LEO: Attorney/Client - Nonpayment of Fees  LE Op. 996

 

Attorney/Client - Nonpayment of Fees.

 

November 13, 1987

 

An attorney was retained by a client regarding a breach of contract claim

relative to the sale and purchase of a residential property. A fee

arrangement was executed. Attorney's client, the seller, in the particular

transaction in dispute, wished to pursue a cause of action against a

contract purchaser who failed to consummate settlement. Negotiation

efforts to settle the dispute were made, but were unsuccessful. A lawsuit

was filed on behalf of the attorney's client. Shortly after the filing of

the lawsuit, the settlement offer was communicated to the attorney by

defense counsel. The client, however, rejected this offer. The client

believed his damages to be far greater than the settlement offer. The

attorney discussed with the client his reluctance to proceed with trial

because of the difficulty in obtaining a greater net recovery.

 

The attorney strongly advised the client to consider the cost and fees

associated with litigation. The attorney and client discussed the

possibility of attorney's fees offsetting his recovery. The attorney and

client also discussed the risk of trial and the possibility of not

proceeding and retaining judgment. The client stated that he understood

the risks, but wished to proceed by pursuing resolution of the lawsuit by

a trial. Trial took place and judgment against the defendant was obtained.

Subsequently, $2,500 was collected from the defendant, in the form of two

checks made payable to the attorney and to the client. The outstanding

attorney's fees were $3,040.35, less the $600 professional adjustment. The

account receivable has been delinquent for over 90 days. The attorney has

not disbursed payment to his client, nor has he received a demand to do

so. However, the attorney has been requested to reduce the fee by 50

percent. The partners in the firm have denied this request in light of the

fact that a professional courtesy adjustment has already been made to the

client.

 

It is not improper, given the above, for the firm to maintain a lien to

secure payment of fees provided that the client has refused to pay the

firm's fees. The Committee notes that while DR:9-102(B)(1) provides that

a lawyer shall promptly notify a client of the receipt of his funds,

securities or other properties, notification does not appear to always

mandate subsequent payment of the same. The Committee refers to DR:9-102(

A)(2). The Committee does caution, however, that the right of the lien may

prove less deleterious to the already difficult relationship with the

client in light of of EC:2-25.

 

[ DR:5-103(A)(1), DR:9-102(B)(1); EC:2-25; see also LE Op. 995]

 

Committee Opinion November 13, 1987