# Karim v. Finch Shipping Co.

> Court of Appeals for the Fifth Circuit · June 16, 2004 · 374 F.3d 302

URL: https://www.frixlaw.com/law-library/cases/35395

## Case

- **Full name:** Noor Begum KARIM, Etc.; Et Al., Plaintiffs, Fazal Karim, Plaintiff-Appellee, v. FINCH SHIPPING COMPANY LTD.; Et Al., Defendants, and the Law Office of Paul C. Miniclier, Appellant. in Re: In the Matter of Finch Shipping Company Ltd., Owner and Operator of the M/V LOUSSIO for Exoneration From or Limitation of Liability. Noor Begum Karim, Etc.; Et Al., Claimants, Fazal Karim, Claimant-Appellee, v. the Law Office of Paul C. Miniclier, Appellant
- **Court:** Court of Appeals for the Fifth Circuit
- **Decided:** June 16, 2004
- **Citations:** 374 F.3d 302; 2004 A.M.C. 1521; 2004 U.S. App. LEXIS 11815; 2004 WL 1344975
- **Precedential status:** Published
- **Opinion:** Opinion by Barksdale
- **Judges:** Jolly, Jones, Barksdale
- **Cited by:** 11 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/35395

## How later opinions describe it (automated extraction)

- holding that subject matter jurisdiction existed to consider reasonableness of contingent fee agreements where the plaintiff had filed a motion for the disbursement of funds in the court’s registry
- stating that a limitation action is within the district court’s admiralty jurisdiction
- noting that the court’s power “to reform contingent fee contracts” is “well-recognized”
- affirming a district court’s decision to amend a seamen’s contingent fee contract

## Opinion text

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT June 16, 2004

Charles R. Fulbruge III
Clerk
No. 03-30069

NOOR BEGUM KARIM, Etc.; ET AL.,
Plaintiffs,

FAZAL KARIM,
Plaintiff-Appellee,

versus

FINCH SHIPPING COMPANY LTD.; ET AL.,
Defendants,

and

THE LAW OFFICE OF PAUL C. MINICLIER,
Appellant.

In Re: In the Matter of FINCH SHIPPING COMPANY LTD.,
Owner and Operator of the M/V Loussio
for Exoneration from or Limitation of Liability

NOOR BEGUM KARIM, Etc.; ET AL.,
Claimants,

FAZAL KARIM,
Claimant-Appellee,

versus

THE LAW OFFICE OF PAUL C. MINICLIER,
Appellant.

Appeal from the United States District Court
for the Eastern District of Louisiana
Before JOLLY, JONES, and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

This appeal is by Paul C. Miniclier; under a contingent fee

contract, he represented Fazal Karim, a Bangladeshi national, for

injuries received while a seaman. Karim was brought to New Orleans

upon being injured but was deported to Bangladesh prior to the

judgment in his favor being paid into the district court’s

registry. At issue is whether, after receiving that deposit, the

district court erred by: denying a motion by Miniclier to disburse

those funds; appointing counsel for Karim and otherwise

investigating Miniclier’s planned allocation pursuant to the

contingent fee contract (Karim would receive nothing); and ordering

disbursement in a fashion more favorable to Karim. AFFIRMED.

I.

The underlying litigation involving Karim and Finch Shipping

Company is addressed in Karim v. Finch Shipping Co., Ltd., 265 F.3d

258 (5th Cir. 2001). For this appeal, only some of the facts in

that extensive litigation are relevant. In 1995, while a seaman

aboard a vessel owned by Finch, Karim (a Bangladeshi national) was

injured on the vessel while it was off the coast of Bermuda. After

nine days of “excruciating pain”, which presented “a window into

Hell”, Karim v. Finch Shipping Co., Ltd., 94 F. Supp. 2d 727, 732

(E.D. La. 2000), he was debarked in New Orleans.

