Tuesday, November 24, 2009
The New Jersey Appellate Division affirmed in part and reversed in part a judgment awarding the plaintiff law firm for reasonable attorneys' fees and expenses arising out of the representation of the defendant former client. The amount of the awrd was remanded to determine which fees and expenses were incurred pursuant to a retention letter exclusive of sums due under a master retainer agreement. The court sets the stage for its decision:
This case focuses on the attorney-client relationship, especially its bedrock, the retainer agreement. It is a unique and extraordinary association. The attorney-client relationship has been a fertile source for authors over the years. It has spawned books, poems, plays, and movies. Literature on this topic includes fiction and non-fiction, tragedies and comedies. To resolve this case, we are obligated to review the long-established statements and principles of law concerning the attorney-client relationship and to analyse, in particular, the attorney's obligation to his potential client in finalizing the retainer agreement.
The law firm was initially contacted by the client for advice about possible ethics violations of opposing counsel, who represented the Bank of America in litigation against the client. The client signed a retainer agreement that made reference to, but did not append, the firm's master retainer agreement. The client did not see that agreement until seven months after signing the retention latter. The terms imposed by the master retainer agreement were at issue here.
The court held that the master retainer agreement was unenforceable and that fees associated with the law firm's pro se representation of itself may not be recoverable. (Mike Frisch)
Saturday, November 14, 2009
The Alaska Supreme Court affirmed the grant of summary judgment to a law firm in a dispute over the modification of a fee agreement. The clients were injured when the stairs to their rooms at a resort collapsed. They entered into a contingent fee agreement with the law firm. The agreement provided for a 25% fee if the matter was resolved before a complaint was filed, 33% after the complaint and 40% after the filing of an appeal.
The case was complicated by the bankruptcy of the defendant. The clients and law firm entered into a modified fee agreement and the case eventually settled for slightly over $1.231 million. The clients and law firm had a substantial disagreement over the computation of the fee. As required by ethics rules, the law firm paid the undisputed portion of the client's share and retained the disputed amount in a trust account. The trial court found for the law firm.
Here, the court rejected claims that the amended agreement was improper and violated the rules of professional conduct. The trial court had properly resolved any contract ambiguities against the law firm in awarding judgment and was not clearly erroneous in its interpretation of the phrase "further substantial litigation" in the modified agreement. (Mike Frisch)
Sunday, November 8, 2009
A plaintiff couple who received a settlement of $829,500 as a share of the settlement of a federal qui tam action paid one-half of the settlement proceeds to the lawyers that had handled the matter pursuant to a contingent fee agreement. The lawyers also were paid $315,000 by the U.S. government. The case settled in May 2004.
In March 2007, the clients brought an action alleging malpractice and other causes of action against the lawyers. The district court concluded that there was no public policy prohibition against the statutory and contingency provisions of the fee agreement. The district court further held that the statute of limitations had run with respect to both claims of malpractice and of concealment regarding the settlement terms. The Montana Supreme Court affirmed the grant of summary judgment to the lawyers concluding that the statute of limitations had expired with respect to each cause of action. (Mike Frisch)
Monday, November 2, 2009
The Georgia Supreme Court affirmed a trial court determination that two criminal defense lawyers and their law firm did not engage in conversion by accepting fees for services rendered to a widow later convicted of the murder of her husband.
The suit had been brought by the administrator of the husband's estate based on a Georgia statute that prevents a murderer from financially benefiting from the crime. The court held that the husband passed good title to property inherited by the surviving spouse. The murderer may use what are estate proceeds unless and until there is a judicial condemnation proceeding. The lawyers were properly paid prior to conviction and are not liable to the estate under a conversion theory.
Saturday, September 19, 2009
Posted by Jeff Lipshaw
Once again, I violate the tradition by celebrating the Jewish New Year not in a community (which when I was a member of a conservative congregation in Indianapolis never failed to cheese me off by talking full voice through the services, particularly in the back, something that the more Episcopalian sensibilities of the Reform temple seemed to eliminate) but in this solipsistic morning of musing. I've pulled up to the front (just behind this one) a post written on Yom Kippur in 2006 (can it be three years?) just after we started this blog, when I was visiting at Tulane.
