Sunday, April 13, 2008

Contingent Fees In Massachusetts

The Massachusetts Supreme Judicial Court vacated the order of a single justice and directed Bar counsel to issue an admonition in connection with charges relating to the attorney's contingent fee agreements. The attorney operates a high-volume personal injury practice. The court's opinion summarizes its holding:

"Bar counsel appeals from the decision of the single justice dismissing the petition for discipline of an attorney. Principally at issue is the propriety of certain provisions in the attorney's form contingent fee agreement that go beyond the terms of the model contingent fee agreement set out in the Massachusetts Rules of Professional Conduct. Bar counsel also challenges the attorney's conduct in misrepresenting the existence of a statutory lien pursuant to G.L. c. 221, § 50, in failing to notify one client promptly of his receipt of personal injury protection (PIP) funds, and in refusing to provide another client's successor counsel with a statement of his reasonable time and expenses after his discharge by the client.

We conclude that the attorney committed professional misconduct in knowingly misrepresenting on several occasions to insurers the existence of a statutory lien under G.L. c. 221, § 50, in his favor, and in failing to notify and inform his client promptly about his receipt of PIP funds for the client. We further conclude that an admonition is the appropriate discipline for this misconduct.

In the circumstances of this case, we disagree with bar counsel's claims that discipline should be imposed because of the challenged terms of the attorney's contingent fee agreement. However, looking to the future, we doubt whether it is appropriate for a contingent fee agreement to contain a provision--as the attorney's agreement did in this case--giving a lawyer, on discharge by the client before termination of the matter for which representation was sought, a right to recover an amount greater than the fair value of the lawyer's services and expenses up to the date of discharge. In addition, to the extent that a lawyer includes terms in a contingent fee agreement that materially depart from those in the model contingent fee agreement included in Mass. R. Prof. C. 1.5(f), as amended, 432 Mass. 1302 (2000), [FN1] we conclude that the lawyer should explain those terms specifically to the client, and should obtain the client's written consent to them. We refer these issues to the standing advisory committee on the rules of professional conduct."

The opinion also holds that contingent fee agreement do not implicate Rule 1.8(a)(business transaction with client) rule. The case is In the Matter of the Discipline Of An Attorney, No. SJC-09757, decided April 11, 2008. (Mike Frisch)

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