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When is a contingency fee earned in Maryland?

In Maryland, retainer agreements for personal injury cases typically state that the attorney will receive one-third of  the monetary amount recovered  via settlement or judgment.  The attorney fee is earned only upon the occurrence of the contingency.  Depending upon the precise language of the retainer agreement, the contingency may either be (1) the execution of the settlement agreement; (2) the receipt of the settlement check; or (3)  the deposit of the settlement check into the attorney’s trust or a Maryland IOLTA account.

If the client fires his or her personal injury attorney prior to the occurrence of the contingency, the personal injury is no longer entitled to a contingency fee.  If the attorney was discharged for cause or substanial misconduct, such as failure to communicate with the client, the attorney is not entitled to any fees.  If the client terminated the attorney due to his or her good faith dissatisfaction with the attorney, such as the belief attorney was not pursuing the case in an aggressive manner, the attorney is entitled to only a reasonable fee (quantum meruit) after the contingency occurs.    If the attorney is fired without cause or in bad faith or the attorney withdraws with justification, then the attorney is immediately entitled to receive only a reasonable fee (quantum meruit) for the services that were performed.  Scamardella v. Illiano 126 Md.App. 76, 95-96 (1999).  A reasonable fee for a discharged attorney can never exceed the agreed upon contingency fee amount.   First Union National Bank of Maryland v. Meyer, Faller, Weisman & Rosenberg, P.C. 125 Md.App 1, 24 (1999)

The issue as the amount the client owes the attorney in quantum meruit can be resolved through settlement negotiations or by litigation.  Typically, the former attorney will assert a lien on the settlement by notifying the former client and the defendant (or his attorney or insurance carrier) of the lien and its amount via certified mail or personal delivery.  See Maryland Rule 2-652(b) and Business Occupations and Professionals Article Section 10-501.  Maryland Rule 2-652(c) provides the mechanism that allows the former client and former attorney to litigate in Circuit Court the attorney’s entitlement to a lien and the amount that the attorney is entitled to receive.

 

 

 

Articles
Article by Stewart A. Sutton featured in the Maryland Bar Journal:
Emotional Distress Damages - Recoverable in Legal Malpractice Actions
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Law Office of Stewart Andrew Sutton, LLC
8 Executive Park Court
Germantown, Maryland 20874
Telephone: 301-916-5000
Fax: 301-916-1201
E-Mail:
stewart.andrew.sutton@gmail.com