Decision no. ... in the matter of fixing reasonable fees for attorneys or agents under the authority of Section 9 of the...

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DOCUMENTS DEPOT

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U.S. DEPOSITORY






THE AMERICAN COMMISSIONER

MIXED CLAIMS COMMISSION

UNITED STATES AND GERMANY


DECISION NO. 3
IN THE MATTER OF
FIXING REASONABLE FEES FOR ATTORNEYS OR
AGENTS UNDER THE AUTHORITY OF SECTION 9 OF
THE SETTLEMENT OF WAR CLAIMS ACT OF 1928"


DOCKET NO. 6565


Charles R. Hickox, Attorney in Fact for John D. Stephanidis, et al.,
Claimownts

Kirlin, Woolsey, Campbell, Hickox & Keating, Attorneys


CHANDLER P. ANDERSON,
A meri/can Corn m issioner.


Of'lICE :1928


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MIXED CLAIMS COMMISSION, UNITED STATES AND GERMANY

Established in pursuance of the Agreement between the
United States and Germany of August 10, 1922



CHANDLER P. ANDERSON
American Commissioner

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THE AMERICAN COMMISSIONER

MIXED CLAIMS COMMISSION

UNITED STATES AND GERMANY


DECISION NO. 3
IN THE MATTER OF
FIXING REASONABLE FEES FOR ATTORNEYS OR
AGENTS UNDER THE AUTHORITY OF SECTION 9 OF
THE SETTLEMENT OF WAR CLAIMS ACT OF 1928"


DOCKET NO. 6565


Charles R. Hickox, Attorney in Fact for John D. Stephanidis, et al.,
Clainwnts

Kirlin, Woolsey, Campbell, Hickox & Keating, Attorneys


The claimant, John D. Stephanidis (hereinbelow referred to as
the claimant), has duly filed with the American Commissioner a
written request that he fix a reasonable fee to be paid by the claim-
ant to his attorneys, Kirlin, Woolsey, Campbell, Hickox & Keating,
of New York, N. Y., as compensation for whatever services have
been rendered by the said attorneys on behalf of and with the author-
ity of the said claimant, such services being of the character described
in the provisions of Section 9 of the "Settlement of War Claims
Act of 1928." The claimant, Charles R. Hickox, attorney in fact
for John D. Stephanidis, has concurred in this request.
The claimant, John D. Stephanidis, has objected to the amount
of the fee asked by his attorneys on the ground that it is excessive,
and the attorneys have been notified of the filing by the claimant
of this request that a reasonable fee be fixed, and the attorneys, in
18600-28 (37)







response to a request by the American Commissioner, have filed
with him an affidavit sworn to by Mr. Cletus Keating, a member of
their firm, and an affidavit by Harold Riegelman, giving the in-
formation which the attorneys desire to have considered by the Com-
missioner as showing the reasonableness of the fee asked, which
information has been brought to the attention of the claimant, who
has filed in reply thereto copies of certain correspondence between
himself and the attorneys, and an affidavit, a copy of which has been
transmitted to the attorneys.
The amount of the fee asked by the attorneys as compensation
for their services in this matter is twenty per cent of the amount
of the proceeds of the award rendered by this Commission in this
case, in addition to their disbursements which amount to $202.80.
The award in this case was made on behalf of Charles R. Hickox,
attorney in fact for John D. Stephanidis, et al., on January 27, 1926,
for $180,000 together with interest thereon at the rate of five per cent
per annum from March 12, 1917, to the date of payment. This
amount represents the value of the Steamship "Algonquin," which
was sunk in March. 1917, less the amount of the insurance collected
on account of her lo.s. This steamship, at the time she was sunk,
was owned by the claimant John D. Stephanidis. It appears that
the claimant Stephanidis had assigned by a written instrument dated
June 18, 1923, after the claim was filed but. prior to the rendering
of the award, all of his right, title and interest in this claim to
Messrs. Harold Riegelman and Julius Weiss as co-trustees, and they
later joined with him in executing a power of attorney, dated De-
cember 2, 1925, appointing Charles R.. Hickos their attorney in
fact, to act for them in the prosecution and collection of the claim.
Mr. Hickox is a member of the firm of Kirlin, Woolsey, Campbell,
Hickox & Keating, the attorneys in this case.
It also appears that further interests in this claim were assigned
by the clainiant Steplianidis, after the date of the award. These
assignments were stated by Mr. Stephanidis, in a letter addressed by
him to this Commission on June 19, 1926, to be subject to the previous
assignments above mentioned, and to "the lien of Charles Hickox,
my attorney in the matter, which amounts to 20% of the' award to be
received ".
It appears that by these assignments the claimant did not actually
relinquish the total amount of the award, and he states that he has








