The ARDC has filed a complaint against two lawyers who handled a case on a contingency basis. The first agreement from 2005 gave them a legal fee of 33 and 1/3 of the gross amount recovered. After they had obtained a recovery for the client, they lawyers prepared a new agreement in 2008 which increased the fee to 40% of the total amount. The ARDC alleged that the increased fee constituted overreaching and a breach of fiduciary duty.
Generally, it is taboo to renegotiate a contingency fee agreement after a recovery has been made. The client is vulnerable and the lawyer, who may be holding funds in a trust account, is in a stronger position.
The key allegations are set forth below:
“18. Respondents did not perform services sufficient to justify fees of $227,000 for their work on behalf of Davis related to the CCC litigation, as the amount of time and labor required, or the novelty and difficulty of the work performed by Respondents, did not justify their fees, and Respondents’ fees were unreasonable in light of the customary fees charged in the legal community for similar legal services.
19. Respondents’ fees were inconsistent with both the 2005 Fee Agreement and the 2008 Revised Fee Agreement and were obtained from Davis by overreaching the attorney-client relationship and by falsely advising Davis that they were entitled to 40% of the sales proceeds that Davis received from the sale of 5850 S. King Drive. ”
Comment: obviously these are allegations. They have not been proven. The lawyers may have a defense to this case. From my perspective, it is important to note that the ARDC brings claims against lawyers for overreaching where a fee agreement is changed after there is a recovery. This is a cautionary tale.
Edward X. Clinton, Jr.