In the absence of an express agreement as to the amount of their compensation, lawyers are entitled to reasonable attorney’s fees. The creation of a relationship of attorney and client by express or implied contract is essential to the right of an attorney to recover compensation for his or her services. In order for a person to be liable for the payment of attorney’s fees, that person must have either hired the attorney personally, or authorized someone to hire the attorney on his or her behalf.
Prior to the establishment of an attorney-client relationship, the parties may deal with each other at arm’s length, and the attorney may then contract with reference to compensation for his or her services. What an attorney charges for his or her services is generally a matter of agreement between him or her and the client, and such contract will govern the attorney’s fee.
When contracting for a fee the lawyer must explain at the outset the basis and rate of the fee; in addition, the lawyer should advise the client of potential conflicts, the scope of representation, and the implications of the agreement. Under the ABA Model Rules of Professional Conduct the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible must be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. A “true retainer,” also known as a “general retainer” or “classic retainer,” is paid by a client to the lawyer to secure the lawyer’s availability during a specified period of time or for a specified matter. An “advance payment retainer” consists of a present payment to the lawyer in exchange for the commitment to provide legal services in the future.
Section 5.4 of the Rules of Professional Conduct prohibits fee sharing in order to protect a lawyer’s professional independence of judgment in rendering services to another.However, under the Model Rules of Professional Conduct, the division of a fee between lawyers who are not in the same firm may be made under certain conditions.
Contingent fee contracts between an attorney and client are generally recognized as valid, and a true contingent fee has two components, namely: the payment is contingent on the outcome, and the fee is a percentage deducted from the client’s recovery. The right of the attorney to recover for his or her services is dependent on the happening of the contingency, and the precise event which was contemplated must happen. More specifically, absent a contrary agreement between the lawyer and the client, attorney’s fees pursuant to a contingency fee agreement is taken only when the client receives payment.
The primary purpose of contingent-fee contracts is to allow plaintiffs who cannot afford an attorney to obtain legal services by compensating the attorney from the proceeds of any recovery. An agreement between an attorney and client for a contingency fee cannot be implied, but must be expressly contracted for by the attorney and the client. Under the Model Rules of Professional Conduct, a contingent fee agreement must be in a writing signed by the client and must state the method by which the fee is to be determined, including the percentage or percentages that will accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated.
A statute may validly limit the fee which an attorney may charge or receive for prosecuting a claim, and typical of the statutes under consideration are those that limit a fee for prosecuting a claim under unemployment compensation acts, or medical malpractice provisions, although extraordinary circumstances may permit a contingency fee award in excess of a statutory mandatory maximum contingency fee for medical malpractice actions. The Federal government may prohibit the acceptance of an attorney’s fee for the representation of claimants under the Black Lung Benefits Act of 1972, except such fees as are approved by the Department of Labor. The courts in older cases have examined minimum fee schedules adopted by bar associations as at least persuasive evidence of what constitutes a reasonable fee for legal services.
In the absence of a controlling contract, statute, or rule of court fixing the amount of compensation, an attorney is entitled to the reasonable value of the services performed for the client, such reasonable value to be determined in the light of the particular circumstances of each individual case, and the trial court, where the services were performed in that court, has a large measure of discretion in fixing the reasonable value of the legal services. The most useful starting point for determining the amount of a reasonable attorney’s fee is a lodestar figure. The “lodestar method” of calculating attorney’s fees involves determining the number of hours reasonably spent on a case multiplied by a reasonable hourly rate.
As a general rule, an attorney may recover, on a quantum meruit theory, the reasonable value of the services rendered. The factors normally considered in assessing legal fees include time and labor required, difficulty of the questions presented, skill required to perform the services including the lawyer’s experience, ability, and reputation, amount involved, and benefit resulting to the client from the services. Also, in determining the reasonable value of an attorney’s services rendered without an express contract, it is proper for a judge or jury to consider the usual and customary fees for similar services in same community.
While an attorney ordinarily cannot look to one who has not employed him or her for payment of his or her fees, an exception to the rule that an attorney cannot recover fees from one who did not employ him or her or authorize his or her employment, is the private attorney general doctrine, under which a plaintiff’s attorneys are entitled to reasonable attorney’s fees where, as a result of their efforts, constitutional rights of societal importance are protected to the benefit of a large number of people. The purpose of the private attorney general doctrine, which is an exception to the usual rule that each party bears its own attorney fees, is to encourage suits enforcing important public policies by providing substantial attorney’s fees to successful litigants in such cases. Thus, in a class action by jail inmates seeking relief against the sheriff responsible for allegedly intolerable living conditions, an award of attorney’s fees to a civil rights organization was proper under the private attorney general doctrine, since the litigation served the public interest by vindicating strong public policies favoring the protection of constitutional rights. However, attorney’s fees will not be awarded under the private attorney general doctrine where the interests of the general public are only incidental to the primary objectives of the parties of protecting their interests. Eligibility for fees under the private attorney general fee statute is established when the plaintiffs’ action or defendants’ defense of that action has resulted in the enforcement of an important right affecting the public interest; a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons; and, the necessity and financial burden of private enforcement are such as to make the award appropriate.
Generally, an attorney may not recover legal fees from persons other than his or her client merely because such other persons might have benefited from his or her services. However, under the “common fund” doctrine generally, a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole. Under the “common fund doctrine” a court may award reasonable attorney fees to a party who, at his own expense, successfully maintains a suit for the creation, recovery, preservation, or increase of a common fund or common property; the attorney’s fees awarded pursuant to the common fund doctrine come directly out of the common fund created or preserved.
In some jurisdictions, an attorney appointed by the court to defend an indigent, in the absence of statute, cannot recover compensation from the public for his or her services. This rule is because an attorney, being an officer of the court, like other officers takes his or her office cum onere, and one of the burdens of office which custom has recognized is the gratuitous service rendered to a poor person at the suggestion of the court. In other jurisdictions however, an attorney appointed to represent an indigent defendant is entitled to compensation, even though no statute or court rule specifically provides for compensation.