a remainder interest amounting to about $75,000. The assignees
above mentioned are not concerned in the amount or the payment of
the attorneys' fee, which is to be paid by the claimant. Stephanidis.
It appears from Mr. Keating's affidavit filed in this proceeding
that in February, 1918, the claimant consulted Mr. J. Parker Kirlin,
who at that time was the head of the firm and is now dead, with
respect to this claim, but no agreement was entered into between the
firm and the claimant until the early part of May, 1919, when the
claimant took the matter up with Mr. Keating. In Mr. Keating's
affidavit he states, "At the request of Mr. Stephanidis I took up with
him the question of the charges that would be made by my firm for
handling this matter. Mr. Stephanidis represented to me that he
was not in a position financially to have this matter undertaken on
the customary basis where he would pay the disbursements and a
reasonable fee. He asked me to undertake the prosecution of the
claim on a basis that we should be paid our necessary disbursements
in any event, and when collection was made should be paid from the
recovery a fee of twenty five per cent thereof." This proposal was
accepted by Mr. Keating on behalf of his firm.
It further appears from Mr. Keating's affidavit that in November,
1925, the claimant urged that the attorneys, as a favor to him, should
reduce the amount of the fee from twenty-five per cent to fifteen
per cent, and that after consideration of this request the attorneys
agreed to reduce their charge from twenty-five per cent to twenty
per cent. The claimant was so notified by the attorneys by letter
dated November 17, 1925, in which it was stated that they had agreed
to this reduction although the firm was unanimously of the opinion
that under all the circumstances they should receive twenty-five
per cent ". This agreement has been repeatedly referred to and
confirmed in writing by the claimant, and is not now disputed
by him.
Some correspondence seems to have ensued, which is not submitted,
but its substance is stated in the claimant's affidavit as follows:
On November 17, 1925, I wrote Mr. Keating and told him that although
I appreciated his efforts in the matter yet in order to be more definite I was
desirous of having him specify that the amount of twenty per cent would be
figured only on the principal and not on the interest. On November, 1925, Mr.
Keating wrote me stating unequivocally that their fee would have to be paid
both out of principal and interest as it might be years before they would receive
the money.








Apparently nothing further was done about the matter at that
time, but in the following month, on December 2, 1925, the power
of attorney mentioned hereinabove was executed by the claimant
and his assignees appointing Mr. Hickox their attorney in fact to
act for them in the prosecution and collection of the claim.
Mr. Keating's affidavit sets out in considerable detail the char-
acter and extent of the services rendered by the attorneys. Apart
from some preliminary discussions and conferences with the claim-
ant, the services rendered by the attorneys in this matter really .
began with the preparation and filing of the claim with this
Commission.
Mr. Keating states that. the petition or memorial was prepared
by his firm after numerous conferences with the claimant and was
filed with the Department of State, to be transmitted to this Com-
mission, on December 30, 1922, by a representative of the attorneys
who was sent to Washington expressly for that purpose. Thereafter
numerous conferences were held with the claimant, and many letters
exchanged with him, and a substantial amount of time and attention
was devoted to the consideration and collection of the data required
for proving the claim. Numerous conferences were also had, and
correspondence exchanged, with the above mentioned assignees of
the claim, and also with the Agent of the United States before this
Commission and li's legal staff. Ten affidavits or certificates were
prepared and, after execution, were filed by the attorneys with the
United States Agency, and briefs or memoranda with respect to the
value of the vessel were prepared by the attorneys and discussed
with the legal staff of the Agency. The attorneys also secured from
two recognized ship surveyors and engineers, and filed in this case,
appraisals of the value of the vessel, based on their expert knowl-
edge and experience.
It is further stated in Mr. Keating's affidavit that the attorneys
exchanged a total of 161 letters and telegrams with various par-
ties in connection with the claim and that their office register shows
a total of at least 230 instances when they gave attention to this
matter, and he adds that some of the occasions on which this claim
was under consideration occupied an entire day in their office, and
that some of the occasions when they conferred with counsel for
the United States Agent in Washington consumed at least two days

