Judge Cut Legal Team’s $1-Million Burn Case Payment : Meese Lawyer Sued Over Earlier Big Fee

A member of the legal team whose $720,924 fee for representing Atty. Gen. Edwin Meese III is now being examined by a court panel was involved in a still larger fee dispute in which a San Francisco judge cut a claimed $1-million fee to $353,435, according to court records.

The lawyer, E. Robert Wallach, was part of the team of lawyers who represented Meese when his financial affairs were investigated by an independent counsel and several government agencies in connection with his nomination as attorney general. Meese is now seeking government reimbursement for the $720,924 fee--as permitted by law under some circumstances.

A special three-judge court in Washington called on Meese to provide more details in support of his claim on Thursday--its second request for additional material.

The earlier fee case involving Wallach has grown into a civil law suit accusing Wallach and his former partner, David B. Baum, of fraud and breach of fiduciary duty in connection with their representation of two Canadian children who were badly burned in a 1977 camping accident near San Luis Obispo.

Complex Settlement Package

The $1-million fee for Wallach and Baum amounted to more than half of the $1.73 million that insurance companies and a tent manufacturer agreed to pay out in a complex settlement package, although the two lawyers may not have known then that the defendants’ actual out-of-pocket cost for the settlement was only about $730,000 because the case ended with a so-called structured settlement.

Under this arrangement, the defendants agreed to pay for annuities that would yield payments to the victims at fixed rates over their lifetimes; the children eventually could receive a total of more than $40 million. According to legal authorities, it is common in structured settlements for the defendants not to disclose actual out-of-pocket costs, although defense attorneys may be able to estimate those costs fairly accurately.

A major issue in the current dispute is a contention by a new lawyer representing the children and their parents that Wallach and Baum “deliberately concealed” from their clients the fact that it was “court policy” in San Francisco to limit lawyers’ fees to 25% of a settlement in cases involving minors. The new lawyer, Richard R. Clifford of North Hollywood, argues in court papers that the children and their parents should have been told about the policy of the 25% limit.

Prominent Lawyer

Wallach, on the other hand, maintains that the limit did not apply to a structured settlement. Wallach is a prominent San Francisco lawyer and his involvement in the dispute there surprised his friends. He is a former president of the San Francisco Bar, has done work for the NAACP and the National Resource Defense Counsel and teaches at Hastings Law School.

“Bob Wallach has done as much pro bono work as anyone in town, and that’s a lot,” said San Francisco Bar President Jerome B. Falk, who early in the case represented Wallach and Baum.

The fee dispute in the burn case involves the practice among lawyers of handling personal injury cases on what is known as a contingency basis. Instead of charging a flat fee based on the amount of work done regardless of the outcome, lawyers agree to press a client’s claim in exchange for a negotiated fee--often a percentage of what they win for the client--with no fee charged if they lose.

System Controversial

This system has itself been the subject of controversy over the years. Critics charge that it leads to huge fees because lawyers today commonly receive more than 30% of a personal injury settlement or award. Defenders of the system argue that it is the only way many injury victims can obtain fair compensation because few could afford conventional legal fees if they lost.

In the case of the burn victims, former San Francisco Superior Court Judge Eugene F. Lynch, who has since become a federal judge, initially approved the settlement package on Sept. 17, 1981. When a parent of one of the burned children expressed reluctance to agree, Lynch praised Wallach and Baum as “the finest trial lawyers that I know of.”

Lynch made favorable reference to the $1-million fee also. “I also approve of the attorneys’ fees, and I might say for the record, while they are high attorneys’ fees, that this concept of a structured settlement in this type of case appeals to me, and it is a package that the attorneys delivered in excellent fashion . . . .”

After the parents complained, the lawyers agreed to cut their fee to $839,000. However, that was not enough for the parents, and they pressed their claim before a second judge.

On June 30, 1982, Judge Francis W. Mayer, who had taken over the case, approved a revised settlement negotiated by the parents’ new lawyer and pared the fees for Wallach and Baum.

Baum and Wallach, who now are in Washington to help Meese interview candidates for top Justice Department positions, refused to discuss their representation of the burned children. They noted that the suit against them could come to trial later this year.

Judge Lynch refused through his secretary to be interviewed. He “feels it is inappropriate to speak to you about this (case) because it is in ongoing litigation,” she said.

James N. Penrod, Baum’s lawyer in the children’s suit, praised the performance of his client and Wallach. “What they had to start with was a shard or two of a burned tent,” he said, contending that the children’s parents had placed a candle on a plastic table in the tent and were not present when the fire started. “They took that and got this settlement,” Penrod said.