There are large differences in the hourly rate among attorneys.  In Montgomery County, the rate for family lawyers range from about $150 per hour to $425 per hour.  But did you know that there is an even larger discrepancy in their fix rates to draft a simple separation agreement?  I asked eight local firms how much would they charge to prepare a separation agreement for a client who had no children, no home, no debts, and no retirement account.   I received price quotations from a reasonable $750 to an astronomical $3,950 to draft a simple separation agreement.  The average amount was $1,512.   To reduce the risk of being overcharged, I recommend that clients schedule free consultations with at least 3 attorneys before retaining one.

Contingency fee agreements usually state that the attorney will receive a higher percentage if the case is appealed after trial.  In a reported decision, a  D.C. jury awarded an accident victim $1 million.  The defendant appealed and then the parties entered into a post-judgment settlement.  The issue was whether the attorney was entitled to a higher contingency fee, because an appeal had been filed.  The D.C. Arbitration Board found that the attorney was not entitled to a higher percentgage contingency fee, because the appeal had been voluntarily dismissed pursuant to the post-judgment settlement.

1. You are entitled to receive a written contingency fee Retainer Agreement (“fee agreement”) from your attorney. The written contingency fee agreement should not contain any legal jargon, ambiguous terms, or confusing language. If you do not understand the fee agreement, do not sign it.

2. You have the right to negotiate a reasonable contingency fee percentage with your personal injury attorney. The following may be a reasonable fee structure, depending upon the nature of your case:
a. One-quarter (25%) if the matter is resolved without litigation;
b. One-third (33.33%) if the matter is settled after filing a lawsuit but before trial; and
c. Forty percent (40%) if the matter is actually tried.

3. In negotiating a contingency fee agreement, the following factors favor reducing the attorney’s contingency fee percentage:
a. That it is clear that the defendant was at fault for causing your injuries, such as your vehicle was rear ended;
b. The defendant has liability insurance, which will pay for your damages;
c. That the defendant’s insurance carrier has already or is likely to concede that its insured was at fault for causing your injuries;
d. That is beyond dispute that the incident caused your injuries, such as trauma from a vehicle collision;
e. That your personal injury case does not involve any novel or complex issues;
f. That your attorneys will not spend much time or effort working on your case; and/or
g. You do not have a pre-existing relationship with the attorney.

If the attorney is unwilling to negotiate a reasonable fee structure with you, then walk out of his or her office. If you have a meritorious case, you will find another attorney to represent you.

4. You have the right to terminate your personal injury attorney at any time for any reason. If your attorney does not return your messages or provide you with regular updates on the status of your case, you should fire your attorney sooner rather than later.

5. You have the right to review all pleadings filed by your attorney and the opposing party. You have the right to review all correspondence exchanged between your attorney and the opposing party’s attorney.

6. Your attorney must promptly inform you of all material developments, such as the opposing party has conceded negligence.

7. Your attorney must forward to you all settlement offers made by the opposing party. Your attorney cannot make a settlement demand on your behalf without your authority.

8. At a settlement conference or mediation, you always have the right to request that your attorney reduce his or her fees in order to facilitate a settlement. If the opposing party is offering to settle your claim for $60,000 and you want a net recovery of $45,000, you have the right to request that your attorney reduce his or her contingency fee from one-third (33.33%) to one-quarter (25%).
Most attorneys will voluntarily reduce his or her fees to facilitate a settlement. If your attorney is unwilling to reduce his or her fees to facilitate a settlement, you have the right to terminate your attorney.

9. After your case is resolved, you have the right to receive a detailed accounting from your attorney regarding litigation expenses and the disbursement of the settlement or judgment proceeds.

10. You have the right to contest whether your attorney’s contingency fee is reasonable after his or her fee is quantified. An attorney is never entitled to an excessive fee. For example, if your personal injury case settles within several months of the filing of your lawsuit, a one-third (33.33%) contingency fee may no longer be reasonable, because the attorney performed much less work than originally expected.

11. You have the right to request that your attorney attempt to reduce your medical bills and medical liens. If you did not have health insurance, you have the right to contest the reasonableness of your medical bills and/or whether you have a statute of limitations defense. If you had health insurance, your health insurer’s subrogation lien should be reduced by one-third pursuant to Maryland Courts & Judicial Article 11-112.

12. You have the right to report your attorney’s unethical conduct to the Maryland Attorney Grievance Commission.

“Block billing” is when an attorney provides no description or an inadequate description of the work performed.  For example, the attorney might have an entry on the invoice that states “case work” or “reviewed email”.    Such billing entries are insufficient, because they do not inform the client of either the nature of the legal services performed, the source and nature of the communication, nor why the work was reasonably necessary.  

