The plaintiffs' lawyer in In re Ski Train Fire in Kaprun Austria, 2007 U.S. Dist. LEXIS 60229 (S.D.N.Y. Aug. 16, 2007), filed Chapter 11 bankruptcy. He reported $ 13.6 million in outstanding debts. Among the listed creditors were two expert witnesses in the Ski Train case whom he owed, respectively, $75,000 and $3 million. The ‛single most significant source of funding for his Chapter 11 reorganization plan is a hoped-for settlement“ of the action, in which he represented his 100 clients on a contingent-fee basis. District Judge Shira A. Scheindlin ruled that this created an impermissible conflict of interest on the part of plaintiffs’ counsel because he ‛cannot confirm his Chapter 11 plan absent a positive result for the foreign plaintiffs in these cases,“ meaning that his debts to his experts would necessarily remain unpaid unless and until a favorable settlement or verdict in the litigation. That put the experts ‛in a position whereby their compensation as expert witnesses is contingent on the outcome of these cases. Under these circumstances, [plaintiffs’ counsel’s] retention of them violates Disciplinary Rule 7-109 of the [N.Y.] Code [of Professional Responsibility], which provides that ‘[a] lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the outcome of his or her testimony or the outcome of the case.’“ Counsel was disqualified and, for other reasons, sanctioned.
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