerning the successive representation of a party, pursuant to a contingent fee arrangement. Often, these matters are resolved quickly and informally because the first attorney does not want his ex-client to become too angry and possibly file a bar discipline complaint over whatever led to the termination of representation. The 1998 Report of the Office of Chief Disciplinary Counsel showed that there were 208 bar complaints relating to the declining or terminating of representation. This was the fourth highest category of complaints. However, if the dollars are large enough, or the relationships are adversarial enough, these matters can lead to litigation.

In Kuczwara v. Continental Baking Company, 24 S.W.3d 712 (Mo.App.E.D. 1999), Gerritzen, and then Price, represented Kuczwara in a workers’ compensation case. Both attorneys separately contracted with Kuczwara for contingency fees. Price negotiated a settlement for Kuczwara, which Kuczwara did not accept. Kuczwara terminated his relationship with both attorneys and both attorneys filed liens for their fees. Gerritzen appealed the order of the Labor and Industrial Relations Commission, which modified his award of attorney’s fees.

An attorney’s recovery under an attorney-client fee agreement is not proper when the attorney fails to complete the terms of a contingent fee agreement. Id. at 715. If the attorney-client relationship is terminated before the completion of a contingent fee contract, the attorney’s only theory of recovery is in quantum meruit for benefits conferred to the client. Id. (Emphasis added.) The court held that the evidence did not support part of the Commission’s award of attorney’s fees to Price. Id. Although Gerritzen could show exactly how much time he spent on the case, Price failed to do the same. Since Price’s representation ended before the completion of the contingency fee agreement, the only recovery available to him was in quantum meruit. Thus, the court reversed and remanded with instructions to modify Gerritzen’s award of attorney’s fees. Id. at 716.

It is important to remember that Rule 4-1.5 begins with “A lawyer’s fee shall be reasonable” and ends with 4- 1.5(e)(3) “the total fee is reasonable. This is, of course, the guiding principle governing fees. However, in the contingent fee arena, what does this really mean? Is it possible that on a slam dunk, quickly settled case, worth six or seven figures, that a 15% contingent fee is too high? It is also possible in a bitterly contested case with disputed liability and damages, involving a need to clarify or change existing case law, that a 50% fee might be extremely reasonable?

There is a lot of interesting philosophizing that could be done about these questions. However, the rubber meets the road when either a client subsequently objects to the fee, or the matter requires court approval and a judge must review and approve the fee. Many large cases involve wrongful death, minors, or people who have been injured so severely that they are now held to be incompetent and therefore court approval is required.

Some judges seem to view all fee agreements as reasonable, if there is not any serious complaint from the client. Other judges will review the fee agreements and independently determine what is reasonable. Giving advance thought to this issue and preparing evidence or argument regarding the propriety of the fee may help plaintiff’s counsel convince a reluctant judge, if the settlement must be approved. Attorneys should always be mindful, however, of the ethical requirement that the fee must be reasonable.

The problems faced by defense counsel concerning fees are less complicated that those faced by plaintiffs’ counsel, but they are very real. Some defense counsel are part of captive law firms and are really employees of the insurance carriers. In re Allstate, supra, holds that there is no ethical problem in this relationship, in and of itself. However, house counsel needs to be very careful due to the issues or problems that may arise, if a conflict is asserted. Since they are employees of the insurance company, the insurer is incurring some level of increased risk concerning bad faith, failure to settle within limits, and conflict of interest, if the actions of house counsel are deemed inappropriate and unethical.

Outside counsel are almost always paid by the hour, perhaps the most straightforward of all fee arrangements. However, as insurance companies have been more proactive in managing cases and in establishing billing guidelines, defense counsel may be confronted with questions as to whether the insurer is refusing to authorize that degree of work, which needs to be done to effectively represent the client. In my experience, these issues can almost always be talked through and resolved satisfactorily, so that the legitimate needs of the defendant client are met. If this cannot be done, an ethical dilemma is presented. Informal advisory opinion 980124, provides as follows:

QUESTION: Attorney has received a set of litigation and billing guidelines from an insurance client. Is Attorney allowed to limit services to an insured to those for which the insurance company tells Attorney the will pay? May Attorney agree to such litigation and billing guidelines absent the insured’s consent?

