Attorneys' Fees and Contingent Fee Agreements: Rules and Cases, Slides of Criminal Law

Download Attorneys' Fees and Contingent Fee Agreements: Rules and Cases and more Slides Criminal Law in PDF only on Docsity! Attorney Fees Ethical Limitations on Fees and Fee Sharing Docsity.com Attorneys’ Fees  Types:  Hourly fee  Flat fee  Contingent fee  Proportional fee  Can be combination.  Contract, but ethical limitations.  Rule 1.5 –  A lawyer shall not charge an unreasonable fee, or unreasonable expense amount.  Texas Rule 1.04 –  A lawyer shall not charge an illegal fee or unconscionable fee. Unconscionable if not reasonable. Docsity.com Cluck questions  What kind of case is Cluck?  What is the result?  Did Cluck violate the Rules?  Unconscionable fee?  Trust account?  Prompt response to requests for information?  What is the basis for the court’s decision?  Is the remedy appropriate? Docsity.com Non-refundable retainers – Texas Ethics Opinion 431  Opinion 391 – may deposit non-refundable retainer in general operating account.  Q: Is non-refundable retainer allowed?  True retainer – fee to secure services, pay for lost opportunity.  Still may need to refund if discharged before opportunities lost.  Fee deposit – not retainer, not earned until earned.  Must refund if discharged.  Does not matter if voluntarily withdraw or fired.  Potential problems:  Interfere with client’s right to discharge attorney.  Need to refund equitable portion. R 1.16 – refund unearned pmt.  Fee may be excessive if just non-refundable. Docsity.com In the Matter of Fordham  Disciplinary Proceeding  Fordham charged with charging excessive fee – $50,000 + for DUI  Board dismissed.  Court imposed sanction – public censure.  Factors here –  Pretty standard case – not justified by novel argument.  Can’t charge client for time to learn the law.  Customary fees much lower – $1,000 - $7500 – $15,000 max. Docsity.com Culpepper & Carroll v. Cole  Cole hired Culpepper to handle will contest.  Negotiated settlement offer of $21,000 +.  Cole rejected offer.  Fired Culpepper.  Handled case pro se. Lost.  Culpepper sued for $6950 “owed” to firm.  T Ct awarded Culpepper the $6950.  Appellate court affirmed.  Appeal to Louisiana Supreme Court.  Q: Is Culpepper entitled to contingent fee under K? Docsity.com Culpepper questions:  Why does court reverse?  What are the arguments that he earned the fee?  What are the arguments that he didn’t?  What are the “multiple and serious concerns” in the rules?  What if the agreement gave the attorney the right to approve or disapprove the settlement agreement?  What if Cole hired another attorney and recovered money?  Would Culpepper be entitled to his 1/3?  Would he be entitled if he had a 1/3 interest in the recovery? Docsity.com Augustson v. Linea Aerea Nacional-Chile S.A. (LAN-Chili)  Susan Augustson and her daughter were in a plane crash.  Susan survived, but her daughter died.  Susan and her husband Clyde hired Speiser Krause (SK).  Sued LAN-Chili. Ps refused $475,000 settlement offer.  SK filed suit. Conducted mediation.  Ps refused to ask for $625,000.  SK withdrew ( with court’s permission).  Ps (w/ new lawyer) settled for $850,000.  SK sued for fee would have earned if had settled for $475,000.  District Court awarded fee.  Appeal to 5th Circuit. Result? Docsity.com Contingent fee  Relatively recent (late 1800’s)  No longer real concern about stirring up litigation.  Mostly just in this country.  Justification:  Makes legal services available to those who cannot otherwise afford attorney. (Other options???)  Compensates attorney for risk takes. (How much risk???)  Concern in some cases that overcompensation to attorney, and undercompensation to client.  If court reviews, how should it review?  Ethical concerns/enforceability/reason for fee Docsity.com Rule 1.8(i) A lawyer shall not acquire a propriety interest in the cause of action or subject matter of the litigation, except for: (1) Lien authorized by law to secure fees or expenses; and (2) Contract with client for reasonable contingent fee in a civil case. Docsity.com Other Contingent fee issues  Do all contingent fee agreements raise ethical concerns? If so, what?  Is it always appropriate to have a contingent fee agreement as long as  the client agrees and  the case is the kind of case usually handled under a contingent fee agreement?  See Rule 1.5, comment [3]:  Consider the circumstances to decide if a contingent fee is reasonable, or if it is reasonable to have a contingent fee. Docsity.com Fogarty v. State  Fogarty charged with kidnapping, assault . . .  Wife hired attorney –  $25,000 advance, to be reduced to $10,000 if charges dismissed.  Charges not dismissed.  Trial – convicted on 6 counts, acquitted on 6.  Fogarty appealed based on conflict of interest due to fee agreement.  Attorney had financial interest in charges not being dismissed.  Court of Appeals: conflict – but no adverse effect. Affirmed.  Georgia Supreme Court affirms – different reason. Docsity.com Why are contingent fees not allowed in criminal cases?  Criminal cases do not produce a res to pay fee.  Compare to personal injury case, which does.  Contingent fee creates a conflict of interest.  Is there a conflict in this case?  If not, use Strickland, not Cuyler.  Is this the kind of conflict contemplated in Cuyler?  If there is a conflict, is there a conflict in hourly fee cases?  Is the fee in this case a contingent fee?  Majority – No?  Concur – Yes, but not improper.  Escalating fee okay.  