Friday, February 22, 2008

Reasonable Contingent Fees

The New Jersey Appellate Division reversed and remanded for further proceedings a trial court decision that had placed the burden of proof on a law firm "to establish that the contingent fee recovered on the first $2,000,000 of [a] settlement was inadequate." The firm had sued the Division of Youth and Family services for failure to properly provide for the care and custody of three minors. One of the children was killed; the other two were "discovered locked in the basement near starvation." The gross settlement of the claims was for $7.5 million.

The trial court had held that the law firm was not entitled to a fee on amounts recovered in excess of $2 million. The decision here recites the benefits of contingent fee agreements and holds that the failure of the firm to submit time records was not fatal to the fee claim. The burden is not on the firm to demonstrate that the fee was inadequate; rather, the judge must determine whether a fee based on a recovery in excess of $2 million is reasonable. The court sets out the factors the trial court must consider on remand in determining a reasonable fee. (Mike Frisch)

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