Law Firm Sues to Collect on Ambiguous Contingency Fee Agreement

Michael Talve, CEO

Written by
— Updated on October 13, 2017

contingency feeThis case concerns a plaintiff who brought a personal injury claim and retained a law firm on a contingent fee basis. The agreement called for payment in several installments. The agreement did not mention appeals. At the end of the trial, a verdict was entered for the defendant in the case. The plaintiff wanted the law firm to represent him in appealing the decision. The law firm agreed to represent the plaintiff in the appeal, on the condition that the plaintiff advanced the litigation expenses to the firm. The plaintiff refused to advance the litigation expenses and retained new counsel. The plaintiff eventually obtained a jury award of $1.5 million in a retrial. The law firm later sought to collect on this award.

Question(s) For Expert Witness

  • 1. Is it unethical for a law firm to collect on a contingency fee agreement where the agreement had unclear terms?

Expert Witness Response

A contingent fee agreement is one where the payment of fees to the attorney is contingent on the client getting an award or recovery in the case. Under RPC 1.5, an attorney’s fee agreement must be reasonable and should be communicated to the client in writing. Under the Rules of Professional Conduct, fee agreements must be fair, reasonable, and fully known and understood by the client. Under RPC 1.5, a fee agreement where the client does not know enough to make an informed choice about it is unreasonable. Under the Rules of Professional Conduct, all contingent fee agreements must be in writing and signed by the client. In this case, the law firm probably cannot collect on the fee agreement because the terms of the representation are not clear. The agreement is probably unenforceable because the law firm added an additional contract term of advancing expenses for handling an appeal. This term was not in the original agreement which only addressed the total fee and did not include a provision about expenses. The fee agreement is probably unethical because it does not include all limitations on the scope of the representation, so that the client could know and understand them from the beginning of the representation. For this type of agreement to comply with the rules of ethics, it should have clearly discussed litigation costs. Since the client would be responsible for paying litigation costs no matter whether they won or lost the appeal, the agreement should have addressed this so that the client would have clearly understood the fee agreement.

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