Impermissible contingent fee if fee contingent on acquittal. Docsity.com Contingent fees in criminal cases  A lawyer shall not charge a contingent fee for representing a defendant in a criminal case.  Rule 1.5(d)(2)  Texas Rule 1.04(e)  Why is this a conflict of interest?  Aren’t interests of lawyer and client “perfectly aligned?”  What about contingent fee for private attorney hired to prosecute a criminal defendant? Docsity.com King v. Young, Berkman, Berman & Karpf  King hired Young, Berkman to represent him in divorce proceeding.  K provided for  $25,000 non-refundable retainer,  hourly rate for attorneys +  “bonus” for complexity and results.  King refused to pay bonus.  Firm sued.  Court awarded $525,000 bonus.  King appealed.  Said bonus was improper contingent fee. Docsity.com King result  Florida Appeals Court holds that bonus provision is unenforceable.  Improper contingent fee.  Refuse to enforce contingent fee provision entirely.  Attorney keeps part of fee based on hourly rate.  What is view of concurring/dissenting J?  Why doesn’t majority review the entire fee?  Are fees considered reasonable if already paid?  Are there other concerns in domestic relations cases? Docsity.com Galanis v. Lyons & Truitt  Suzanne Brown injured in auto accident. Hired . . .  Attorney #1 withdrew due to conflict  Attorney #2 – didn’t return phone calls – fired  Attorney #3 (Truitt, of Lyons & Truitt)  1/3 contingent fee agreement –  Represented for 2 ½ years.  Brown fired Truitt.  Attorney #4 (Galanis ) –  40% contingent fee agreement, 50% if appealed.  Case settled for $200,000. Docsity.com Determination of reasonable amount  Restitution.  Generally based on hourly rate.  Possibility of adjustment – fact Q for T Ct.  What did attorney contribute to award? Time, quality?  Who pays?  Client gets benefit if pays less for job.  New attorney gets benefit if more money for less work.  Client should pay only one contingent fee. Higher.  Allocate among attorneys.  By agreement if possible.  Second attorney has obligation to explain to client.  Must pay if didn’t do this. Galanis pays here. Docsity.com Notes  If voluntarily withdraw, not generally entitled to fee  May forfeit fee for breach of fiduciary duty  Most states allow fired lawyer to recover in quantum meruit  Some require fee contract to spell out right to quantum meruit.  Example: client hired lawyer to represent him in wrongful termination suit on contingent fee basis – dismissed suit and accepted old job back in lieu of damages.  Court denied recovery to attorney since not clear under K.  Is this case distinguishable from cases discussed?  Without K, lawyer usually entitled to fair value of services.  Is this inconsistent with the previous case? Docsity.com Johnston v. California Real Estate Investment Trust  Young boy was injured.  Parents hired attorney – 1/3 contingent fee.  Fired attorney.  Hired second attorney – 1/3 contingent fee.  Case settled for $75,000.  Under Texas law (Mandell & Wright v. Thomas) each attorney gets $25,000 for a total of $50,000.  Injured child get < $20,000.  What does court think of this result?  Why does it hold this way?  What does it suggest first attorney could have done?  What other options were available? Docsity.com Supreme Court opinion  Affirm Mandell & Wright – attorney discharged w/o cause can sue on K or in quantum meruit.  Termination agreement unconscionable:  Does not distinguish w/ or w/o cause  Assesses as % of present value  Required immediate payment  Public policy favors client freedom of choice  Provision puts unreasonable financial burden on client  Strike unconscionable portion – enforce remainder  If discharged w/o cause, entitled to compensation.  Remand on cause issue (not reached by Ct/App). Docsity.com Arthur Andersen & Co. v. Perry Equipment Corporation Arthur Andersen D assets P Maloney Pipeline PECO $ PECO sued Arthur Andersen for accounting malpractice, and for violation of the DTPA. Court dealt with attorney fee issue. Awarded under fee-shifting statute. Is a percentage award appropriate? Docsity.com Fee Calculation – fee shifting  Here, one-way fee-shifting (mostly).  Defendant must pay P attorney fees under statute.  P had contingent fee K – Contingent fee justified  Allow those who can’t afford lawyer to hire lawyer.  Compensate for risks on attorney.  Must determine fee defendant pays based on lodestar method –  Consider factors from rule.  Fact that was reasonable fee for plaintiff does not make it reasonable under statute.  Jury must determine if fee is in fact reasonable.  Does not know what percentage will be, or if reasonable. Docsity.com Ford v. Albany Medical Center  P hired attorney Spada to represent daughter in a medical malpractice action.  P then retained attorney Harding.  Harding agreed to pay Spada 1/3 of any attorney fee.  Case settled.  Attorney fee of $99,701.  Spada petitioned court for his 1/3.  Court awarded 3% based on quantum meruit – agreement not binding.  Spada appealed. Docsity.com Ford appeal  Agreement to split fees unenforceable.  Violates Rule  Affirm J.  Not entitled to 1/3 of recovery.  Did not assume joint responsibility  Did not do 1/3 of work. Docsity.com Rule 1.5(e)  May share fees with lawyer not in same firm {within firm ok} only if:  Division is in proportion to services performed OR each assumes joint responsibility;  Client agrees, in writing, to the arrangement, including the share of each; AND  The total fee is reasonable.  Texas now has substantially the same rule – no longer allows forwarding fee.  What considerations support rule? Forwarding fee? Docsity.com