Hello everyone and welcome to this edition of the JACPA Ethics Alert. This Alert will discuss the very recent Florida 4th DCA case wherein the court found a termination of services clause in a probate contingent fee to be unenforceable and a violation of Florida Bar Rule 4-1.5. The case is Guy Bennett Rubin, P.A. v. Guettler — So.3d —-, 2011 WL 4577670 (Fla. 4 DCA October 5, 2011).
In Rubin v. Guettler, the law firm took a probate litigation case on a contingency fee basis and was subsequently fired by the client without cause. The probate litigation was then apparently abandoned by the client before any recovery was obtained; however, the law firm sued the client and requested that the trial court enforce a clause in the fee agreement requiring the client to pay for services provided prior to the discharge, which clause is set forth below.
“In the event I discharge the firm prior to resolution by judgment or settlement, or if I elect to no longer pursue the Anticipated Claims as identified herein-below, I agree to immediately thereafter pay LAW FIRM accrued hourly legal fees based upon the hourly rates as follows: Services of Guy Bennett Rubin $500/hr., all other attorneys $400/hr., all paralegals $150/hr., all legal assistants $100/hr. listed in paragraph 4 immediately above.”
The trial court granted summary judgment against the lawyer finding that the clause resulted in a penalty in violation of Florida Bar Rule 4-1.5 and was not enforceable as a matter of law. The law firm appealed.
The 4th DCA agreed with the trial court stating that “(a) termination-of-services clause in a contingency-fee agreement, which provides for the client to pay the discharged law firm for all services rendered up through the date of termination at the prevailing hourly rate for firm members, if the client abandons or dismisses the claim, violates rule 4–1.5 on its face. The Florida Bar v. Hollander, 607 So.2d 412, 414 (Fla.1992). The opinion also cited to The Florida Bar v. Doe, 550 So.2d 1111 (Fla.1989). In that Bar discipline case, the Florida Supreme Court stated that “(a)n attorney cannot exact a penalty for a right of discharge.”
The 4th DCA opinion also rejected the lawyer’s argument that he was entitled to quantum meruit since an action for quantum meruit “arises only upon the successful occurrence of the contingency. If the client fails in his recovery, the discharged attorney will similarly fail and recover nothing (citation omitted).” Since the trial court found that there was no evidence that the plaintiffs received anything as a result of the litigation they had dismissed their claims against the estate and recovered nothing, the contingency did not occur and the lawyer was not entitled to quantum meruit.
Bottom line: Florida lawyers should be very wary: Florida Bar Rules and Florida case law unequivocally prohibit penalty/termination of services/discharge clauses in contingency fee matters such as the one in this case.
Be careful out there!
As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, do not hesitate to contact me.
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