ANSWER: Attorney may only agree to have Attorney’s representation limited in the manner proposed, if the client consents. Under Rules 4-1.8(f) and 4-1.4, Attorney must inform the insured of the limitations in a manner such that the insured will understand the extent of the limitations and the implications of the limitations on the representation. If the insured does not consent, Attorney may not represent the insured subject to the limitations.

Usually, insureds are very happy that the cost of their defense is being paid for by their insurance carrier. It is part of what the insured contracted for in their policy of insurance. As you are no doubt aware, there are cases where parties sue their insurance companies to compel the insurance company to defend them in pending litigation. Costs of defense in complex cases can be extremely large, even if the defendant eventually prevails. However, informal opinion number 970132, raises an interesting question:

QUESTION: Does Rule 4-1.8(f)(1) require Attorney to obtain a client’s consent before representing that client for a fee, when the client’s legal fees are being paid for by someone other than the client such as an insurance company? Is written consent from the insured/client required under Rule 4-1.8(f)(1)?

ANSWER: Rule 4-1.8(f) does apply to the insurance defense situation. This is a situation involving third party payment and also multiple representation. It is necessary for the insured to consent to the third party payment as well as any other conditions or limitations imposed on the representation. The rules do not require that this consent be in writing, but it is recommended.

As previously set forth, almost all insureds are very happy to have defense counsel provided for them at the insurer’s cost, but one can envision circumstances in which the issues raised in informal opinion 970132 are real rather than theoretical. This issue does sometimes arise especially in the defense of business entities and the defense of professionals.

The issue of outside auditors reviewing attorneys fees bills on behalf of insurance carriers has been a hot topic for a number of years. Please see informal opinion 980188 in these regards. I have never personally encountered any significant problems in these regards; but on an industry-wide basis, apparently insurers feel that some defense firms have done unnecessary work or perhaps churned hours to compensate for artificially low rates.

Though the issues affecting defense counsel are not as blatant as those affecting plaintiffs’ attorneys in personal injury cases, they nevertheless present significant dilemmas.

In doing research for this seminar, I became aware of a non-personal injury case that was somewhat frightening. In United States v. Massachusetts Institute of Technology, 129 F.3d 681 (1st Cir. 1997), the relevant issue concerned a demand by the IRS to review attorney bills and work product to determine whether the school qualified for tax-exempt status. As requested by the Department of Defense, MIT had provided billing statements to an auditing agency for review. The Court agreed that the disclosure of the information to the outside auditor constituted a waiver of both the attorney-client and work product privileges. The MIT case involves the client, MIT, voluntarily waiving the privilege. That case did not decide whether “unauthorized action by a lawyer” could be a basis for the waiver of the privilege. However, none of us envies the lawyer who arguably waived a privilege and gave the IRS access to attorney-client information.

Given the MIT holding and the Rules of Professional Conduct combined with informal opinions, defense counsel should be very careful in agreeing to disclose information to outside auditing agents, without the explicit consent of the client.

Though the problems confronted by plaintiffs’ attorneys and defense attorneys in the personal injury arena concerning fees are quite different, both are significantly impacted by the ethical rules and the comments and pertinent case law.
C. CLIENT CONTACTS
The topic of client contacts is so broad that it is impossible to meaningfully discuss within the confines of these materials. Therefore, an overview approach will be used, with more detail provided regarding several items of more specific interest.

Especially for the plaintiffs’ bar, getting clients to come in the door is a big part of the practice. When I started practicing in 1974, lawyers did not have large yellow page ads, TV commercials, or radio announcements. The concept of advertising within the profession has certainly changed. The requirements for media advertising are set forth in Rule 4-7.2. Direct mail can be used, subject to the limitations and guidelines of Rule 4-7.3 (I recently was involved in the defense of a suit against a law firm, where the plaintiff was solicited through direct mail by an attorney seeking to develop a volume practice regarding alleged violations of the Fair Debt Collections Practices Act.)

There are still fairly stringent limitations, however, regarding personal contact by phone or by meeting, where the communication is initiated by the attorney. See Rule 4-7.3(b).