2
Karim’s claims were presented by Miniclier in the limitation

of liability proceeding filed by Finch in 1996. Later that year,

Karim and Miniclier entered into the contingent fee contract at

issue: Miniclier would receive 33-1/3 percent of the recovery if

the case settled; 40 percent, “or as allowed by law”, if tried.

Miniclier’s percentage was to be calculated based on the gross

recovery — that is, before expenses were deducted. Karim was to be

responsible for court costs and other expenses, but Miniclier was

permitted to advance them. As he would later represent to the

district court, Miniclier advanced: $91,901.73 for advances and

personal expenses (“advances to Mr. Karim for living expenses in

the [United States, prior to his being deported in 1997] and his

family in Bangladesh, travel, food, telephone, clothes, utilities,

and rent in the [United States] and other expenses”); $62,209.79

for medical expenses; $104,252.94 for litigation expenses (“filing

fees, depositions, photocopies, witness/expert fees, travel

expenses for overseas depositions, service fees, translator fees,

trial, transcript costs and other related litigation expenses”);

and $34,129.01 for miscellaneous expenses (“primarily ... interest

and other banking charges” (emphasis added)).

Applying Bangladeshi law of damages, the district court

entered judgment in 2000 in favor of Karim for approximately

$407,000, which included damages, prejudgment interest, and $70,000

for litigation costs, including attorney’s fees. The damages were:

3
$13,081.28 for past earnings; $26,451.70 for future earnings;

$63,668.16 for outstanding medical expenses; $20,000 for future

medical expenses; and $160,000 for general damages. Our court

affirmed in September 2001. Karim had been deported to Bangladesh

in 1997, long before his judgment was affirmed.

After our mandate issued, Karim, through Miniclier, moved for

leave to tax costs out of time; the district court denied the

motion. In January 2002, in satisfaction of judgment, and pursuant

to the district court’s instructions, Finch deposited the judgment

amount in the district court’s registry, rather than pay the

judgment to Karim, through his counsel (counsel’s trust account).

Upon Karim, through Miniclier, moving to withdraw those funds,

the district court denied the motion, citing its duty to ensure

that the rights of seamen, as wards of admiralty, are protected,

and ordering Miniclier “to submit an accounting ... detailing the

expenses, costs, and fees, including attorneys fees, that will be

charged against [Karim’s] judgment, as well as the net amount that

will be conveyed to [Karim] after all costs, expenses, and fees

have been deducted”. (Emphasis added.)

Miniclier filed the accounting at the end of January 2002,

again moving to withdraw the funds. The accounting listed the

litigation expenses advanced by Miniclier on Karim’s behalf as more

than $290,000 (again, including more than $60,000 in medical

expenses, more than $34,000 in interest/banking charges, and more

4
than $90,000 in advances/personal expenses for Karim). Were this

amount reimbursed to Miniclier (per the contingent fee contract),

the amount remaining from the judgment would be less than the 40

percent due Miniclier based upon the gross amount, pursuant to the

contingent fee contract; as a result, Miniclier would receive all

the funds. In short, Karim would receive nothing.

Based on the accounting, the district court ordered a hearing

on the motion to withdraw funds, stating:

According to this accounting, after deducting
attorney’s fees, advances, medical expenses,
litigation expenses, and miscellaneous
expenses, the net recovery to Karim is zero.
At first blush this result seems harsh. The
medical providers, the attorneys, the banks,
and others, received some form of recompense.
Karim, who fractured his lumbar vertebra and
hip, pelvis, leg, ankle, heel and wrist on the
left side, sustained several herniated discs
in his back and neck, as well as a detached
retina in his right eye, who is permanently
disabled from returning to maritime work, and
who is likely to require future medical care,
takes home nothing.

Karim v. Finch Shipping Co., 195 F. Supp. 2d 809, 810 (E.D. La.

2002). The district court determined that legal and factual issues

had to be resolved before the motion to withdraw could be decided.

