180 A.D.2d 718 | N.Y. App. Div. | 1992
In an action, inter alia, to recover damages for malicious prosecution, the plaintiff appeals from (1) an order of the Supreme Court, Nassau County (Morrison, J.), entered June 1, 1990, which sua sponte determined that the contingent fee retainer agreement between the plaintiff and her attorneys violated Code of Professional Responsibility DR 2-106 (C) (1) and 5-103 (A) (2), disqualified the plaintiff’s counsel, and
Ordered that the appeal from the order entered June 1, 1990, is dismissed, without costs or disbursements, as no appeal as of right lies from an order entered sua sponte which does not determine a motion made on notice (see, CPLR 5701 [a] [2]; Kokalari v Kokalari, 166 AD2d 418); and it is further,
Ordered that the order entered July 25, 1990, is modified by (1) deleting the provision thereof which found that the contingent fee retainer agreement violated Code of Professional Responsibility DR 2-106 (C) (1) and (2) deleting the provision thereof which disqualified the plaintiff’s counsel, and by substituting therefor a provision striking the retainer agreement as violative of Code of Professional Responsibility DR 5-103 (A) (2) ; as so modified, the order is affirmed, without costs or disbursements.
The facts underlying the instant malicious prosecution action are set forth in the decision and order made upon the plaintiff’s prior appeal (see, Landsman v Moss, 133 AD2d 359). Pertinent to this appeal, the plaintiff and her attorneys, who have represented her in all relevant criminal and civil actions, entered into a contingent fee retainer agreement which provided, inter alia, for the attorneys to receive "the entire net recovery [from the malicious prosecution action] up to $12,000”. Thereafter, any recovery in excess of $12,000 would be split two-thirds payable to the plaintiff and one-third payable to her attorneys. This agreement was intended, by the parties, to compensate the plaintiff’s attorneys for their unpaid fees earned in defense of the assault charge unsuccessfully advanced by the defendant in the prior criminal action. When the parties appeared for trial of the malicious prosecution action, the court, sua sponte, determined that the above provisions of the contingent fee retainer agreement violated Code of Professional Responsibility DR 2-106 and 5-103 (A) (2). The court thus disqualified the plaintiff’s attorneys and directed her to retain new counsel.
Contrary to the determination of the Supreme Court, we find that the contingent fee retainer agreement is not violative of Code of Professional Responsibility DR 2-106 (C) (1). That disciplinary rule prohibits the use of contingent fee agreements to pay for representation of a defendant in a criminal action (see, e.g., People v Winkler, 71 NY2d 592). This rule is predicated, inter alia, upon a public policy disfavoring
The court was, however, correct to hold that the agreement violated Code of Professional Responsibility DR 5-103 (A) (2) as it caused the plaintiff’s attorneys to acquire too great a proprietary interest in the plaintiff’s malicious prosecution action. A lawyer may contract with a client for a reasonable contingent fee. The reasonableness of such a fee agreement is within the authority of the court to review (Gair v Peck, 6 NY2d 97; Beatie v DeLong, 164 AD2d 104). The agreement at bar is not reasonable because it effectively assigns to the plaintiff’s attorneys 100% of the plaintiff’s recovery up to $12,000, thereby divesting the plaintiff of her interest in the action. Should the plaintiff recover $12,000 or less, under the terms of the retainer she will not realize any net recovery. Moreover, under such an agreement there is a genuine risk that a conflict of interest could arise which might affect the attorneys’ ability to zealously represent the interests of their client. Accordingly, we agree with the Supreme Court’s determination that the retainer agreement violates Code of Professional Responsibility DR 5-103 (A) since it confers upon the plaintiff’s attorneys a potentially exclusive proprietary interest in the client’s case.
In view of the lengthy history of this action, we further conclude that it was improvident of the court to disqualify the