122 Misc. 2d 863 | N.Y. App. Term. | 1983
Lead Opinion
OPINION OF THE COURT
Judgment entered March 24, 1982 is affirmed, with $25 costs.
The plaintiff, under a retainer agreement dated June 6, 1977, retained the defendant attorney, and her “associates”, to represent him in proceedings arising out of his marital difficulties. The June 6,1977 agreement was in the form of letter from the plaintiff to the defendant and was printed on the letterhead of a law firm with which defendant was then associated. Paragraph 1 of the retainer agreement provided that defendant’s fee for representing the plaintiff was to be billed at $100 per hour, with the understanding that the ultimate fee might also reflect the
While the employment of an attorney by a client is largely governed by the contractual provisions of the retainer, elements of trust and confidence endemic in the attorney/client relationship add a dimension to the retainer beyond the terms of the retainer agreement. Thus it has consistently been held in this jurisdiction that irrespective of the express terms of employment, a client may at any time, for any reason, or without any reason, discharge his attorney (Gair v Peck, 6 NY2d 97; Martin v Camp, 219 NY 170). A necessary corollary of the rule that a client has an unfettered right to discharge his attorney at any time and for any reason is that the client, upon discharging his attorney, cannot be held liable for damages for breach of contract (Gair v Peck, supra; Martin v Camp,
The arguments made by defendant on appeal are similar to those made in the court below. She claims that the propriety of “nonrefundable” retainer agreements is demonstrated by their widespread use, especially among attorneys practicing matrimonial and criminal law. Defendant contends that since there is some authority for the proposition that legal fees, once paid to an attorney, may not be recovered by a client who has discharged the attorney without cause, at least where that was the implicit intent of the parties (citing Fellner v Zuckerberg, 202 Misc 611; Riehl v Levy, 43 Misc 59; Gross v Russo, 47 AD2d 655), it necessarily follows that where parties have, as here, expressly “agreed” to a “nonrefundable” retainer, that express agreement should be enforced. Defendant further argues that a “nonrefundable” retainer agreement provides an attorney with a permissible “minimum fee”, consideration for which is the attorney’s commitment to the client of availability. Indeed defendant suggests that the willingness to pay such a minimum fee makes it possible for a client to retain an attorney of particular renown and reputation.
That so-called “nonrefundable” retainer agreements are widely used by certain segments of the Bar is hardly dispositive of the issue now before this court. Defendant has cited no case in which the enforceability of a “nonrefundable” retainer provision was at issue, and we find none. We do not believe that Gross v Russo (supra), Fellner v Zuckerberg (supra) and Riehl v Levy (supra) are disposi
We view unenforceable any contractual provision which constrains a client from exercising his right to freely discharge his attorney. A retainer provision which requires a client to pay for legal services in advance, and which permits the attorney to retain the advance payment irrespective of whether the services contemplated are rendered, necessarily has a chilling effect upon a client’s right to freely discharge his attorney. Indeed the larger the amount of the so-called “nonrefundable” retainer, the more securely is the client held hostage to that payment.
Moreover, a “nonrefundable” retainer may be viewed as a mechanism for liquidating damages for discharging an attorney at the amount by which the payment made on account exceeds the actual value of legal services rendered. Since, as noted above, a client will not be cast in damages for discharging his attorney, imposition of damages in the form of a forfeited payment on account is unacceptable.
The court below in concluding that the reasonable value of the legal services rendered by the defendant was only $1,000, necessarily determined that the balance of the plaintiff’s $2,500 payment to the defendant, i.e., $1,500,
Accordingly, the judgment appealed from should be affirmed.
Dissenting Opinion
(dissenting). I do not agree that, absent patent unconscionability, a nonrefundable retainer agreement freely arrived at between an attorney and client is violative of public policy or the Code of Professional Responsibility.
The few cases in this department with any relevancy to this issue hold otherwise (Fellner v Zuckerberg, 202 Misc 611; Riehl v Levy, 43 Misc 59; Gross v Russo, 47 AD2d 655).
The other cases cited by the majority are clearly inapplicable as they deal with the accident case contingent fee retainer and not with cases wherein a client has paid a retainer.