The point of the previous post was what I find difficult about religious ritual, which is the reification of the sense of awe, wonder, and mystery of life, being, and consciousness into a set of rules. (Hence, my appreciation instead for the music.) That's the tension I described three years ago, between kevah - fixed prayer - and kavanah - inspiration.
Not unrelated, I've come to think since then, is the relationship between law and justice, articulated (surprisingly as far as I'm concerned) by Derrida, a view I find grounded, sensible, and moderate (that's the surprise). In a nutshell, law and philosophy are both about the arche, the structure, the polity, the rules, but justice is something else, an-arche, related to a singularity, unreachable, and subject to reification as soon as the sense of justice is embedded in a rule, because rules are not singular but universal. We can't deal with complete anarchy - law is necessary, but equity (in Derrida's terms) deconstructs it. I'm indebted here to the book I'm reading this morning - Demythologizing Heidegger - by John Caputo, formerly at Villanova and now at Syracuse. What Caputo calls Derrida's "scandal" is that Derrida is not wholly without foundational anchor - there is something that is not capable of deconstruction, and that is justice. Of course, if it can't be deconstructed, then is it an ageless and universal truth? Well, no, and there's the paradox. Law is a construct and we can deconstruct it. But "deconstruction is possible insofar as justice is undeconstructible, for justice is what deconstruction aims at, what it is about, what it is." (Caputo, at 193.)
Not surprisingly, this returns me to the relationship between individual judgment and default to authority, something on which I posted mysteriously a week or so ago. Let's go straight to the paradigmatic case of judgment and default to authority, the Akedah story, the binding of Isaac, which is the traditional Torah portion on Rosh Hashanah morning, and thus quite appropriate as the text for this morning's sermon. This was the story that provoked Kierkegaard's Fear and Trembling, of the knife-edge of impossible judgments, caught between conformity to what purports to be authority and what Derrida (through Caputo) describes as "fresh judgment":
What is to be done cannot simply be calculated - it must be judged. Furthermore, a just decision, which is never a merely programmed, calculated application of a rule, is always made in the element of undecidability, must always pass "through the ordeal of the undecidable," in which our respect for the universal trembles before "the unique singularity of the unsubsumable example."
Caputo, at 196, quoting Derrida, "Force of Law: The 'Mystical Foundation of Authority'", 11 Cardozo L. Rev. 919, 961-67 (1990). That's the leap of faith in judgment, that instant of decision that Kierkegaard calls a madness. Or as I said in the abstract to the yet unpublished essay: "Judgments are those things that occur in our minds, privileged to us, beyond authority, external truth-justifications, and power, whether or not we accede, in the solitude of our own minds, to authority, justifications, and power. Lawyering, or advocacy, is an external appeal to authority. It seeks to use argument, largely of origin rather than validity, to vanquish an opponent. It is a social and inter-subjective exercise. When we make judgments, however, we are completely alone." That's particularly true if the God speaking to you is saying that what is just is to slay your child merely to show your obedience to God.
For more on practical judgment, and in particular, facing up to authority that dictates against one's own sense of justice, see Susan Neiman's account and interpretation of the counter-example of the Akedah story, Abraham's bargaining with God to save Sodom and Gomorrah, in her book Moral Clarity.
Wednesday, August 12, 2009
The New York Appellate Division for the Second Judicial Department affirmed a trial court damage award in a matter involving the alleged breach of a fee-sharing agreement between attorneys:
"It has long been understood that in disputes among attorneys over the enforcement of fee-sharing agreements the courts will not inquire into the precise worth of the services performed by the parties as long as each party actually contributed to the legal work and there is no claim that either refused to contribute more substantially" (Benjamin v Koeppel, 85 NY2d 549, 556 [internal quotation marks omitted]).
