Contingency Fee Recovery After Withdrawal or Discharge

  The rules on fee recovery by an attorney after withdrawal or discharge in a contingency case depend on two things: 1) who initiated the separation; and 2) why. When a client discharges an attorney the courts have adopted a bright line rule – the attorney is entitled to a reasonable fee against any recovery. In this circumstance whether the attorney was discharge for cause, or not, makes no difference; the attorney is entitled to recover the reasonable value of his services rendered to the time of discharge.

  The rules are more complex when an attorney withdraws without having been discharged by the client. In this circumstance, the attorney’s right to fees will depend on whether the attorney had “justifiable cause so as to permit a recovery of compensation.” If the attorney had just cause, the attorney may be entitled to reasonable fees to the date of discharge; otherwise, the attorney’s claim for fees will fail because an attorney who withdraws without justifiable cause may not recover any attorney’s fees under a contingency fee agreement. [This post concerns attorney’s fees only, not an attorney’s right to recover costs pursuant to a written fee agreement or valid attorney lien.] Continue reading

$1000+/Hour Attorney Fees

   The Justice Department’s U.S. Trustee Program is asking law firms, whose billing rates approach or exceed $1000/hour in Chapter 11 reorganization cases, to justify their rates according to the Wall Street Journal. The rates allowed professionals in the Lehman Brothers bankruptcy to be paid more than $1.4 billion according to the WSJ article.