The first issue was whether Bangladeshi or Louisiana law

governed Miniclier’s fees. If Bangladeshi law applied, Miniclier

would be limited to the $70,000 for costs and fees included in the

judgment; if Louisiana law applied, there was a further question of

whether the fees were reasonable. In order to assist with the

5
resolution, the district court appointed the Tulane Law School Law

Clinic to represent Karim for the district court’s examination of

the funds’ proposed disposition.

Miniclier sought mandamus relief from this court. It was

denied. In re Karim, No. 02-30267 (5th Cir. 19 Mar. 2002).

After briefing, the district court determined that Louisiana

law applied to the contingent fee contract. After further briefing

and two hearings, including testimony by two experts, the district

court ruled in November 2002 on the fee’s reasonableness. Karim v.

Finch Shipping Co., 233 F. Supp. 2d 807 (E.D. La. 2002). The court

cited authority that seamen are wards of admiralty courts, and that

those courts have the same equitable powers as those not sitting in

admiralty; it further cited ample Louisiana and federal precedent

that a court’s equitable powers include the power to reform

contingent fee agreements. The court concluded: “Clearly, under

both state and federal law a court has the power as well as the

responsibility, particularly where seamen are concerned, to examine

and modify contingent fee agreements”. Id. at 810 (emphasis

added).

The district court found: a 40 percent share of the gross

recovery was “not totally out of line with community standards for

this type of case”; and Miniclier’s “work product was certainly

more than adequate”. Id. at 811. But, the court concluded it was

appropriate to modify the funds’ distribution: Miniclier would be

6
reimbursed the litigation expenses (approximately $300,000); the

remaining $112,928.51 would be divided equally between Karim and

Miniclier ($56,464.25 each).

Several days later, the distribution to Miniclier (expenses-

reimbursement and adjusted fee) was ordered (because of accrued

interest, he received $57,386.44 for his fee). Karim’s share, the

amount now at issue, was to remain in the district court registry

pending further order.

II.

Miniclier presents two contentions: after Finch satisfied the

judgment by paying it into the court registry, the district court

was deprived of jurisdiction to do anything other than order the

funds’ disbursement; and the district court erred in finding the

contingent fee agreement unreasonable under Louisiana law. (As

discussed infra, the ultimate issue is whether the district court

abused its discretion, as an admiralty court, in its treatment of

its ward, Karim.)

We have jurisdiction under 28 U.S.C. § 1291 (appeal from final

decision), because, as for the order at issue, the requisite “final

decision is one that ‘ends the litigation on the merits and leaves

nothing more for the court to do but execute the judgment’”.

Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 309

(2003) (quoting Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S.

79, 86 (2000)), cert. denied, 124 S. Ct. 311 (2003). And, it goes

7
without saying that Miniclier has sufficient interest to vest him

with standing to take this appeal. See Castillo v. Cameron County,

Tex., 238 F.3d 339, 349 (5th Cir. 2001).

A.

It also goes without saying that federal courts have

jurisdiction only over “cases” and “controversies”. U.S. CONST.

art. III, § 2; e.g., McConnell v. FEC, 124 S. Ct. 619, 707 (2003).

In this regard, Miniclier contends: after the registry-deposit, no

case or controversy remained; the district court was limited to

simply disbursing the funds.

Miniclier relies heavily on Brown v. Watkins Motor Lines,

Inc., 596 F.2d 129 (5th Cir. 1979). Brown concerned a district

court’s decision “to adopt as the court’s ward a minor represented

by a duly qualified guardian, fix the compensation of the

guardian’s attorney, and direct his payment out of a tort judgment

previously rendered by the court”. Id. at 130. In reversing, a

split-panel of our court held: “The case or controversy in the

federal forum ended with payment of the judgment into the registry

of the court”. Id. at 132. This decision was based on there

having been no request for relief by plaintiff concerning the fee

amount. Id. at 131 & n.1. As discussed infra, that is not the

situation here. Karim, represented by the legal clinic appointed

by the district court, contested the disbursement sought by

Miniclier. As stated in Brown: “It cannot be seriously doubted

8
that prior to distributing a judgment award a court has the power

to decide a contest between the judgment creditor and his attorney

over the appropriate amount of the attorney’s fee lien on the

judgment”. Id. at 131 (emphasis added).