the na








away from the office. The necessary expenses paid for clerical serv-
ices and cash disbursements are listed as amounting to $202.80.
The contingent fee in this case, figured on the basis of twenty per
cent of the amount recovered, is approximately $56,000, and the
claimant's objection to this fee is that it is totally out of pro-
portion to the services actually rendered ". The claimant states
in his affidavit that at the time the original twenty-five per cent
fee agreement was made neither the attorneys themselves nor I
were in a position to know the amount of work that this case would
involve but we did anticipate that there might be many questions
raised which would require a great deal of time as well as pains-
taking care and attention ".
He states further that as it finally turned out the services actually
rendered by the attorneys were much less than had been anticipated
because, There was no litigation of any kind. There were no
intricate questions of law. There were no extensive investigations.
There was merely the filing of the necessary papers for the pay-
ment of the claim and a few incidental conferences in connection
therewith." He states further that "the legal work involved was
very slight as most of the evidence for the preparation of such
claim was obtained by me and not by my attorneys. From the very
outset my attorneys shifted the burden of all investigations upon
my shoulders. I was obliged to, and did, obtain the necessary evi-
dence to establish title in myself. I was also called upon to obtain
evidence as to value. All that my attorneys did was to prepare the
necessary papers based more or less upon the information that I
furnished to them."
It further appears from the claimant's affidavit that he feels that
a considerable part of the time and work which the attorneys have
charged against this case was in part at least chargeable against
other cases before this Commission in which they were acting as
attorneys for other claimants.
In considering the issue thus raised it must be remembered that
when the claimant made his appeal to his attorneys in November,
1925, for a reduction of the twenty-five per cent fee originally agreed
upon, the presentation of the claim was practically completed, the
value of the vessel at the time of her loss had been established, the
amount recovered on account of insurance had been ascertained, the








claimant's title to the vessel, as to which there had originally been
some confusion, had been cleared up and settled, and an agreed
amount had been recommended by the Agents of the two Govern-
ments to the Commission for its award. In this connection Mr.
Keating states in his affidavit, We also had long conferences with
the counsel for the United States Agent with respect to a brief
prepared by counsel on ship values, as a result of which, we per-
suaded counsel that the tentative value allowed for the 'Algonquin'
was incorrect, and secured a readjustment, resulting in a very sub-
stantial increase of the amount of the award which was eventually
made." The claimant does not deny or challenge this statement.
At that time both the claimant and the attorneys had full infor-'
mniation as to exactly what services had been required and performed
on the part of the attorneys in the establishment of this claim, and
the attorneys acted with this information in mind in reducing the
basis of the fee from twenty-five per cent to twenty per cent, and in
refusing to reduce it further. So also the claimant acted with this
new basis of compensation in mind in arranging, within a month
thereafter, to have Mr. Hickox appointed attorney in fact for himself
and the assignees above mentioned under the power of attorney dated
December 2. 1925, under which arrangement the obligations of the
attorneys were somewhat increased because, as appears from Mr.
Keating's affid.a vit, some correspondence and numerous conferences
were thereafter necessary between the assignees and the attorneys,
but without any additional compensation to the attorneys.
An admitted fact, having an important bearing upon the question
here presented, is that the claimant is himself a member of the Bar
of the State of New York and has been engaged in the practice of
law for many years. It is also important to note that the claimant
had previously retained this firm as his attorneys in many substantial
case.,, out of which they received fees aggregating over $150,000. Mr.
Keating states in his affidavit that in those cases we had been paid
by Mr. Stephanidis on the ordinary basis, consisting of payment of
our disbursements and, irrespective df the result, a reasonable fee for
our services."
The claimant, accordingly, was well aware of the scale of charges
of this firm for legal services. As showing their usual rate of
charges for services, Mr. Keating lists in his affidavit the fees received
by his firm in nine other cases before this Commission in which








