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October 28, 2019

Supreme Court to consider fee-shifting provisions in retainer agreements

The New Jersey State Bar Association (NJSBA) argued that the Appellate Division engaged in improper rulemaking when it held that an attorney was obligated by the Rules of Professional Conduct to communicate clearly that his fee structure was different from what other attorneys might offer, in that the plaintiff would be obligated to pay regardless of the success of her case. Edward Zohn argued the matter on behalf of the NJSBA as amicus curiae in Balducci v. Cige, Docket A-3068-16T2. The brief was written by Zohn, William E. Denver, and past NJSBA president Thomas H. Prol.

The underlying matter challenges the validity of a retainer agreement of attorney Brian Cige, who handled a matter for the son of the plaintiff, Lisa Balducci. Balducci signed a retainer agreement that proposed a fee of either the greater of an hourly rate, 37.5 percent of the net recovery or the statutory fees, by settlement or award. Balducci terminated the attorney-client relationship and received a bill for fees and expenses in the amount of nearly $287,000.

In the published decision of the Appellate Division, it was held that Cige was obligated by the Rules of Professional Conduct to communicate clearly that his fee structure was different, in that the plaintiff would be obligated to pay regardless of the success of her case. The court further held that attorneys must tell clients that if a case becomes too complex, an hourly rate-based fee could approach or even exceed any recovery, and advise of other attorneys who would represent the client on a purely contingency fee basis.

Arguing that the decision will have a substantial impact on solo and small firm practitioners, the NJSBA argued that the new ethical mandates for attorney fee-shifting cases should not be upheld.

“If attorneys are either induced into representing clients in fee-shifting cases solely on contingency, or are forced to find and suggest other attorneys who would, the Appellate Division’s understandable desire to ensure that clients are compensated for economic and non-economic loss will be turned on its head,” wrote the NJSBA.

The NJSBA further underscored the inappropriateness of amending the Rules of Professional Conduct in this manner, without pursuing the full vetting of a proposed change that would be afforded by the Court Rules review process.

NJSBA Town Hall Highlights NJSBA Advocacy Through Section and Committee Involvement

Leading into the NJSBA Fall Open House, the Town Hall Advocacy continuing legal education program “From Idea to Law: A Practical Discussion With Legislators” features a panel discussion on the impact of advocacy on the practice of law. The NJSBA welcomes Senator Linda R. Greenstein, Assemblyman Erik Peterson, Assembly Republican Counsel Kevin Logan, and NJSBA Treasurer Timothy McGoughran. Listen to them share their experiences with how to make policy into law and how it impacts the practice of law and your clients.

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