Moreover, Miniclier acknowledges Brown’s being distinguished

in Hoffert v. General Motors Corp., 656 F.2d 161 (5th Cir. Unit A

1981), cert. denied sub nom. Cochrane & Bresnahan v. Smith, 456

U.S. 961 (1982). Hoffert affirmed a district court’s sua sponte

decision to limit plaintiff’s counsel’s recovery because counsel

had invoked the court’s power by asking it to approve a settlement

agreement. Id. at 164-65. For example, in ruling, the district

court had felt it necessary to appoint a guardian ad litem for the

minor injured party because of a possible conflict of interest with

his father, the other injured party. Id.

The order at issue here resolved a controversy over which the

district court had jurisdiction. Pursuant to the district court’s

instructions, Finch paid the judgment into the district court. Not

all of the background details prompting that registry-deposit,

instead of payment directly to Karim, through counsel, are

reflected in the record. Nevertheless, this background illuminates

the unusual situation resulting from, among other things, Karim’s

not being in the United States when judgment was satisfied. As

noted, in the immediate aftermath of the first appeal, Karim sought

permission from the district court to tax costs against Finch (the

9
judgment-debtor) out of time. Permission was denied in November

2001. In early January 2002, after the time for seeking Supreme

Court review had run, Miniclier demanded payment of the judgment by

Finch into Miniclier’s trust account. Upon Finch not doing so,

Karim moved to execute against Finch’s surety bond. Following a

status conference, Finch moved to pay the judgment into the court’s

registry, “pursuant to the verbal instructions given by the Court”

at that conference.

Accordingly, Miniclier was required to move the court to

disburse the funds, a motion that could be contested. The motion

was contested, by the law clinic appointed to represent Karim.

Miniclier waited until his reply brief to contend the clinic was

improperly appointed under the in forma pauperis statute, 28 U.S.C.

§ 1915. He has waived the factual issue of whether the clinic

represented Karim. And, in appointing the clinic, the district

court relied in part on its inherent powers. Miniclier does not

contend that those powers do not extend to that appointment.

The clinic represented Karim’s interests and contested the

proposed distribution. Its contesting that distribution is even

more clearly a case or controversy (an actual dispute between

adverse parties, see Richardson v. Ramirez, 418 U.S. 24, 36

(1974)), than had been created by the request in Hoffert for

approval of a settlement agreement. The district court had

jurisdiction.

10
B.

Miniclier claims the district court erred when, after having

determined that Louisiana law governed the contingent fee contract,

it subjected it to equitable revision. Miniclier bases error on

three reasons: first, because the district court’s ruling is self-

contradictory; second, because Louisiana law does not permit an

unambiguous contract for reasonable attorney’s fees to be subject

to equitable revision; and third, because an admiralty court’s

power to protect seamen does not include the revision of the

contingent fee contract at issue.

1.

Miniclier asserts: “[T]he district court’s determination that

the Contract would be governed by the substantive laws of

Louisiana, and that the only remaining issue was ‘reasonableness,’

pretermits the analysis of any other contractual issues which may

have had an equity component”. Basically, Miniclier contends that

the district court contradicted itself by choosing Louisiana law

but then applying admiralty principles.

Because Karim’s claim against Finch was presented in a

limitation of liability action, it is undisputed that the district

court was sitting in admiralty for Karim’s claim. To the degree

Miniclier contends the district court ceased to do so when it

received the judgment amount in its registry, the contention is

11
rejected because there was a continued case or controversy. See

supra.

Actions to limit liability are classic maritime claims.