Even Martin v Camp (219 NY 170,176), characterized by the majority as “landmark”, recognized the distinction between actions by discharged attorneys to recover on contingent fee retainers and actions concerning retaining agreements — particularly where the attorney entering into such a contract has changed his position or incurred expense.
The court in Greenberg v Remick & Co. (230 NY 70, 72) further qualified its holding in Martin (supra) stating:
“[i]t was not therein decided that a contract cannot be made between an attorney and client that is enforcible against the client.
“The compensation of an attorney or counselor for his services is governed by agreement express or implied which is not restrained by law. (Judiciary Law [Cons.
The court further held (230 NY, at p 75) that a contract’s enforceability will depend on whether the particular contract permits discharge without liability.
The facts herein concern a signed retainer agreement which expressly stated, and which the client admittedly read and was aware at the time, that the $2,500 retainer paid was nonrefundable and, as set forth therein, clearly constituted the minimum fee required to be paid in order to obtain defendant as his lawyer. Such retaining fee contracts are not novel but have been and are recognized as legal and enforceable. (7A CJS, Attorney & Client, § 282, p 522.) In sum, the plaintiff was free to accept or decline this proposed fee arrangement. He chose to accept it.
It is not the function of the court to oversee every fee agreement freely arrived at between the parties before the lawyer-client relationship is established. “Unless unreasonable upon its face, the contract, however, like any other contract is presumed to be fair until the contrary appears” (Rodkinson v Haecker, 248 NY 480, 489). Thus, the court’s only concern where fees have been agreed to is whether there was overreaching or the agreement was unconscionable. (Gross v Russo, 47 AD2d 655, supra.) The minimum retaining fee herein of $2,500 to retain a qualified specialist attorney does not in these inflationary times appear excessive or unconscionable as to warrant judicial intervention.
A better perspective on this entire issue is presented in Jacobs v Holston (70 Ohio App 2d 55), a decision of the Ohio Court of Appeals, which specifically concerned a nonrefundable retainer.
In considering the validity of such agreements, that court stated (supra, p 58): “We consider first the retaining fee for $2,500. The word ‘retainer’ may contain different connotations depending on the agreement, see 1 Speiser, Attorney’s Fees, 7, Section 1:4; American Jurisprudence 2d, 168, Attorneys at Law, Section 208; 7A Corpus Juris
In the case before us, the retainer fee was paid for accepting the case. On this aspect, the Ohio court further observed (70 Ohio App 2d, at p 59):
“Although doubtful or ambiguous agreements providing for a retainer are construed in favor of the client, see 1 Speiser, supra, at page 16, Section 1:11, we find that the retainer in this case was a nonrefundable retaining fee for accepting the case.
“The next issue is the fairness of the contract. While cases directly on point do not abound, it is the general rule, referred to in many text authorities, that, prior to employment and the formation of the fiduciary relationship, compensation for services may be fixed by contract; and, in the absence of fraud or overreaching, the contract will be enforced without the attorney showing it is fair and reasonable. See 1 Speiser, supra, at page 26, Section 1:22; 7 American Jurisprudence 2d, 169, Attorneys at Law, Section 210; 6 Ohio Jurisprudence 3d, 694, Attorneys at Law, Section 156.”
The court also considered the impact thereon of the Code of Professional Responsibility. Significantly, it did not conclude such agreements to be per se void. Rather, it permitted court intervention only if the client could prove the unreasonableness or unfairness of a particular agreement specifically stating (supra, p 60): “We hold that a contract made before employment places the burden on the client to establish the defense of the unreasonableness or unfairness. See Speiser, supra, at page 474, Section 18:12; 7A Corpus Juris Secundum 681, Attorney and Client, Section 346. This defense, while available to the defendants, also places upon them the burden of assertion and persuasion concerning the alleged ‘unreasonableness’ of the retaining fee.”
The plaintiff in the instant case upon the record presented has failed to sustain such burden as to the agreement he executed. While the court below touched on other issues in the case, its determination was primarily
Dudley, P. J., and Hughes, J., concur; Parness, J., dissents in a separate memorandum.