When an attorney block bills, the attorney may face difficulties in seeking to recover legal fees based on either contract or quantum meruit.

A proper invoice from an attorney should be in a format that is clear and should be reasonably particular regarding the nature and the necessity of the legal services performed.

For the fiscal year ending on June 30, 2009, the Client Protection Fund of the Bar of Maryland paid out $975,874 on 62 claims against 41 attorneys.  The reimbursement to defrauded clients ranged from $199 to $315,785.   Just 3 attorneys accounted for 57% of the $975,874 in claims paid.

The Client Protection Fund collects $20.00 from every Maryland attorney each year as an assessment.  The Fund currently has a reserve of $7 million.   The Fund limits an individual claim to 10% of its reserve.

It is unethical for an attorney’s retainer agreement to limit the attorney’s liability for legal malpractice.  Rule 1.8(h) of the Maryland Rules of Professional Conduct forbids an attorney from executing a retainer agreement that prospectively limits the lawyer’s liability to a client for malpractice, unless the client is independently represented in entering into the agreement.    For similar reasons, an arbitration clause contained in a retainer agreement is unenforceable, unless the client had obtained independent representation concerning the advisability of signing the retainer agreement.

The Montgomery County Bar Association offers binding arbitration to resolve fee disputes between clients and their attorneys.   The Bar Association will appoint a pro bono attorney to represent the client in the arbitration.   Both parties have to agree to participate in the arbitration; and the decision of the arbitrator(s) will be binding.

Legal malpractice can occur even when the attorney has successfully represented a client.   This occurred in Bijou v. Young-Battle 185 Md.App. 268 (2009).    Andrienne Young-Battle was bitten on the hand by a dog owned by Leila Bijou.  Young-Battle retained counsel and sued Young-Battle for $250,000.   The jury returned a verdict in the amount of $504,480, including $311,000 in loss earnings as a graphic designer.    At this point, Young-Battle’s attorney should have requested that the Court amend her $250,000 damage demand to conform with the $504,480 verdict.   But he didn’t.   The result was that the Court reduced the $504,480 judgment to $250,000.   The attorney’s malpractice cost the client $254,480. 

Queries:  Do you think that Young-Battle’s attorney was entitled to receive one-third of the reduced $250,000 verdict?   If Young-Battle’s attorney had malpractice insurance that covered the $254,480 in damages, was the attorney entitled to receive one-third of $504,480 as fees?

When a personal injury victim does not have health insurance, some medical providers will treat the victim as long as the victim and his or her attorney execute an “Assignment & Authorization”.  This document provides that the medical provider will be paid from the proceeds of the patient’s personal injury settlement or judgment.   If the patient does not receive a settlement or judgment, the patient is still responsible for his or her medical bills.

Both personal injury lawyers and physicians abuse “Assignments and Authorizations”.   If the client has health insurance coverage, the attorney should never refer the client to a physician who will only provide treatment pursuant to an “Assignment and Authorization”.    The reason why is that physicians bill patients without insurance double to triple the amount that they charge patients with insurance.   Even worse, most personal injury attorneys do not attempt to negoitiate a reduction of the medical provider’s excessive charges.    Such a failure on behalf of the personal injury attorney may constitute legal malpractice.

In personal injury cases, attorneys usually agree to represent the client in exchange for one-third (33.33%) of the gross recovery.  This is known as a contingency fee.    For the attorney’s contingency fee agreement to be enforceable, it must reasonable at the time the attorney was retained in relationship to the expected difficulty of the case.   In other words, it would be unreasonable for an attorney to charge a client in excess of one-third, unless there are extraordinary circumstances.    An excessive contingency fee  agreement is not enforceable. 

One Court explained why: “[A] fee agreement between lawyer and client is not an ordinary business contract.  The profession has both an obligation of public service and duties to clients which transcend ordinary business relationships and prohibit the lawyer from taking advantage of the client.  Thus, in fixing and collecting fees the profession must remember that it is a branch of the administration of justice and not a mere money getting trade”.   Matter of Swartz 686 P.2d 1236, 1243 (Ariz. 1984)

The reasonableness of the contingency fee must also be determined after the case is resolved.   For example, a one-third contingency fee may become unreasonable if the attorney spent  only a few dozen hours in obtaining a settlement.  In such situations, the attorney should voluntarily agree to reduce his or her fees so that the attorney does not receive an unwarranted windfall. 

In Maryland, a contingency fee agreement of 50% or more is both unethical and unenforceable, because an attorney is not allowed to have too great an interest in the client’s case.

If the attorney’s fee agreement is unenforceable due to excessiveness, the attorney is only allowed to recover the reasonable value of  the legal services rendered.   The reasonable value of the attorney’s services is usually substantially less than the contingency fee.