awards were made in favor of claimants represented by these attor-
neys. In these cases the fees charged ranged from twelve and one-
half per cent to sixteen per cent, averaging about fifteen per cent
of the amount recovered, and in none of these cases was the charge
made on a contingent fee basis. In all of these cases the fees charged
were considered satisfactory, and paid by the claimants.
The attorneys employed by the claimant are a firm of high standing
and reputation in the profession, and recognized as one of the leading
firms in New York engaged in the practice of admiralty law.
The American Commissioner concurs in the views expressed in the
Resolution of a State Bar As.sociation quoted in his Administrative
and Jurisdictional Decision of September 28S, 1928, that the ability
of an attorney and his reputation and standing in the profession are
very important factors in the determination of what he may charge
and collect for his services. The law of supply and demand applies,
and any attorney may properly charge and collect what his clients
are willing to pay to obtain his service ".
It seems that in this ca-e the claimant was very urgent that these
attorneys should act for him. Mr. Keating states, and the claimant
does not deny, that he represented to Mr. Keating that he was not
in a position financially to have this matter taken on the customary
basis where he would pay the disbursements and a reasonable fee ",
and he persuaded the attorneys to undertake the presentation of his
claim on a contingent fee basis, as hereinabove set forth. It was not
the usual practice of these attorneys to handle claims on a contingent
basis, and they yielded to the claimant's request in this case appar-
ently as a friendly concession on account of their previous profes-
sional relations with him.
The claimant, as a practicing lawyer, undoubtedly knew that the
fee in this case under a contingent agreement would be larger than
on the ordinary basis of payment, irrespective of whether or not
there was recovery, because of the certainty that the payment of a
contingent fee would in any event be delayed, and of the uncertainty
whether it would ever be paid. Nevertheless, the claimant now asks
that the contingent element in the service agreement be disregarded
and the fee be fixed on the ordinary quantum meruit basis for the
services actually rendered. As shown by the fees charged in the
nine other claims mentioned in Mr. Keating's affidavit, the charges
of this firm for services on the ordinary basis average about fifteen
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per cent of the amount recovered. It will be recalled that this is
the same percentage which the claimant asked to have adopted when
the original twenty-five per cent fee was reduced to twenty per cent.
In other words, the claimant does not wish to allow the attorneys any
additional compensation on account of the risk taken in rendering
their services on an uncertainty as to when, if ever, any fee at all
would be paid.
As stated in the Administrative and Jurisdictional Decision of
September 28, 1928, the American Commissioner holds that a larger
fee might be reasonable for services rendered on a contingent fee
basis than for the same services valued on a quantum meruit basis,
but that the reasonableness of the fee fixed by a contingent fee agree-
ment may be tested by reference to the terms of the agreement, the
circumstances in which it was made and the value of the services
actually rendered."
One of the notable circumstances in which this contingent fee agree-
ment was made is that, as above stated, the claimant who made it
was himself a practicing attorney, and had previously employed
these attorneys in other important cases.
The American Commissioner has also held in a previous decision
in a similar proceeding (Decision No. 1) that when the claimant is
entirely competent to look after his own interests in making a fee
agreement with his attorney.,, he falls within the group referred to
in the following extract from the Report of the Senate Committee
on Finance recommending this fee fixing legislation to the Senate:
"It is expected, however, that it will not be necessary to alter amounts fixed
by contract with large corporations and others fully capable of protecting
their own interests. In such cases the American Commissioner
* would undoubtedly lie justified in fixing the amount specified in the
contracts."

In that decision the American Commissioner expressed his concur-
lence in this view, and held that the word reasonable as used in
(lihe fee fixing provisions of the Act can properly be given this
interpretation.
In the present case the American Commissioner holds that the
claimant wa.s fully capable of protecting his own interests in making
this agreement with the attorneys and that the fee fixed by that
agreement was reasonable, not merely for that reason, but also be-
cause the payment of the fee was contingent upon securing and








collecting an award, and, finally, because the amount of the fee. is
justified when tested by the value of the services actually rendered
in this case, under the circumstances above mentioned.
Now, therefore, in these circumstances, and in view of the consid-
erations stated in the general Jurisdictional and Administrative Deci-
sion rendered by the American Commissioner under date of Septem-
ber 28, 1928, and after careful examination and full consideration of
the information furnished in this proceeding by the attorneys and
the claimant, and of the information pertinent to the questions in-
volved in this case on file in the records of this Commission, and after
due deliberation thereon,
The American Commissioner decides and fixes as the reasonable
fee to be paid by the claimant, John D. Stephanidis, to his said attor-
neys, Kirlin, Woolsey, Campbell, Hickox & Keating, the fee fixed in
his agreement with them, namely, twenty per cent of the amount re-
ceived from the Treasury Department in payment of this award, in
addition to the disbursements expended by the attorneys, amounting
to $202.80, said fee to be paid by the claimant, and received by the
attorneys as full compensation for all services rendered in the prose-
cution and collection of this claim, as defined in Section 9 of the Set-
tlement of War Claims Act of 1928 ".
Done at Washington, D. C., this 26th day of October, 1928.
CHANDLER P. ANDERSON,
American Commissioner,
Mixed Claims Commission,
United States and Germany.




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