Congress enacted the Limitation of Liability Act in 1851. 46

U.S.C. App. § 181 et seq. The Supreme Court summarized its cases

construing the Act as follows:

These decisions establish, first, that the
great object of the statute was to encourage
shipbuilding and to induce the investment of
money in this branch of industry by limiting
the venture of those who build the ships to
the loss of the ship itself or her freight
then pending, in cases of damage or wrong
happening, without the privity, or knowledge
of the shipowner, and by the fault or neglect
of the master or other persons on board; that
the origin of this proceeding for limitation
of liability is to be found in the general
maritime law differing from the English
maritime law; and that such a proceeding is
entirely within the constitutional grant of
power to Congress to establish courts of
admiralty and maritime jurisdiction....

Hartford Accident & Indemnity Co. of Hartford v. Southern Pacific

Co., 273 U.S. 207, 214 (1923) (citation omitted).

Because of the mobility of their subject, admiralty courts

(perhaps more than others) face choice of law issues. See Coats v.

Penrod Drilling Corp., 61 F.3d 1113, 1119-21 (5th Cir. 1995) (en

banc). This is particularly true for limitation actions. Numerous

cases discuss the method of choosing the applicable law in a

federal court limitation action brought, as here, by a foreign

owner of a foreign vessel. See, e.g., Oceanic Steam Navigation

12
Company, Limited v. Mellor (The Titanic), 233 U.S. 718 (1914)

(American limitation law limited remedy created by foreign law);

Black Diamond S.S. Corp. v. Robert Stewart & Sons, 336 U.S. 386,

395-96 (1949) (foreign law creating and limiting a substantive

right would be applied in American limitation action); see also

Karim, 265 F.3d at 270 (quoting Korea Shipping Corp. v. Tokio

Marine & Fire Ins. Co., 919 F.2d 601 (9th Cir. 1990)). Moreover,

courts applying admiralty law “may adopt state law by express or

implied reference or by virtue of the interstitial nature of

federal law”. Palestina v. Fernandez, 701 F.2d 438, 439 (5th Cir.

1983) (quoting Baggett v. Richardson, 473 F.2d 863, 864 (5th Cir.

1973)).

The district court’s ruling that “the attorney-client contract

in this case is governed by the substantive law of Louisiana”, 233

F. Supp. 2d at 809, did not mean that the court was not sitting in

admiralty, any more than its previous choice of Bangladeshi law to

measure damages meant it was not sitting in admiralty. Miniclier

has not identified any reason why the court’s application of

Louisiana law meant it would be unable to exercise its ongoing

powers as an admiralty court. As discussed in greater detail,

infra, the responsibility admiralty courts have for seamen is an

old and important one, not to be defeated by the fact that the

contingent fee contract was formed in Louisiana.

13
2.

Because Miniclier claims the district court acted

inconsistently, he contends that this appeal presents the following

question: Under Louisiana contract law, can an unambiguous

contract for reasonable attorney’s fees be amended on the basis of

admiralty equitable principles? Because the district court did not

contradict itself, this appeal does not present an issue of

Louisiana contract law. (For that reason, we reject Miniclier’s

alternative request that we certify the question to the Louisiana

Supreme Court.) In that regard, this appeal does not present the

issue of a federal court’s well-recognized power, in general, to

reform contingent fee contracts. Indeed, this power is reflected

in the contingent fee contract’s providing a fixed percentage for

counsel, “or as allowed by law”.

Instead, a much more narrow, fact-specific issue is at hand:

the scope of the power of district courts, sitting in admiralty, to

protect an absent seaman by adjusting his contingent fee contract

(Miniclier’s third basis for reversing on the merits). Therefore,

although Miniclier maintains there is a legal question to be

reviewed de novo, we are faced instead with whether the district

court abused its discretion in its treatment of its ward. See,

e.g., Wilkins v. P.M.B. Systems Engineering, Inc., 741 F.2d 795,

798 n.2 (5th Cir. 1984) (“Where ... the settling plaintiff is a

seaman, and thus a traditional ward of admiralty, that discretion

14
of the court to scrutinize and determine the validity of Mary

Carter agreements is magnified.”); Isbrandtsen Marine Services,

Inc. v. M/V Inagua Tania, 93 F.3d 728, 733 (11th Cir. 1996)

(district court “abused its discretion by failing to aid the crew,

wards of admiralty whose rights federal courts are duty-bound to

jealously protect”; quotation marks omitted).

