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Are Retainer Agreements Sacrosanct?

Posted by Judie Bronsther | May 19, 2014 | 0 Comments

Attorneys are in the unique position of being both officers of the court (that is, quasi public officials) and entrepreneurs engaged in operating businesses that need to make a profit in order to survive. So, unlike other entrepreneurs, lawyers cannot make an unreasonable profit. In fact, there are ethics rules in every jurisdiction (modeled after ABA Model Rule of Professional Conduct 1.5) that basically states legal fees and expenses must be reasonable. As assessment of whether a fee is reasonable depends on the fact and circumstances of each particular case.

In determining whether a fee is reasonable, courts will generally consider:

1. the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

2. the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

3. the fee customarily charged in the locality for similar legal services;

4. the amount involved and the results obtained;

5. the time limitations imposed by the client or by the circumstances;

6. the nature and length of the professional relationship with the client;

7. the experience, reputation, and ability of the lawyer or lawyers performing the services; and

8. whether the fee is fixed or contingent

When the parties have a written contract in which the fees and costs are clearly established, the fees and costs charged thereunder are presumed to be reasonable; however, these factors still apply.

For instance, in In re Sinnott, 845 A.2d 373 (2004), the Vermont Supreme Court affirmed a disciplinary panel's finding that a fee was unreasonable even though it was based on a valid contract knowingly signed by the client. The court said it is unethical for lawyers to charge unreasonable fees “even if they are able to find clients who willpay whatever a lawyer's contract demands.”

About the Author

Judie Bronsther

Ms. Bronsther began her career in 1979 as an associate with Finley, Kumble, Wagner, Heine, Manley & Underberg specializing in corporate finance. In 1984, she joined forces with a client, Empire Securities, a brokerage house specializing in oil and gas transactions, and became Executive Vice President and General Counsel. In 1989, she joined Kaye, Scholer, Fierman, Hayes and Handler. Ms. Bronsther graduated from University of Rochester, magna cum laude, and New York University School of Law. Ms. Bronsther has written extensively on the subject of legal cost control and lectures frequently on this subject.

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