American Trial Lawyers Ass'n, New Jersey Branch v. New Jersey Supreme Court

• Decision Date: 17 December 1974
• Citation: 66 N.J. 258,330 A.2d 350
• Parties: AMERICAN TRIAL LAWYERS ASSOCIATION, NEW JERSEY BRANCH, et al., Plaintiffs-Appellants, v. NEW JERSEY SUPREME COURT, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 258

66 N.J. 258

330 A.2d 350

AMERICAN TRIAL LAWYERS ASSOCIATION, NEW JERSEY BRANCH, et al., Plaintiffs-Appellants, v. NEW JERSEY SUPREME COURT, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Oct. 21, 1974.

Decided Dec. 17, 1974.

Morris M. Schnitzer and William O. Barnes, Jr., Newark, for plaintiffs-appellants (Schnitzer & Schnitzer, Newark, and William O. Barnes, Jr., Newark, attorneys; Alexander M. Bickel, on the brief).

Stephen Skillman, Asst. Atty. Gen., for defendant-respondent (William F. Hyland, Atty. Gen., attorney).

The opinion of the Court was delivered by

HUGHES, C.J.

This litigation challenges the authority of the Supreme Court under its rule-making power, N.J.Const. (1947), Art. VI, § II, par. 3, ¹ to establish a graduated schedule of maximum contingent fees applicable to certain tort litigation conducted by New Jersey attorneys. It thus suggests to the Court an introspective look at its constitutional power to regulate the practice of law as well as its consequent responsibilities in that regard.

The contingent fee rule, R. 1:21--7, was adopted by this Court ² in December 1971, to be effective January 31, 1972. Its limitation clause (c) ³ was promptly challenged on federal and state constitutional grounds by litigation instituted by several highly respected associations of trial lawyers (hereafter 'plaintiffs'). Plaintiffs may be considered, Arguendo, to be representative of a class, namely the entire New Jersey trial bar; we are not so clear as to their standing to represent the poor, ⁴ but that is not necessary to decide now. The initial attack on the rule was spelled out in complaints filed in the United States District Court, seeking declaratory and injunctive relief. There was convened, under 28 U.S.C. §§ 2281, 2284, a three-judge court which dismissed the cause on grounds of abstention, Reetz v. Bozanich, 397 U.S. 82, 90 S.Ct. 788, 25 L.Ed.2d 68 (1970). On appeal the United States Supreme Court vacated that judgment, ordering the District Court to retain jurisdiction pending conclusion of proceedings in the state courts. American Trial Lawyers Ass'n v. New Jersey Supreme Court, 409 U.S. 467, 93 S.Ct. 627, 34 L.Ed.2d 651 (1973).

The state court litigation has a procedural history not particularly important here, except to recall that, proceeding summarily under R. 4:67--5, the Superior Court, Law Division, in an unreported opinion, held R. 1:21--7(c) to be invalid. (Docket No. L--16981--72, filed July 5, 1973). It rested that judgment on state constitutional grounds, interference by the rule with freedom of contract and absence of apparent justification therefor in the record. It deemed freedom of contract, including that between attorney and client as to contingent fees, to be constitutionally protected as a basic liberty, subject only to the exercise of the police power.

The Appellate Division reversed and in a comprehensive opinion determined that the adoption of the rule, fixing outer limits on contingent fees, not only was constitutionally unassailable, but clearly came within the ambit of this Court's responsibility to regulate relationships between Bar and public. American Trial Lawyers Ass'n v. New Jersey Supreme Court, 126 N.J.Super. 577, 316 A.2d 19 (1974). We adopt this well-reasoned opinion In toto, and ordinarily would end by saying so.

However, some few observations might be useful, touching on the basis of the Court's constitutional power and responsibility.

In 1947, the people of New Jersey adopted a new Constitution to replace that of 1844 (the successor to the Revolutionary Constitution of 1776), recognizing that over the span of that century-plus the state had emerged from its largely agricultural past to become a more complex component of the American community. Heavily industrialized, congested by dynamic population and business growth, suffering the pains of unprecedented and largely unplanned urbanization, crisscrossed by the travel of millions of visitors or transients, choked by an archaic tax system, New Jersey had become, in the words of Woodrow Wilson (who served as its Governor part way through that interval) a kind of 'laboratory' of the nation's problems and its hopes.