3.

In maintaining the district court exceeded the permissible

scope of its concern for seamen, Miniclier relies upon Bass v.

Phoenix Seadrill/78, Ltd., 749 F.2d 1154 (5th Cir. 1985), where

the district court voided a portion of a settlement agreement

between an injured seaman and his employer (obviously, not his

attorney, as discussed infra). We reversed, holding:

Our ultimate concern in these cases is not
whether the seaman has received what the court
considers to be adequate consideration for the
rights he has relinquished; rather, we inquire
whether the seaman relinquished those rights
with an informed understanding of his rights
and a full appreciation of the consequences
when he executed the release.

Id. at 1161 (quotation marks omitted). We reversed because the

only finding supporting the district court’s decision was

inadequacy of consideration.

We simply hold that adequacy of consideration
is not the touchstone of a valid seaman's
release; absent a finding that the settlement
was not executed with a full understanding of
the seaman's rights and the effect of the
agreement thereon, the district court lacks

15
authority, especially where the seaman
testifies to complete satisfaction, to void
the agreement because the court thinks the
seaman could have negotiated a better deal.

Id. at 1162 (emphasis added). Accordingly, at issue is the

district court’s permissible scope in acting on behalf of an absent

seaman with respect to his contingent fee contract.

As stated in Bass: “Seamen, of course, are wards of admiralty

whose rights federal courts are duty-bound to jealously protect”.

Id. at 1160-61. In fact, “[t]he protection of seamen was one of

the principal reasons for the development of admiralty as a

distinct branch of law”. 1 THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME

LAW 239 (2d ed. 1994). In accord with that goal, special

legislation particular to, and particularly solicitous of, seamen

has long been enacted. See, e.g., 46 U.S.C. § 10313(g) (when

seamen’s wages not provided within time set by statute, “the master

or owner shall pay to the seaman 2 days' wages for each day payment

is delayed”); see also The Osceola, 189 U.S. 158 (1903) (surveying

foreign maritime statutes on maintenance and cure); Chandris, Inc.

v. Latsis, 515 U.S. 347, 354 (1995) (“Congress enacted the Jones

Act in 1920 to remove the bar to suit for negligence articulated in

The Osceola, thereby completing the trilogy of heightened legal

protections (unavailable to other maritime workers) that seamen

receive because of their exposure to the perils of the sea.”;

quotation marks omitted).

16
In addition to statutory protection, seamen have also long

received particular care under rules created and adopted by the

judiciary. See Romero v. Int’l Terminal Operating Co., 358 U.S.

354, 360-61 (1959) (Article III grant of admiralty jurisdiction

“empowered the federal courts ... to draw on the substantive law

inherent in the admiralty and maritime jurisdiction, and to

continue the development of this law within constitutional limits”;

quotation marks and citation omitted).

Here, the district court was motivated by the doctrine that

seamen are wards of admiralty. E.g., U.S. Bulk Carriers, Inc. v.

Arguelles, 400 U.S. 351, 355 (1971) (“Seamen from the start were

wards of admiralty.”). In American admiralty, the doctrine is at

least as old as 1823; that year, Justice Story wrote, as circuit

justice, oft-cited language in support of this doctrine.

Every court should watch with jealousy an
encroachment upon the rights of seamen,
because they are unprotected and need counsel;
because they are thoughtless and require
indulgence; because they are credulous and
complying; and are easily overreached. But
courts of maritime law have been in the
constant habit of extending towards them a
peculiar, protecting favor and guardianship.
They are emphatically the wards of the
admiralty; and though not technically
incapable of entering into a valid contract,
they are treated in the same manner, as courts
of equity are accustomed to treat young heirs,
dealing with their expectancies, wards with
their guardians, and cestuis que trust with
their trustees.

