Be Careful What You Bargain For |
not actually receive the fee ). It was the fee agreement itself , with the fee calculated and quantified later , which violated the Rule in both cases . Query whether had the settlement or ultimate recovery in Fink been only $ 50,000 , would Rule 1.5 ( a ) have been violated ?
Unlike the Court in Sinnott , the Court in Fink cited the eight enumerated factors in assessing the reasonableness of the fee , stating : “ Respondent ’ s role did not require a large investment of time or labor . In addition , although he is an experienced lawyer , his tasks did not require specialized legal knowledge or legal experience .”
III . Hybrid Fee Agreements .
Hybrid or “ alternative ” fee agreements combine elements of a fee based upon a fixed rate of payment with a fee based upon a stated percentage or amount of a favorable outcome . The author found no cases or Advisory Opinions on point in Vermont , but found cases and commentary in other jurisdictions , notably New York and California . These jurisdictions have an abundance of sophisticated clients and businesses engaged in high stakes litigation and transactions , so it is unsurprising that fee agreements would naturally evolve in complexity and creativity , along with the business and litigation world itself . New York ’ s State
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Bar Committee on Professional Ethics addressed the issue as early as 1997 in N . Y . State Op . 697 ( 1997 ) and the Nassau County Bar tackled the same subject in Nassau County Bar Op . 99-4 ( 1999 ). N . Y . S . 697 addressed the issue of a reduced hourly fee combined with a “ modified contingent fee .” The State Bar Committee in that case stated : “ We believe a hybrid or modified contingent fee is permissible as a matter of ethics as long as the total fee is not excessive . This will usually mean that the contingency percentage will be lower than it would be if the fees were based on a pure contingency . Whether the hourly fee must also be reduced depends on whether the fee as a whole exceeds a reasonable fee .” 10 The author finds limited guidance here except the conclusion that hybrid fee agreements are not unreasonable , per se . 11
The Nassau County case , Op . 99-4 involved an employment discrimination claim . The Nassau County Committee cited an older Hulk Hogan assault case , Belzer v . Bollea ( a / k / a Hulk Hogan ) 150 Misc . 2d 925 ( 1990 ), and essentially followed and confirmed the earlier State Bar Committee position , finding that “ an attorney ’ s retainer agreement may provide for a combination of hourly , flat and contingent fees , but only if ( 1 ) the total fee is reasonable under all of the circumstances and ( 2 ) if the court rules apply in the particular case then the total
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fee does not exceed 33-1 / 3 % of the client ’ s net recovery .”
California indirectly addressed the issue in Arnall v . Superior Ct . ( Liker ). 12 In Arnall , a client was permitted to void a hybrid fee agreement , providing that the attorney ( Liker ) practicing in the areas of taxation and complex business transactions was to receive a monthly stipend and a “ success fee ” of 2 % of specified reductions in “ adverse economic impact ” and other “ economic savings ” resulting from his advice . For purposes of our discussion , the interesting aspect of Arnall is its holding that … “ the term “ contingent fee ” applies to such [ hybrid ] arrangements , as the amount of the resulting fee is conditioned upon some measure of the client ’ s success .” Thus , California followed New York ’ s position that any hybrid fee arrangement must also comply with court rules and in the Arnall case , California statutes , applicable to contingency fee agreements . Failure to do so may implicate Rule 1.5 ( a ) and allow a client to void an otherwise reasonable fee agreement .
IV . Practical Suggestions for the Vermont Practitioner
From review of the cases and commentary , the author has some practical suggestions for further consideration and research by practitioners .
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