By Article VI of the 1947 Constitution, the people discarded the former court system, attenuated and overburdened as it was by the developments and complexities of the years. The new charter had at its core the creation of a modern system of courts. That court system, in its political independence, its design of administrative self-government, its hoped-for efficiency and consequent productivity potential in the public interest since has come to be regarded as something of a model by other jurisdictions. W. J. Brennan, Jr., After Eight Years: New Jersey Judicial Reform, 43 A.B.A.J. 499 (1957); M. Pirsig, The Proposed Amendment of the Judiciary Article of the Minnesota Constitution, 40 Minn.L.Rev. 815, 823--24 (1956); R. Pound, Procedure Under Rules of Court in New Jersey, 66 Harv.L.Rev. 28 (1952). Central to this system was a unique administrative flexibility, largely accommodated by the rulemaking power, soon to be vindicated (in the context of procedural and practice, vis-a-vis substantive, matters) in Winberry v. Salisbury, 5 N.J. 240, 74 A.2d 406 (1950), cert. den. 340 U.S. 877, 71 S.Ct. 123, 95 L.Ed. 638 (1950).

In this context, then, we come to the basic question of this case: What is the nature and extent of the Court's regulatory power over those who practice law?

One source of the power of the Court to regulate practice and procedure therein, of course, is its traditional, inherent and integral relationship to the very existence and the functioning of the court. But so precisely and unmistakably (as held below) did Article VI, § II, par. 3 of the Constitution, Supra, make 'the Supreme Court the exclusive repository of the State's power to regulate the practice of the law, investing it 'with exclusive responsibility in this area.' State v. Rush, 46 N.J. 399, 411, 217 A.2d 441, 447 (1966),' American Trial Lawyers Ass'n v. New Jersey Supreme Court, Supra, 126 N.J.Super. at 585, 316 A.2d at 23, that the existence and exclusivity of the power would seem quite beyond question.

As to its nature: we must remember that there is a manifest conceptual kinship between 'power' as such, and the obligation for responsible use of that power, and that, never from a myopic viewpoint, but fully and truly in the public interest. The people's constitutional reposition of power always carries with it a mandate for the full and responsible use of that power. When the organic law reposes legislative power in that branch, for instance, it is expected that such power will be used, lest it wither and leave the vacuum of a constitutional exigency, requiring another branch (however reluctantly) to exercise, or project the exercise of, that unused power for the necessary vindication of the constitutional rights of the people. Robinson v. Cahill, 62 N.J. 473, 303 A.2d 273 (1973), cert. den. sub nom. Dickey v. Robinson, 414 U.S. 976, 94 S.Ct. 292, 38 L.Ed.2d 219; Jackman v. Bodine, 43 N.J. 453, 205 A.2d 713 (1964); Asbury Park Press, Inc. v. Woolley, 33 N.J. 1, 161 A.2d 705 (1960). So it is with the unparalleled executive authority vested by the 1947 Constitution.

And so it has been with the judicial branch of this government. Since 1948 (the Judicial Article became effective September 15, 1948, Article XI, § IV, par. 14) the Supreme Court has not hesitated to meet its responsibility for the use of the judicial and administrative power reposed in it by Article VI. Thus, it has 'legislatively' adopted Rules of general application regulating the professional conduct of attorneys and their relationships to their clients and to the courts. The wide range of such rules was noted by the Appellate Division. ⁵

Nor has the judiciary forgotten to regulate the conduct of its own members, as by our adoption of the Code of Judicial Conduct and our creation of an Advisory Committee on Judicial Conduct to aid in its enforcement. R. 2:15--1 et seq.

In their able brief, plaintiffs suggest that the nature and reach of the disciplinary power are of 'first, critical importance,' and we agree. We are also quite clear that the people, in their constitutional grant of the power of superintendence of those admitted to practice law, did not express a mere gesture or formality. On the contrary, we think they intended that responsibility to extend to every area in which unjust or unethical conduct might afflict the public at the hands of those admitted by the Court to the practice of the law. We believe the people intended that the Court should cope as best it might with interstices, wherever they appear, in the pattern of honest and ethical practice of the law. In this grant of power and reposing of responsibility the people of New Jersey trusted and commissioned the Supreme Court, in effect, to 'keep the house of the law in order.' See, Gair v. Peck, 6 N.Y.2d 97, 111, 188 N.Y.S.2d 491, 502, 160 N.E.2d 43, 51 (1959), appeal dismissed 361 U.S. 374, 80 S.Ct. 401, 4 L.Ed.2d 380 (1960). The Court intends to fulfill that responsibility, and to fulfill it within the framework of constitutional right. ⁶ To do less would degrade the Court, weaken the profession and impede the administration of justice, eventualities against which we believe the profession, as well as this Court, to be fully dedicated.

Plaintiffs argue that in its adoption of R. 1:21--7(c) the Court acted, not in a legislative but in an adjudicatory role, and that an evidentiary hearing should have preceded and justified its action. Again, we think the constitutional grant of power and lodgement of responsibility were not so limited. For instance, the people surely did not intend that the court would require an evidentiary hearing to prove to itself the wrongness and danger of an attorney commingling his personal funds and those entrusted...