17
Harden v. Gordon, 11 F. Cas. 480, 485 (D. Me. 1823) (No. 6,047)

(emphasis added). See also Richards v. Relentless, Inc., 341 F.3d

35, 41 (1st Cir. 2003) (“Seamen are wards of admiralty, and their

relationship with their employers is similar to the relationship

between a beneficiary and fiduciary.”; quotation marks omitted).

As reflected in Bass, 749 F.2d at 1161, this solicitude for

seamen’s well-being is often associated with the burdens placed on

an employer to prove the validity of a seaman’s release or a

settlement agreement. See also Garrett v. Moore-McCormack Co.,

Inc., 317 U.S. 239, 248 (1942) (“We hold, therefore, that the

burden is upon one who sets up a seaman’s release to show that it

was executed freely, without deception or coercion, and that it was

made by the seaman with full understanding of his rights.”); Noble

Drilling, Inc. v. Davis, 64 F.3d 191, 195 (5th Cir. 1995) (vacating

district court’s enforcement of settlement agreement and remanding

for a hearing); Orsini v. O/S SEABROOKE O.N., 247 F.3d 953 (9th

Cir. 2001) (fact issues of enforceability of release required

reversing grant of summary judgment on seaman’s claim).

The principle is also applied in other areas. For example, it

is applied in statutory construction, by which statutes are

construed in favor of seamen. See Isbrandtsen Co. v. Johnson, 343

U.S. 779, 782-83, 787 (1952) (construing statute to bar employer

from setting-off against seaman’s wages any costs except those

explicitly in statute); see also Governor and Company of the Bank

18
of Scotland v. Sabay, 211 F.3d 261, 265-70 (5th Cir.), cert.

denied, 531 U.S. 959 (2000) (acknowledging the principle while

concluding that, under statute, penalty wage lien did not have same

priority as lien for earned wages). As another example, it is also

a principle used in evaluating whether a district court has abused

its discretion in procedural rulings. See Isbrandtsen Marine

Services, Inc., 93 F.3d at 733-34 (district court abused its

discretion by not permitting crew’s untimely intervention to

enforce wages lien).

Karim cites one case in which the ward of admiralty doctrine

was used to alter an attorney’s contingent fee. In Schlesinger v.

Teitelbaum, 475 F.2d 137 (3d Cir.), cert. denied, 414 U.S. 1111

(1973), a seaman and his attorney had entered into a contingent fee

agreement; instead, the district court ordered the fee to be in

accord with a schedule set by local rules. In denying mandamus

relief sought by the seaman and his attorney, the Third Circuit

noted that the attorney had not presented evidence, either in

district court or with his mandamus request, that the contractual

fee was fair. Id. at 142. “On the facts presented by this record,

we hold that petitioners cannot rely simply on an allegation of the

existence of a contingent fee agreement, which may have been dated

after the establishment of the [district court’s fee schedule], to

nullify such guidelines as ‘discriminatory, ultra vires and

violative of due process’ as a denial of petitioners’ contract

19
rights.” Id. Although the situation in Schlesinger is readily

distinguishable from that at hand, it is yet another example of

courts’ flexible application of the ward of admiralty doctrine.

A seaman’s entering into a contingent fee contract for legal

services to recover for personal injury may have the

characteristics that have historically prompted the solicitude of

admiralty courts. First, one of the justifications of the doctrine

was judicial recognition of the hard lot of seamen. “The paternal

regard of the Courts and Congress for seamen has, for the most

part, grown out of the peculiar conditions of their employment.

These conditions, by their very nature rigorous and subjecting the

seaman to unusually severe discipline for extended periods of time,

are quite unlike the conditions which attend land labor, and have

resulted in extraordinary remedies being made available to those

who accept this calling.” Perkins v. American Elec. Power Fuel

Supply, Inc., 246 F.3d 593, 597-98 (6th Cir.) (quoting Paul v.