As this case was tried without a jury, this Court's authority is as broad as that of the trial court, and this Court "may render the judgment it finds warranted by the facts, taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses" (Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499 [internal quotation marks omitted]). Since the evidence revealed that the client consented to the fee-sharing agreement and the referring attorney, the plaintiff Weinstein, Chayt & Chase, P.C. (hereinafter WCC), performed some of the work, and there was no claim that the referring attorney refused to contribute more substantially, the Supreme Court properly found that the referring attorney was entitled to enforcement of the terms of the agreement (see Benjamin v Koeppel, 85 NY2d at 556).
Furthermore, viewing the evidence in the light most favorable to WCC (see Jacobs v RJAK Enters., 226 AD2d 679), legally sufficient evidence was presented from which the Supreme Court could rationally conclude that the parties entered into an enforceable fee-sharing agreement pursuant to Code of Professional Responsibility DR 2-107(a) (22 NYCRR 1200.12[a]; see Benjamin v Koeppel, 85 NY2d at 556; Cohen v Hallmark Cards, 45 NY2d 493, 499). We note that since the conduct at issue occurred prior to the effective date of the New York Rules of Professional Conduct, this matter is not governed thereby.
Wednesday, July 1, 2009
Posted by Jeff Lipshaw
Appellate lawyer and author John Derrick has asked us to put in a link to his book Boo to Billable Hours: A Lawyer's Guide to Better Billing, the contents of which are available on his website for free. We don't usually do commercial endorsements, but, as far as I can tell, free in this case means free. So why not?
Here's the blurb:
THE BILLABLE HOUR dominates the legal profession, but is gradually eating away at its soul. It chills the attorney-client relationship. It penalizes efficient lawyers, while rewarding plodding ones. It leads to arbitrary, irrational, and suspect results, in which time is distorted and sometimes invented. It disconnects the amount that is charged from the value delivered. And it fails to produce what it promises, transparency. Its effects are all the worse in law-ﬁrm pyramids that impose excessive billing requirements. This straight-talking book critically dissects the practice of billing by the hour, examining how time is actually recorded in a variety of contexts that raise ethical as well as practical concerns. The book is not all about criticism. It also advocates alternatives that shift the focus away from time expended and onto value delivered.
Friday, May 8, 2009
The Maryland Court of Special Appeals has held that attorney's fees may be awarded in family law cases even though the legal services were performed by a non-profit legal services organization. The court concluded that important policy considerations weigh in favor of such fee awards, here made to the House of Ruth. Relying on language from a Montana case, "the 'principle of providing equal access of justice to all' warrants the award of attorney's fees to persons represented by legal services organizations or a pro bono attorney."
...we hold that a court may, in its discretion and after considering the requisite statutory factors, award reasonable attorney's fees in a case where a party is represented by a non-profit legal services organization, or a pro bono attorney, irrespective of whether a fee agreement exists between the client and the attorney.
Tuesday, April 14, 2009
An attorney was retained by the father of a deceased child to prosecute a wrongful death action. The father and the lawyer agreed to a 1/3 contingency fee. The case was settled for the defendant's insurance policy limit of $300,000. The attorney had recommended a prompt settlement before lab reports were completed that could have had a negative impact on the value of the case. The mother, who had not participated in the representation, objected to the lawyer's fee to be paid from her statutory share of the settlement proceeds.
The Tennessee Court of Appeals affirmed the trial court's conclusion that the fee was a reasonable one and that the mother was obligated to pay as a passive beneficiary of the lawyer's services. The award was not based on the contingency agreement; rather, the trial court had heard conflicting expert testimony concerning a reasonable fee and concluded that 1/3 was reasonable. (Mike Frisch)
Tuesday, April 7, 2009
A law firm appealed the grant of summary judgment in favor of the State of Missouri in a matter arising out of a drug arrest. The sheriff had seized $4,421 from the defendant at the time of arrest. The state had sought forfeiture of the seized funds. The defendant signed a release that directed that the seized funds be released to the law firm as fees. The defendant pleaded guilty and was sentenced to three years in jail. The State then dismissed the forfeiture petition and sought "incareceration reimbursement" from the funds. The law firm intervened and appealed after summary judment was entered in the State's favor.
