Tuesday, April 19, 2011

For Your Protection

In re Fink, 2011 VT 42

Two things lawyers really need to know: (1) contingent fee agreements need to be in writing (and signed by the client) and (2) you can’t charge 12% of the gross recovery on a claim for acting as a communication facilitator.

The SCOV took this one up on its own.  A Professional Responsibility Board panel found that Respondent violated “Vermont Rules of Professional Conduct 1.5(c) and 8.4(a) for failing to put a contingent fee agreement in writing and for attempting to charge an unreasonable fee.”  The Board recommended a public reprimand and probation.  And that’s what Respondent ended up with, though other possibilities were suggested by both sides. 

Respondent has been practicing law for 40-years-plus.  He represented Complainant in a divorce and in a relief from abuse proceeding.  Complainant also had a personal injury case going with a Burlington lawyer at the time.  The facts get somewhat complicated, but here are the essential details: Complainant had a potentially lucrative personal-injury case after a trampoline accident rendered him a quadriplegic.  Respondent was not involved with the personal-injury case, but at some point became the “communication facilitator” between Complainant and the personal-injury-case lawyer.  Also, at some point—after Respondent acted as communication facilitator for some time without compensation—Complainant promised to pay Respondent 12% of the gross recovery in the personal-injury case for performing the communicator role.  They never reduced the agreement to writing.

And that’s all you really need to know.  Respondent never billed Complainant for his work on the divorce.  And Complainant fired Respondent before anything was really settled, including the divorce.  Complainant eventually did recover on the personal injury claim—and because he was afraid Respondent might try to collect on the 12% fee—filed a complaint against Respondent. 

There is no dearth of analysis in this opinion.  It’s relatively straightforward, so I’ll just give you the highlights and poke a little fun when I see an opportunity.

Lawyers must put contingent fees in writing.  Respondent claimed that a writing was not required, because Complainant could not physically sign an agreement.  The SCOV notes that, technically, the Complainant’s signature was not required under the version of the Rules in force at the time of the agreement (unlike now), and dismisses that argument quickly—with a nod to other ways the Complainant could have signed if the rules had required a signature.

Respondent attempted to make a “no harm, no foul” argument, which the SCOV summarily rejects. The SCOV explains that the purpose of the Rule is to ensure that the client makes an informed decision about representation.  A noble purpose indeed, but I would posit that some fee agreements are so obfuscatory that they make cases from the 1800s seem like light reading.  However, Respondent failed to put the contingent agreement in writing, and therefore he violated V.R.P.C. 1.5(c).

The unreasonable fee discussion is . . . well . . . interesting.  Respondent explained that he thought his role would be more involved than just communication.  The SCOV explains that communication was the only activity contemplated at the time of the deal.  The SCOV reasons that “Respondent is [to be] held accountable for the deal he made, not the one he supposed might be made in the future.”  Then the SCOV rejects Respondent’s argument that he didn’t charge the fee.  Back to the “no harm, no foul.”  The SCOV says that what matters is an attempt to charge an unreasonable fee, not whether the attorney went about collecting it.
The SCOV also rejects Respondent’s due process claim.  This one isn’t hard to parse out.  Respondent had a hearing and opportunity to be heard . . . the sanction is appropriate . . . end of story.  There’s more, of course, about intent and other juicy nuances, but we only do the highlights here.  There’s a link at the top of the page if you need more detail. 

So, boys and girls, put those contingent fee agreements in writing.  Don’t compound the error by leaving open the potential for an unreasonable fee.  The paper—as this case proves—is as much for your protection as it is for the client’s.  

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