Once the client has come to your door, many issues are presented. The most preliminary and basic is the formation of the attorney-client relationship. Aspects of this relationship are established even before the attorney decides whether or not to take the case. These would include the provisions relating to confidentiality, and potentially, conflict of interest.

Assuming that the client wishes to retain the attorney, and the attorney wishes to represent the client, the scope of the representation and the exact details of the fee agreement are important. As discussed previously, all contingent fee contracts must be in writing. Does your present fee agreement clearly delineate the scope of representation? If an attorney loses a case at trial, does he have a duty to file a Motion for New Trial and Notice of Appeal, or take an appeal? Do the financial terms of representation change, if any of these things occur?

Is the contract clear regarding whether the contingent fee applies to the gross amount of the settlement, or to the net amount of the settlement? What is to be done if recovery is made by a plaintiff, pursuant to a contingent fee arrangement, in a case where part of their recovery relates to subject matters other than money? What understanding exists regarding disposition of file materials at the conclusion of the case?

It should be remembered that the file belongs to the client, and needs to be delivered to the client upon demand. Matter Of Cupples, 952 S.W.2d 226 (Mo. 1997). However, typically attorneys retain files for a period of time. This is a very good risk management practice, given that something new may arise with respect to the case, or because of the remote possibility that the client may make a claim against you for malpractice. I have defended a number of malpractice cases where the attorney no longer had a file, and it certainly makes life more interesting for the defendant attorney and defense counsel, and usually makes the case harder to defend.

If you maintain files electronically, consider what you may need to go through to produce a file to a client. I have never encountered attorneys who had that issue arise, but The Bar Plan Insurance Company indicates that one attorney with a paperless office spent over $8,000.00 in order to convert an electronic file into materials that could be produced to the client upon the client’s demand. Remember all clients are entitled to their file upon demand; not just those clients who assert a malpractice claim.

Now that you have a client and have set up your file, a large number of ethical rules become significant. Perhaps the most basic is the requirement of confidentiality, which is set forth in Rule 4-1.6 and the comments to that Rule. Rule 4-1.6 provides:

a. A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in paragraph (b).

b. A lawyer may reveal such information to the extent the lawyer reasonably believes necessary:

(1) to prevent the client from committing a criminal act that the lawyer believes is likely to result in imminent death or substantial bodily harm; or

(2) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.

The sanctity of the lawyer-client communication is such that the exceptions are very narrow. A good piece of general advice is when in doubt, assert the privilege and err on the side of confidentiality.

The conflict of interest issues were discussed above. If there is a recovery by the plaintiff, then plaintiff’s attorneys face the issues presented by 4-1.15 concerning safeguarding of client’s property.

Perhaps the most pertinent part of Rule 4 relating to Client Contact is Rule 4-1.4 concerning communication, which provides:

a. A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.

b. A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

The report of the Office of Chief Disciplinary Counsel for 1998 shows that the number one category of complaints against attorneys related to communications under Rule 4-1.4. This information should help you practice more ethically, and be more responsive, if for no other reason than to avoid bar complaints. The second highest category of complaints reported was for violation of Rule 4-1.3 relating to diligence.

That file that has been sitting on the back of your credenza for the last six months could be a ticking time bomb for malpractice. However, even if you “have everything under control” and there has been no damage to the client; and maybe you even have a strategic reason to hold off on action, an attorney would be very well served to communicate all of this to the client so that the client is reasonably informed of the status of the matter. This can avoid unnecessary client distress and unnecessary bar complaints.

Also, remember that it is important to maintain a current telephone number and address for a client, and discuss long term absences from the client’s primary residence, such as vacation. Rights of parties may be prejudiced by their inability to respond in a timely manner to their attorneys.

I believe most plaintiffs’ attorneys, and probably most defense attorneys, have had that very unpleasant feeling of being called by the docket clerk and being told that you are assigned out to trial, but then being unable to contact your client.
CONCLUSION
This article dealt with some of the more frequently occurring ethical issues encountered by plaintiffs’ and defense counsel in a personal injury practice. However, it is by no means exhaustive. As stated at the beginning of these materials, periodically review Rule 4 and consult it when you have questions. If that does not solve your problem, contact either Missouri’s Ethics Counsel, your legal malpractice carrier, or contact an attorney who is extremely knowledgeable about these matters.

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