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Ambiguous retainer agreements drafted by Maryland attorneys

Mets’ manager, Casey Stengel, famously stated: “Can’t anybody here play this game?”  The same can be said of Maryland attorney’s ability to draft a concise retainer agreement.  An attorney has a duty to draft a retainer agreement that is clear and comprehensible to a client.  Mallen & Smith, 1 “Legal Malpractice” (2009 ed.) § 2:10, p. 125 (“Elements—Clarity: Engagement agreements should be written to be understandable by the client”).

When a retainer agreement is ambiguous, it must be construed against the drafter.  Ford Motor Credit Co. v. Jackson 328 Md. 188, 334 (1992) (“it is a canon of contract construction that ambiguities in the contract are to be construed against the drafter because that party had the better opportunity to understand and explain its meaning”); Suburban Hospital, Inc. v. Dwiggins 324 Md. 294, 306 (1991) (“If there is an ambiguity in a document, the drafter—in this case, Suburban—will have the ambiguity construed against it”).

Here are two example of ambiguous retainer agreements drafted by Maryland attorneys.

          A.      CONTINGENCY FEE

This Retainer Agreement provided that the law firm was entitled to receive either a one-third or 40% contingency fee:  “Attorney is hereby retained on a contingent basis and is to receive an amount equal to thirty-three and 1/3 percent (33 1/3%) of any amount which is recovered for Client by settlement.  Attorney is hereby retained on a contingent basis and is to receive an amount equal to forty percent (40%) of any amount which is recovered for Client by suit or arbitration”.   The personal injury case was settled prior to trial.  Was the attorney entitled to a one-third or 40% contingency fee?

The word “recover” has two meanings.  Its broad meaning is “to get back or regain (something lost or taken away)”.  Random House College Dictionary (1980 rev. ed.), p. 1104.  But “recover” also has a narrow meaning in the context of jurisprudence: “to obtain by judgment in a court of law”.  Id.

Black’s Law Dictionary (5th ed.) also recognizes that the word “recover” has both a broad and narrow meaning: “To get or obtain again, to collect, to get renewed possession of, to win back.  To regain, as lost property, territory, appetite, health, courage.  In a narrow sense, to be successful in a suit, to collect or obtain amount, to have judgment, to obtain a favorable or final judgment, to obtain in any legal manner in contrast to voluntary payment”.

This Retainer Agreement is ambiguous as to whether the one-third or 40% contingency fee applies.

B.       ATTORNEY’S FEE PROVISION

This Retainer Agreement contained a fee-shifting provision when the attorney sues the former client for unpaid invoices: “In the event that we find it necessary to initiate appropriate legal actions against you to collect unpaid debts owed to the Firm, you will be responsible for the reasonable attorney’s fees and expenses associated in the collection of any debt based upon our usual hourly rates”.

In an unreported opinion, the Maryland Court of Special Appeals found that this provision was ambiguous, because it had two different meanings: (1) the law firm had the right to be reimbursed for the work its employees performed in collecting a debt against the client for the legal services performed in the underlying case; or (2) that the law firm is only permitted to seek reimbursement for fees incurred in retaining an outside counsel in collecting the debt against the former client for legal services performed in the underlying case.

Generally, law firms do not include a fee shifting provision in their retainer agreements.  First and foremost, a pro se law firm does not incur any attorney’s fees in collecting its debt against a former client.   “A lawyer who represents himself or herself has not incurred legal fees”.   Frison v. Mathis 188 Md.App. 97, 109 (2009).  Secondly, a fee-shifting provision would create a dysfunctional incentive for a pro se law firm to protract and over-litigate its claims against its former client.

 

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Law Office of Stewart Andrew Sutton, LLC
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