The Missouri Supreme Court reversed and remanded. There was an issue of material fact whether the funds were not subject to incarceration reimbursement after assigned to the law firm. The client averred that he entered his plea on the understanding that the State had agreed to release the funds to the law firm. The prosecutor agreed. The client's intent to transfer his rights to the firm was clearly expressed in writing. Thus, the court concludes, there is an isuue whether all or part of the money had been earned as legal fees and exempt from incarceration reimbursement. (Mike Frisch)
Wednesday, March 11, 2009
A recent opinion of the D.C. Bar Legal Ethics Committee concludes:
A reverse contingent fee is a fee that is based upon the difference between the amount a third party demands from a lawyer’s client, and the amount ultimately obtained from the client, whether by settlement or judgment. The Rules of Professional Conduct (“Rules”) do not prohibit reverse contingent fees, and a fee arrangement of this nature may align the lawyer’s and client’s interests more closely than hourly or fixed fee arrangements. Like all fees, reverse contingent fees must be reasonable. Beyond the requirement of reasonableness, entering into a reverse contingent fee arrangement places increased burdens of disclosure on the lawyer in order to obtain informed consent to such a fee arrangement. The lawyer is in a better position to assess the likely outcome of a dispute than a client is, and the lawyer must fully and fairly communicate that assessment to the client in any discussion concerning a reverse contingent fee. In addition, a lawyer should take particular care in setting the percentage of the reverse contingent fee, because unlike contingent fees based upon a client’s recovery, there is little established practice upon which a client and lawyer can rely. Finally, as with other Rule provisions, the degree and nature of the disclosure required of the lawyer and the ensuing scrutiny of the fee arrangement may vary based upon the experience and sophistication of the client.
There is a partial dissent from three non-lawyer members of the committee, including my friend and colleague David Luban. The final paragraph summarizes the concerns with the majority opinion:
It may well be that RCFs [reverse contingent fees] will mostly be proposed by sophisticated clients who understand quite well—maybe better than the lawyer—how to value cases. An insurer, for example, has extensive data on the settlement value of automobile collision cases. That insurer might well propose a flat fee with an RCF “bonus” to defense counsel who can beat the averages. In such cases, we agree with the Committee’s opinion: when the client proposes the terms of a RCF, the written agreement need say nothing beyond noting that fact. That satisfies the letter of the rule. But when the lawyer proposes a RCF and a baseline for calculating it, a written agreement that includes the baseline value but not even a hint of the method the lawyer used to arrive at that baseline violates the rule and under-protects clients. The Brown & Sturm case that the opinion discusses shows that lawyer overreaching in a RCF is not merely a hypothetical danger to clients.
It's nice to see the non-lawyer members of the committee expressing concern that the opinions of the lawyer members may be overly protective of the profession to the detriment of clients. (Mike Frisch)
Tuesday, March 10, 2009
A criminal defendant charged with malice murder was convicted and sentenced to death but his habeas petition led to an order for a new trial. New counsel were appointed by the then Director of the Georgia Public Defender Standards Council to handle the second trial. The lawyers were assured that they would be paid out of the Council's funds.
The lawyers submitted periodic bills, which were not paid. When the lawyers completed the representation, they submitted a bill for services to the public defender of slightly less than $69,000. The Council refused to pay them anything, claiming that payment was not under the statutory appointment scheme.
