ON PETITION FOR WRIT OF MANDAMUS AND PROHIBITION.
Van Dusen and Adams, Circuit Judges, and Barlow, District Judge.
VAN DUSEN, Circuit Judge.
This case, where petitioners (a seaman and his attorney) request issuance of a writ of mandamus and prohibition, presents the issue of whether a district court may establish a schedule of contingent fees for use in personal injury actions brought by seamen, providing that such fees or lesser fees considered as guidelines shall be deemed to be fair and reasonable and that any fees in excess of such schedule shall constitute the exaction of unreasonable compensation in violation of the Code of Professional Responsibility of the American Bar Association (see below at page 7) unless a showing is made justifying higher compensation based on unusual circumstances. Compare Special Rule 4 Regulating Conduct of Attorneys of the First and Second Judicial Departments of New York, as reproduced at note 1 in Gair v. Peck, 6 N. Y. 2d 97, 160 N.E. 2d 43, 45-46, 188 N.Y.S.2d 491 (1959), cert. denied, 361 U.S. 374, 4 L. Ed. 2d 380, 80 S. Ct. 401 (1960).
This PETITION FOR WRIT OF MANDAMUS AND PROHIBITION (hereinafter Petition) alleges that petitioner Hensler filed an action as a seaman for personal injuries against the corporate respondents in the district court on April 5, 1971. The amended complaint alleges that such petitioner, while complying with the command of the vessel on which he was employed, "was caused to slip on the barge and his foot and leg were badly mashed and injured when the same was caught between the vessel and the barge," and that the injuries and disabilities suffered were due to the negligence of the corporate respondents and the unseaworthiness of the vessel. During the course of the trial, a compromise settlement of $17,500 was agreed upon by the parties and approved by the trial judge. Although the court was informed (paragraph 3 of the Petition) that counsel fees of one-third of the settlement had been agreed upon by Hensler and his attorney (petitioner Schlesinger),*fn1 the trial judge stated that seamen were wards of the court and that "a fair fee in this case for representation of this [plaintiff], who is a seaman and ward of the court," (11a) was the amount set forth in "a schedule that the court applies in seamen's cases" (8a), which schedule is "a guideline which I see fit to follow" (12a).*fn2 The schedule provided for 33 1/3% for the first $10,000. of recovery and 25% above that amount on the next $90,000. of recovery (16a). The court rule (adopted in April 1971) provides that this schedule is to be the guideline "pending further study of the problem" (16a and paragraph 6 of Petition). The court added: "I have exercised my discretion and I have said what the fee is" (12a).
In addition to the above schedule, Local Rule 20 of the district court provides for court approval of all settlements in actions to which a seaman is a party. Paragraph(d) of this Rule provides: "The court . . . shall make an order approving . . . any settlement entered into by the proctor or attorney and the seaman for payment of counsel fees . . . out of the fund created by the . . . settlement . . .; or the court may make such order as it deems proper, fixing counsel fees. . . . The court shall then order the balance of the fund to be paid to the seaman. . . ." The order challenged by this Petition provided as follows:
"AND NOW, to wit, this 11th day of December, 1972, in consideration of the plaintiff's Petition for Compromise Settlement, in light of the general guidelines of this court regarding fees of counsel after the settlement of a seaman's action, and with reference to the services rendered by plaintiff's counsel in this particular seaman's action, IT IS ORDERED that a reasonable and appropriate fee for plaintiff's counsel in this action be and hereby is awarded in the amount of $5,208.33 (33% of $10,000.00 plus 25% of $7,500.00). IT IS FURTHER ORDERED that the $625.00 which represents the difference between the counsel fee allowed herein and the fee which the plaintiff by prearrangement agreed to pay his counsel (33% of the amount of recovery) shall be and hereby is placed in escrow with the Clerk of Court pending resolution of the plaintiff's counsel's contention that he is absolutely entitled to the fee agreed to between him and his client. IT IS FURTHER ORDERED that accordingly the Petition for Compromise Settlement be and hereby is granted."
At the hearing held November 13, 1972, on the application of petitioners to use a larger percentage of the settlement for counsel fees than is permitted by the court's tentative guidelines, petitioners produced no time records to justify the higher fee provided for in the contingent fee agreement and no facts showing the fee produced by the guidelines to be unfair have been alleged in this Petition.
It is well recognized that the court has the power to set fees in cases involving persons of presumed incapacity to look after their affairs intelligently. See McKinnon, Contingent Fees for Legal Services,*fn3 pp. 23 & 44;*fn4 Cappel v. Adams, 434 F.2d 1278, 1279-80 (5th Cir. 1970); United States v. Preston, 202 F.2d 740 (9th Cir. 1953) -- Indian tribes not allowed to enter contingent fee contracts for certain claims. In the Cappel case, supra, Judge Wisdom used this language 434 F.2d at pages 1279-80:
". . . Judge Murrah of the Tenth Circuit has well stated the applicable rule:
where an attorney recovers a fund in a suit under a contract with a client providing that he shall be compensated only out of the fund he creates, the court having jurisdiction of the subject matter of the suit has power to fix the attorney's compensation and direct its payment out of the fund.
Garrett v. McRee, 10 Cir. 1953, 201 F.2d 250, 253. [Citing cases.] The sum determined to be a reasonable attorney's fee is within the discretion of the district court; before a reviewing court should disturb the holding there should be a clear showing that the trial judge abused his discretion. Garrett v. McRee, 10 Cir. 1953, 201 F.2d 250, 254; Monaghan v. Hill, 9 Cir. 1944, 140 F.2d 31, 34. There is no such showing in this case.
"Splawn does not dispute the validity of these principles, but contends that they are inapplicable in a case in which the attorney has a valid contract fixing his fee. The action of the district court in these circumstances, Splawn argues, interferes with the right of the attorney and his client to establish the ...