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1.70 - C. Changing The MaXImum Percentages
Jurisdiction | New York |
c. Changing the Maximum Percentages
In extraordinary circumstances, these percentages can be changed upon application to the assigned judge.347 L must first establish inadequate compensation or financial detriment before the court will address extraordinary circumstances.348 If L believes himself to be entitled to contingent fees in excess of the scheduled percentages, he can provide for them in his contingent fee contract without infraction of the rule by stating that he believes in good faith that the scheduled percentages will not give adequate compensation and that application for greater compensation will be made to the court at the conclusion of the litigation or settlement of the claim.349 The court rules setting the contingent fee percentages in personal injury and wrongful death cases provide for such an application.350
L’s changing the percentages without court approval, however, forfeits the entire fee. For example, in a malicious prosecution case, C and her attorney L, who had represented her in all relevant criminal and civil actions, entered into a contingent fee retainer agreement which provided for L to receive the entire net recovery from the malicious prosecution action up to $12,000 as payment for fees incurred in representing C in the prior proceedings. The retainer agreement further provided that 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 to compensate L for his unpaid fees earned in defense of a previous criminal charge that had been brought against C. At the commencement of the trial of the malicious prosecution action, the trial court sua sponte declared the retainer agreement improper, disqualified L from representing C, and directed C to retain new counsel. The Second Department reversed the disqualification but affirmed as to the impropriety of the retainer agreement. The retainer agreement gave the attorney too great a proprietary interest in the client’s action and was unreasonable because it assigned to counsel 100% of the client’s recovery up to $12,000, divesting the client of her interest in the action.351
Where a contingent fee agreement provides for the fee to be calculated on the amount of the recovery “by settlement or judgment,” whether L may take a percentage of the amount that a third party has loaned to C is a question of law beyond the jurisdiction of the NYSBA Ethics Committee. A retainer agreement may...
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