Charging an Excessive Fee Can Lead to Disciplinary Action
Muldoon & Getz
A lawyer shall not charge an excessive fee. Code of Professional Responsibility, DR 2-106(a). “A fee is excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with the definite and firm conviction that the fee is in excess of a reasonable fee.” Eight factors are listed in determining a fee’s reasonableness. DR 2-106(b). See also, Matter of Freeman, 34 NY2d 1, 355 NYS2d 336 (1974).
Being covered by the Code of Professional Responsibility, an excessive fee can result in disciplinary action. In a Third Department case, the attorney attempted to charge over $22,400 in a divorce action where there were no complicating factors. An expert testified at the professional misconduct hearing that for a “fairly simple” matrimonial action, the fee was clearly excessive. In addition to censure, the attorney was directed to return all fees paid in excess of $7,500 and to reimburse the client for fees the client incurred in defending a collection lawsuit the attorney had instituted. Matter of Keiser, 263 AD2d 609, 694 NYS2d 189 (3d Dept 1999).
In a First Department decision, charging $250 hourly was found unjustified, given the attorney’s admitted lack of experience in the particular area (estates law). After seven prior admonitions and a censure, and now being charged with excessive billings, unjustified hourly rate, and having charged an estate for representation in another matter, the attorney was suspended for one year. In re Brashich, 304 AD2d 207, 759 NYS2d 445 (1st Dept 2003). See also, Matter of Lieberman, 244 AD2d 73, 674 NYS2d 737 (2d Dept 1998) (fee was 22% of a modest estate). See Annotation, 11 ALR 4th 133, Attorney's charging excessive fee as ground for disciplinary action.
In a Fourth Department case, an attorney who charged a “mixed” fee was disciplined. The attorney charged both the normal contingency percentage as well as his very high hourly rate. Matter of Buttarazzi, 304 AD2d 140, 760 NYS2d 100 (4th Dept 2003).
It appears that such an agreement (also called a modified contingency fee or hybrid fee) is proper, so long as it is reasonable and does not exceed the Appellate Division schedules (22 NYCRR § 1022.31 for wrongful death and personal injury actions). See NYS Bar Association Opinion 697 (1997).
Excessive fee vs. commingling
It should be apparent that charging an excessive fee is different from commingling or converting client funds, though some attorneys have managed to combine the concepts. See Matter of Myerson, 250 AD2d 41, 679 NYS2d 136 (1st Dept 1998); Matter of Darden, 240 AD2d 844, 658 NYS2d 718 (3d Dept 1997).
Under the rules for attorney fee disputes, the reasonableness of a fee may be determined in the fee arbitration setting. The attorney has the burden. 22 NYCRR § 137.7(d). See also, 22 NYCRR § 136.6 (arbitration for pre-2002 family law retainers).
What is billable?
For domestic relations cases, the Statement of Client Rights and Responsibilities provides: “Time spent in discussion or explanation of bills will not be charged to you.” Appendix, 22 NYCRR Part 1400.
In a personal injury case where the amount of compensation was determined by quantum meruit, the judge held that the time spent before signing the retainer and after discharge was not compensated. Meyer, Suozzi, English & Klein v Albin & Richman, PC, 196 Misc2d 159, 763 NYS2d 898 (Dist Ct 2003).
An attorney was disciplined for charging for time spent attempting to reverse a sanction imposed on the attorney personally. Additionally, the attorney charged for efforts to obtain court permission to withdraw from representing a client due to the client’s inability to pay the retainer; and charged for advising a court that he had been relieved as the attorney of record. Matter of Lebron, 246 AD2d 31, 675 NYS2d 378 (2d Dept 1998). See also, Matter of Napolitano, 232 AD2d 51, 662 NYS2d 56 (2d Dept 1997) (time spent responding to Grievance Committee).
© 2008 by Gary Muldoon