United States, 205 F.2d 38, 42 (3d Cir. 1953)), cert. denied, 534

U.S. 994 (2001). The risks associated with going to sea contribute

to the likelihood that a seaman will need legal counsel. For that

reason, it is appropriate for courts to concern themselves with the

risks seamen face in obtaining such counsel.

Second, perhaps more importantly, it will doubtless usually be

the case (and is the case here) that seamen are uncounseled in

their pursuit of legal counsel. This factual scenario indicates

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two things: it is appropriate for courts to concern themselves

with the contract for legal services; and, in that regard, the

strictures placed on district courts by our decision in Bass are

inapplicable. As noted, Bass concerned a release between a

counseled seaman and his employer. As quoted earlier, our court

stated: “[A]bsent a finding that the settlement was not executed

with a full understanding of the seaman's rights and the effect of

the agreement thereon, the district court lacks authority,

especially where the seaman testifies to complete satisfaction, to

void the agreement because the court thinks the seaman could have

negotiated a better deal”. 749 F.2d at 1162 (emphasis added).

Such a standard is appropriate for a counseled seaman. But

when he is uncounseled and in pursuit of legal counsel, they do not

serve the same purpose. Rather, in the words of Justice Story,

courts are solicitous of seamen because “they are unprotected and

need counsel”. Harden, 11 F. Cas. at 485. This is especially true

in this instance; Karim was deported to Bangladesh in 1997, long

before the attempted allocation of his judgment by his attorney,

pursuant to which Karim would have received nothing.

We hold: it may be proper for a district court, sitting in

admiralty, to use its admiralty powers to alter a contingent fee

contract for legal services entered into by an uncounseled seaman

when he is absent at the time of the attempted disbursement of his

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judgment, as in this instance. Moreover, on these facts, the

district court did not abuse its discretion in doing so.

In the light of Miniclier’s attempt to have the judgment

disbursed, the district court required Miniclier to provide an

accounting. It therefore became aware that Miniclier did not

intend to disburse any of the funds to Karim. In response, the

court determined that further investigation was required.

The court appointed counsel for Karim and held two hearings,

including hearing testimony by two experts. As stated in its

order, even Miniclier’s expert testified that he would have altered

the fee arrangement to ensure Karim had some recovery from the

judgment.

In response, the district court ordered a distribution that

reimbursed Miniclier for all of his expenses, including the

interest accrued on loans used to finance the litigation, and gave

him half of the remainder. Miniclier places great weight on

Karim’s receiving advances from Miniclier, including for living and

medical expenses; he urges that was recovery by Karim. Those

amounts have been reimbursed to Miniclier. On this record, the

district court viewed those advances as a form of economic risk-

sharing for the litigation. It did not view them as a recovery

from the judgment.

Miniclier contends that the district court could not alter the

contingent fee contract. He does not, however, offer any basis for

holding that, if the district court could alter the contract, its

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alteration was an abuse of discretion. Having concluded that the

district court could alter the contract, we have not discerned any

abuse of discretion — far from it.

Along this line, Miniclier has contended repeatedly that the

40 percent fee against the gross recovery (as opposed to being

against the net recovery remaining after expenses are deducted from

the gross amount) is reasonable because it is common. If so, this

is further evidence why seamen may need protection from such a

practice. If an attorney applies his fee percentage against the

net recovery (after expenses deducted), then the plaintiff will at

least receive something (providing the judgment exceeds expenses).

When the contract is as this one was (percentage taken against

gross amount of judgment), it may produce the results seen here.

The use of such contingent fee contracts is one reason why

admiralty courts may be required to intervene to protect a seaman’s

recovery from a judgment in his favor when his attorney does not do

so.

III.

For the foregoing reasons, the judgment is

AFFIRMED.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/35395. Public record. Not legal advice.