Monday, April 9, 2007

And, Speaking of Fees ...

Last week, the Appellate Division, Second Department, held unanimously that an attorney may recover fees for work performed in a non-matrimonial action even in the absence of a retainer agreement or letter of engagement as required by 22 NYCRR 1215.1. The case is Seth Rubenstein, P.C. v. Ganea.

Since 2002, New York has required attorneys in non-matrimonial actions to obtain a retainer agreement or letter of engagement from the client which specifically sets forth the terms of the representation. In Ganea, the attorney entered into a verbal agreement with the client (shortly after the Rule went into effect) to represent her in connection with a guardianship proceeding involving her husband. The lower court awarded the attorney a guardianship fee and held that such fee award barred further recovery. Both parties appealed. The Appellate Division rejected the client's argument that no payment was due because of the lack of a retainer agreement or letter of engagement. The court held that the attorney could pursue the amount claimed due since nothing in 22 NYCRR 1215.1 contained a penalty for non-compliance, and that a client could obtain an unfair windfall if strict adherence to the Rule were required. The client's testimony that she was aware that the attorney's services were not rendered on a pro bono basis is noteworthy. The Appellate Division opined that the result in Ganea would have been different had this been a matrimonial matter since there are extremely strict disciplinary requirements in those cases.

However, this case is not a bed of roses for attorneys. As the Appellate Division noted, with a verbal agreement, it could be very difficult for an attorney to prove the terms of the retention and to establish that they were fair, understood, and agreed upon. It just goes to show you ... an agreement is only as good as the paper on which it is written.

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