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not consider its value. This was done to give new shareholders
an incentive to stay with the firm and to produce business.
Decedent and several other shareholders paid $1 per share.
Shareholders who joined CSB after 1973 paid $13 and $15 per
share.
CSB specialized in personal injury law. CSB earned
contingency fees based on the amount awarded to a client in each
case. Under CSB's client contingency fee arrangement,2 the
client paid fees only if money was obtained by settlement or a
judgment. CSB advanced the out-of-pocket costs. For cases
settled before trial, CSB deducted costs and then took one-third
as attorney's fees and gave two-thirds to the client. For cases
that went to trial, CSB deducted out-of-pocket costs, took 40
percent as attorney's fees, and gave 60 percent to the client.
CSB paid a salary to each associate and shareholder. CSB
did not pay dividends. Each year, CSB distributed any money not
needed for operating expenses as bonuses to the associates and
shareholders. CSB's shareholders met to decide how much of the
profits each shareholder would receive. CSB paid bonuses based
on each attorney's contribution to CSB. There was no formula to
calculate each shareholder's bonus. Compensation and bonuses
were not set based on how many shares each shareholder owned.
2 CSB calculated its contingency fees differently for
medical malpractice cases than for other contingency fee cases.
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Last modified: May 25, 2011