The Georgia Supreme Court rejected the contention and ordered that the lawyers be paid. The financial problems that the Council was experiencing did not justify non-payment. (Mike Frisch)
Saturday, March 7, 2009
In an action brought for unpaid legal fees, the New York Appellate Division for the Second Judicial Department held that the attorney could not recover pursuant to the retainer agreement because that agreement was "susceptible of no interpretation" other than a prohibited contingent fee arrangement in a domestic relations matter. Any recovery must be on a quantum meruit basis:
"If the terms of a retainer agreement are not established, or if a client discharges an attorney without cause, the attorney may recover only in quantum meruit to the extent that the fair and reasonable value of legal services can be established" In order to make out a claim in quantum meruit, a claimant must establish (1) the performance of the services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services'". In support of its motion for summary judgment, the plaintiff established that it performed legal services on the defendant's behalf in good faith, and that the defendant accepted these services. However, the plaintiff failed, on this motion, to establish that it expected compensation for its services, at least insofar as the matrimonial matter was concerned, and failed to establish the reasonable value of its services. Accordingly, the Supreme Court properly denied that branch of the plaintiff's motion which was for summary judgment on the second cause of action, seeking recovery in quantum meruit. The court also properly denied that branch of the defendant's cross motion which was for summary judgment dismissing the second cause of action.
The court's decision does not address the ethical (as opposed to contractual) issue raised by the prohibited fee agreement. (Mike Frisch)
Friday, March 6, 2009
An attorney represented a client in a workers' compensation matter under a 1/3 contingency fee agreement. The representation terminated prior to completion and the attorney sought a lien or fees against the settlement payments. The Nebraska Supreme Court held that the attorney was entitled to a reasonable fee for services performed but found the record below insufficient to determine the fee amount. The court remanded for further fact finding consistent with the opinion, instructing the lower court to look to the factors set forth in ethics rules governing Nebraska lawyers. (Mike Frisch)
Monday, February 23, 2009
A law firm represented an insurance company that went into receivership had sought priority of payment in connection with their pre-liquidation legal services. The New Hampshire Supreme Court affirmed a trial court's ruling that general litigation services rendered and payable prior to liquidation do not consitute administration costs: " [The law firm] does not advance nor do we discern any principled way to distinguish between the fee for [the firm's] pre-liquidation legal representation and the fees of the other pre-liquidation professionals falling within the residual classification of [the law regarding administration costs.] " (Mike Frisch)
Thursday, December 25, 2008
In a case arising from a corporate receivership and dissolution action from which a law firm had withdrawn when it had been joined as a defendant, the Nevada Supreme Court held:
These consolidated matters arise from an action in which a law firm sought to recover attorney fees incurred for its representation of a corporation in a separate receivership and dissolution action. The district court awarded the requested fees; approved the law firm’s garnishment and directed the corporation’s receiver to pay the firm out of the receivership funds; and awarded the firm additional fees under the offer of judgment protocol. The corporation has appealed from the attorney fees judgment and post-judgment order, and the receiver has appealed from the court’s order on garnishment.
As a threshold matter, the firm challenges this court’s jurisdiction to consider the receiver’s appeal, asserting that the receiver was not a party below and that he was not aggrieved by the district court’s order on garnishment. Having considered the parties’ jurisdictional arguments, we conclude that we have jurisdiction over the receiver’s appeal because the court’s order constituted a final judgment in the garnishment proceeding, and since the order was rendered against the receiver, who was the garnishee defendant in that proceeding, he is an aggrieved party entitled to appeal.
As for the merits of the parties’ appeals, we address whether the failure to pursue a claim under the receivership claims process necessarily precludes the recovery of attorney fees outside of the receivership court. We also address whether fees are appropriate when a firm represents both the corporation and its majority shareholder and president, as well as whether the firm can recover fees for representing itself in the separate attorney fees action.
We conclude that claims for attorney fees incurred in a receivership and dissolution action can be liquidated in a separate action. The court in that separate action, however, has no jurisdiction to levy on receivership funds without the receivership court’s permission. Accordingly, as we conclude that no conflict of interest barred recovery here, we affirm the district court’s judgment liquidating the firm’s attorney fees. We reverse, however, the district court’s orders concerning garnishment and disbursement of receivership funds. Finally, we conclude that a law firm cannot recover fees for representing itself, and we therefore reverse the post-judgment order awarding attorney fees.
