Tuesday, July 17, 2007

Unreasonable Fee?

A law firm was retained to represent a minor who was a passenger in a car hit by a drunk driver. She lost her unborn child as a result. The minor and her father signed a contingent fee agreement that set the fee at 1/3 of amounts recovered and provided for a lien on discharge. The insurer offered policy limits to settle. The firm was then discharged and asserted the lien against the insurer. The firm sued the former client and obtained summary judgment.

On appeal, the Nebraska Supreme Court reversed. The firm did not establish that the fee was reasonable under ethical standards. The fee contact, standing alone, did not establish that the firm had in fact earned 1/3 of the settlement offer. On remand, the law firm bears the burden of proof on the reasonableness of the fee. The firm must prove: the existence and terms of the fee contract, that required disclosures were made to the client and the actual extent and value of the legal services.  (Mike Frisch)


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