Tuesday, November 15, 2011

Dubious Contract Clauses Not Uncommon In Attorney/Client Retainer Agreements

Buried in a recent story in the Orlando Sentinel is a reference to a clause in a retainer agreement used by a foreclosure defense attorney when taking on the representation of a client needing foreclosure assistance. The clause relates to fees charged by the lawyer:

  • In denying [the homeowner/client] a full refund, it also cited her contract with [the foreclosure defense attorney], which states that the original fee was a "flat, nonrefundable rate earned upon acceptance."

Notwithstanding the actual quality of the services that may be offered by the attorney, attempting to assert that the legal fee is a "flat, nonrefundable rate earned upon acceptance" appears to be, at a minimum, a bit of an overreach, and worse, a possible unfair or deceptive trade practice on the part of the attorney, and even worse yet, could make the entire retainer agreement void as against public policy if it is found to fail to comply with the Florida Bar lawyer disciplinary rules.(1)

Florida case law appears to make clear that attorneys practicing in the Sunshine State "are not free to negotiate just any fee" with their clients.(2)

Further, one can reasonably construe the clause to mean that, once the fee is paid, a client's change of heart and desire to withdraw from the agreement shortly thereafter and without the attorney doing any work will leave the client out the entire fee. Such a end result could be found to be the charging of a fee that is "clearly excessive."(3)

In conclusion, even if attorneys fully and in good faith intend to refund any part of the fee that may be unearned, such good intentions won't necessarily stop some "greedy, good-for-nothing, contingency fee class action consumer protection lawyer" (I hear there are a few out there) from trying to make an example out of them for slipping an arguably unenforceable clause into all of their retainer agreements, such clause having the capacity for potentially creating a false or misleading impression in the mind of the consumer (ie. the client) that the 'non-refundable fee, earned upon acceptance' is truly non-refundable, earned at acceptance. Such a practice could be found to be an unfair or deceptive trade practice and, consequently, make the foreclosure defense attorney a nice, juicy target for litigation.(4)

For the story, go here.

(1) See:

  • Rule 4-1.5, Florida Rules of Professional Conduct:

    (a) Illegal, Prohibited, or Clearly Excessive Fees and Costs
    : An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost, or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.A fee or cost is clearly excessive when [...]. [Go here for more of Rule 4-1.5, Florida Rules of Professional Conduct].

  • Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995), where the Florida Supreme Court held that fee contracts that do not comply with the lawyer disciplinary rules are subject to being held void as against public policy. See also American Casualty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.1989); City of Miami v. Benson, 63 So.2d 916 (Fla. 1953); City of Leesburg v. Ware, 113 Fla. 760, 767, 153 So. 87, 90 (1934).

(2) Franklin & Marbin, PA v. Mascola, 711 So. 2d 46 (Fla. App. 4th DCA 1998): Commenting on attorneys fee contracts with clients and their enforceabilty, generally, a state intermediate appeals court observed:

  • Of course, the supreme court has also long held that attorney's fee contracts are infused with the public interest and that attorneys are not free to negotiate just any fee. In Baruch v. Giblin, 122 Fla. 59, 164 So. 831 (1935), the court said:

    "Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation."

    164 So. at 833. To meet this public interest, the supreme court has adopted specific rules regulating attorney's fees.[7],[8] The issue of enforceability of lawyer fee contracts is set out in a specific rule that states:"Contracts or agreements for attorney's fees between an attorney and client will ordinarily be enforceable according to the terms of such contracts or agreements, unless found to be illegal, obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar, prohibited by this rule, or clearly excessive as defined by this rule."[9]

(3) See generally:

  • The Florida Bar v. Moriber, 314 So. 2d 145 (Fla. 1975):

    Few, if any, areas of attorney discipline are as subject to differing interpretations as the matter of what constitutes an excessive attorney's fee. See The Florida Bar v. Winn, 208 So.2d 809 (Fla. 1968), cert. den., 393 U.S. 914, 89 S.Ct. 236, 21 L.Ed.2d 199. The answer turns upon multiple factors including the difficulty of the case; the contingencies, if any, upon which the fee is based; the novelty of the legal issues presented; the experience of the attorney; the quality of his work product; and the amount of time spent in preparation and litigation.

Go here for approximately 100 or so links to Florida cases addressing the issue of attorneys' fees that are 'clearly excessive.'

(4) For more, generally, on the Florida Deceptive and Unfair Trade Practices Act ("FDUPTA" - F.S. Ch. 501, Part II), see The Florida Bar Journal:

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