Thursday, August 7, 2008
The New York Appellate Division for the First Judicial Department recently held that the failure to timely file a retainer agreement, as required by law, is generally fatal to a claim for attorneys fees between lawyers:
With one exception, the motion court properly granted defendants summary judgment to the extent indicated in this fee dispute between attorneys, where plaintiffs failed to file retainer statements in compliance with Rules of the Appellate Division, First Department (22 NYCRR) § a prerequisite to receipt of compensation for legal services" (Rabinowitz v Cousins, 219 AD2d 487, 488 ). Plaintiffs' belated filing of several of the subject retainer statements was insufficient to preserve their right to recover legal fees. Indeed, the record shows that these statements were only filed in response to defendants' motion for summary judgment and plaintiffs did not seek permission to file the statements nunc pro tunc. Nor did plaintiffs offer a reasonable excuse for their failure to timely file (compare Matter of Abreu, 168 Misc 2d 229, 234 ).
However, with respect to the first cause of action relating to the Brooks case, the record indisputably shows that plaintiff Fishkin filed a retainer statement on October 31, 1994, which was 18 months after he was retained, but only seven days after defendants belatedly filed their own retainer statement in the same matter. While the motion court may have been confused by Fishkin's later nunc pro tunc filing of an amended retainer statement in June 2006, we find that, taken together, Fishkin's initial 1994 filing and his 2006 nunc pro tunc filing create a triable issue as to whether there was sufficient compliance with 22 NYCRR 603.7(a)(3) to permit this action to proceed.
Friday, July 18, 2008
Tuesday, July 8, 2008
The New York Appellate Division for the First Judicial Department held that a provision in a fee agreement for a premium and an oral agreement was unenforceable:
The subject "Premium Fee" clause in the parties' retainer agreement provides: "We reserve the right to discuss with you at the conclusion of your matter your payment of a reasonable additional fee to us, in excess of the actual time and disbursements, for exceptional results achieved, time expended, responsiveness accorded, or complexity involved in your case. However, no such fee will be charged to you without your consent." The clause does not satisfy the plain language and specificity requirements of 22 NYCRR 1400.3(8), and defendant's oral agreement to pay plaintiff a premium fee of $150,000 is unenforceable.
An interesting concurring opinion:
I agree that the premium fee clause in issue lacks the specificity required by 22 NYCRR 1400.3(8) because it fails to advise the client beforehand how such fee was to be calculated (e.g., a flat amount or possibly a fixed percentage or a limited range of percentage of the total hourly charges incurred). However, I write separately to emphasize that, to the extent that our affirmance might possibly be construed as a criticism of the proposed bonus agreement, no negative connotation should be read into our decision, particularly where it was left to the client's sole discretion to agree or disagree that a premium fee or bonus was warranted. Indeed, given the ongoing debate regarding the efficacy of hourly charges (see e.g. Turow, THE [*2]BILLABLE HOUR MUST DIE It Rewards Inefficiency. It Makes Clients Suspicious. And It May Be Unethical, 93 ABA 32, [August 2007]), such premium fee or bonus arrangements, when fairly negotiated and properly drafted, should be met with approval by the courts. Attorneys, and particularly matrimonial attorneys, should be encouraged, as much as it is possible within their power, to facilitate the expeditious resolution of marital disputes, whether by negotiation and settlement, mediation, or, when all else fails, litigation.
Wednesday, June 4, 2008
The Illinois ARDC has filed a complaint alleging dishonest billing practices against an attorney who represented indigent respondents in juvenile justice and child protection matters. For the first half of 2006, the accused allegedly sought payments totaling $350,000, claiming he had worked over 20 hours a day on 90 different days. Many days he claimed to have worked more than 24 hours in a single day-- with the most "productive" day being March 15, 2005--a 40 hour day that included 14.5 hours of in-court time. Beware the Ides of March. (Mike Frisch)