Vol. 14, No. 5a, Pg. 26. Contingency fees and interest in collecting back child support and alimony.

• Author: By Gregory S. Forman

South Carolina Lawyer

2003.

Vol. 14, No. 5a, Pg. 26.

Contingency fees and interest in collecting back child support and alimony

26Contingency fees and interest in collecting back child support and alimonyBy Gregory S. FormanChild support and alimony collection are the only areas of family law that can be handled a contingency fee basis. Further, through the collection of judgment interest, the amount of past due support can sometimes be turned into a judgment that is more than double the amount of past due support. Through the use of contingency fees and interest calculations, an attorney can handle a collection matter in the family court without charging the client an up-front fee and can earn a very substantial fee while allowing the client to receive even more funds than the actual past due amount.

28 The fee agreement

Rule 1.5(d)(1) of the South Carolina Rules of Professional Conduct allows an attorney to represent a party to collect past due child support or alimony on a contingency fee basis. Any contingency fee agreement must be in writing. Rule 1.5(c), SCRPC. Since one's fee still needs to meet the reasonableness requirement, it is good form to offer the client to either pay a set retainer for handling the collection action or allow the matter to be handled on a contingency fee basis. However, many potential clients may not want to go to the expense of paying a retainer or incur the risk of an uncollectible judgment so often they will choose the contingency fee agreement. Doing so allows for the client to have a support collection case brought without having to come up with his or her own funds (after all, the client may be cash strapped by not receiving court-ordered support). It also allows the attorney to earn a substantial fee if successful results are achieved.

The interest calculation

The linchpin of this strategy is the addition of interest to the support arrearage. The case of Thornton v. Thornton, 328 S.C. 96, 492 S.E.2d 86, 96 (1997), held that each past due support payment is a judgment, and interest on arrears begins to accrue from the time that each payment becomes due. Judgment interest is 14 percent per annum prior to December 31, 2000, and 12 percent per year as of January 1, 2001. S.C. Code Ann. § 34-31-20.

There is an unresolved issue as to whether support payments due onor after January 1, 2001...