You are a judge for fee disputes for lawyers and clients. To determine whether a fee is reasonable, consider the concepts discussed in this chapter, including the eight factors (TOCATPET) that contribute to the reasonableness of a fee. For each situation, list the issues involved and the factors that apply and make your ruling.
Situation 1: Anthony Vegas retained Howard O’Brien to represent him in his divorce proceedings. Anthony executed a fee agreement that provided for a nonrefundable retainer of $2,500. The agreement stated:
A client will pay a lawyer a nonrefundable retainer of $2,500, which is not to be affected by any possible reconciliation between the client and a spouse. Said retainer is to be credited against charges of $200 an hour.
After Howard had spent 10 hours on Anthony’s case, Anthony discharged Howard and gave no reason for doing so. Howard refused to refund the remainder of the retainer fee to Anthony. Anthony contested. Is Anthony entitled to a refund of the retainer?
Situation 2: A court determined a lodestar fee for a contingency case and doubled that fee to account for a “risk premium.” The court determined that since the client’s chance of success was 50 percent, a doubling of the lodestar was necessary to account for the lawyer’s risk in taking the case. The client appealed the ruling to an appellate court, stating that the multiplier was excessive. Was it?
Situation 3: Paula O’Connor agreed to defend Glen Hageman in a criminal proceeding. Paula prepared a fee agreement calling for a flat fee of $15,000 to cover all services, including the trial. The fee was payable up front. Glen signed the agreement but paid no money. Three months later, after Paula had worked on the case, she refused to represent Glen further until she received the fee. Glen had no money, so Paula demanded a $25,000 note secured by a second mortgage on Glen’s vacation home. When Glen did not pay the fee, Paula started foreclosure proceedings on the home. Glen objected. May Paula foreclose on Glen’s vacation home to satisfy the note?
Situation 4: Ray Addington, a businessman, employed Ellen Henley regarding a contract action. Ellen stated that her hourly rate would be $300. When Ray indicated he had no money to pay on an hourly basis, Ellen presented a one-third contingency fee agreement, which Ray signed. Ellen participated in settlement negotiations for a year and obtained a settlement figure of $195,000 for her client. Under the contingency fee agreement, the lawyer’s fee was $65,000. When payments were made to the lawyer, creditors, and subcontractors out of the settlement proceeds, nothing was left for Ray. Time sheets indicated that if Ellen had charged $200 an hour, her services would have been worth $20,000. Is a contingency fee appropriate in this case?
Situation 5: Donna DeMaster, owner of a piece of property worth $70,000, hired Bill Schuster to represent her in a quiet title lawsuit brought by Donna’s brother. Bill took the case on a one-third contingency. The case never went to trial but was settled because of the efforts of the parties’ mother. No novel or difficult legal questions were involved, and the pleadings filed in the matter were not complicated. Bill charged Donna $23,000 for the representation. He kept no time records since he had the case on a one-third contingency basis. Is the fee excessive?
Situation 6: Al Houser paid Walter Krogen $45,000 to represent him in a felony case. Al pleaded guilty, did not go to trial, and was sentenced to one year in prison. He felt that the fee was excessive. Al’s co-defendant, who went to trial, paid his attorney $12,000. However, Walter stated that he spent more than 800 hours representing Al on the case. Was the fee appropriate?
Situation 7: Laura Albertson retained Leslie Olson regarding the final distribution of property from her divorce. A detailed retainer agreement set forth a minimum number of hours required for the representation and specified Leslie’s hourly rate under two alternative time schedules. It also provided for the payment of additional attorneys’ fees of a percentage of the net property distribution obtained for Laura. Was the fee agreement proper?
Situation 8: Meghan Schuh represented Joshua Anderson in a product liability case that was taken on a contingency and that included an appeal. The trial court ruled against Joshua, and Meghan sought an appeal of the ruling. However, Meghan had no experience with appellate work, so she hired an experienced appellate attorney to prepare the appeal and argue the case before the appellate court. In return for the appellate attorney’s services, Meghan agreed to pay him 25 percent of the total fee. Meghan did not inform Joshua of her association of the appellate attorney. Did Meghan act properly?
Situation 9: Erin Brown’s fee agreement with Nathan Bunnell entitled her to one-third of a gross recovery received by compromise or settlement prior to filing an insurance suit and 40 percent thereafter. The fee agreement also gave Erin a charging lien on any recovery. Erin opened the file, collected certain information, and notified the insurance carrier of the case. The carrier declined Nathan’s claim. A suit was filed in the hope of receiving a favorable disposition from the insurance company, but no offer was forthcoming. Erin wrote Nathan a letter that stated that no further work would be done on the case and advised Nathan that he could seek other counsel, pursue the case himself, or have the matter dismissed. Nathan retained another law firm to represent his interests. When the second firm received his file from Erin, it was accompanied by a statement of Erin’s charging lien on the proceeds of the case. Was Erin entitled to collect on the charging lien?
Situation 10: Sonia Feldbrugge represented Erica Lukk in a criminal case. During the course of representation, Erica was injured in an automobile accident and requested that Sonia represent her in the personal injury case. Sonia agreed to represent Erica for a one-third contingency fee. Erica’s criminal matter ended, but she did not pay Sonia for that case. Erica owed Sonia $5,000 for the criminal case. Therefore, Sonia put a charging lien on the proceeds of the personal injury case for the $5,000 fee not paid in the criminal case. Was the lien proper?