Tuesday, June 7, 2011

An Unconscionable Fee

The June 2011 California Bar Journal reports:

[An attorney] was suspended for one year, stayed, placed on three years of probation with a 90-day actual suspension and he was ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect Feb. 10, 2011.

[The attorney] stipulated that he charged an unconscionable fee of $258,000 when he had not properly documented or contracted for those fees and he then charged an additional $226,213 in fees to which he was not entitled.

In 1998, several brothers who owned and operated several Mexican restaurants in Arizona and California was arrested on federal felony charges related to their restaurants. [The attorney] was one of several lawyers who represented the brothers in what became an unexpectedly complex case. Another lawyer was empowered to collect fees and hire a defense team.

[The attorney] agreed to represent one of the brothers for $10,000, with the possibility of more fees if required. He handled the client’s cases for four years, made trips to Mexico and Phoenix that included numerous meetings with co-counsel and he obtained reduced sentences for his client and a brother. As a result of that work, he submitted a billing statement for $29,625 in legal fees and $11,250 for costs.

[The attorney's] client and his brother pleaded guilty to criminal charges in Arizona and each was fined $375,000 and sentenced to 13 months in prison. [The attorney] submitted another billing statement for $210,000, plus $35,000 for “good results.” He said he coordinated the leadership for the defense with the IRS and immigration services, met with numerous other attorneys, handled probation and traveled extensively. The following year, he submitted another bill for $226,213 for spending up to 80 hours a month on the brothers’ cases.

One of the brothers sued [the attorney] for malpractice. In the meantime, a company that was formed to sell the brothers’ restaurants’ trademark in order to pay their legal fees went bankrupt. The bankruptcy court ruled that [the attorney] had received $268,000 in fees but was entitled to only $10,000, and in a second ruling, found that his request for the additional $226,213 was excessive because the fees were not properly itemized or earned.

[The attorney's] appeals were denied.

In mitigation, [he] cooperated with the bar’s investigation and he had no prior discipline record.

(Mike Frisch)

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