Suspension, Restitution Proposed For Excessive Fee
An Illinois Hearing Board has recommended that an attorney be suspended for four months and until she pays restitution in excess of $100,000
Respondent represented a client in a lawsuit involving a corporation owned by the client and two other persons. The lawsuit alleged the other owners misused corporate funds and deprived the client of her interest in the corporation. The fee agreement covered proceedings at the trial court level and provided for a one-third contingent fee, based on the recovery in the lawsuit. Judgment was entered for the client in the amount of $415,000. After the opposing party appealed, a second fee agreement was signed, which provided for a 40% contingent fee. The case settled for $315,000, and fees of 40% of the settlement amount were paid. After a discussion with the other attorney in Respondent’s firm, the client also paid the firm $106,563.26, representing 40% of her portion of the proceeds from the sale of a corporate asset, plus costs.
The Hearing Board concluded the proceeds from the sale of the asset were not funds from which fees could be legitimately taken under Respondent’s fee agreement with the client. Consequently, the Hearing Board found Respondent received an unreasonable fee. The Hearing Board concluded the Administrator did not prove Respondent engaged in any of the other misconduct charged. The second fee agreement was not improper, as it related to work not covered by the original agreement. The evidence did not establish Respondent made any misrepresentations or improperly failed to advise the client.
The Hearing Board found an excessive fee
In this case, a fee was collected which was clearly beyond the scope of the retainer agreement. The fee collected exceeded, by approximately $102,000, the amount to which Respondent’s firm was entitled under its agreement with Davis. The amount was significant, in general and to our sanction recommendation. Respondent was very involved with Davis’s case. She knew the terms of the retainer agreement with Davis. Respondent knew, very shortly after Cook received the check, this payment had been made. Respondent, one of only two shareholders in the firm, shared in the improperly collected fee.
On the other hand, we do not believe Respondent set out to cheat Davis or to do anything wrong. Respondent should have, but did not, recognize it was improper to take a fee based on the sale proceeds of the real estate. In the case as a whole, Respondent’s firm performed significant work for Davis. The extent of Respondent’s work and the good results obtained colored her perspective, and Respondent allowed herself to believe in a construction of the fee agreement even though it was clearly unreasonable. Davis paid the fees at issue, based on a misperception as to her liability for fees, but Cook, not Respondent, created that misperception and dealt with Davis regarding the fees.
The limited extent of Respondent’s proven misconduct, her lack of evil motives, the extensive work Respondent performed and the favorable results obtained in the case in which she represented Davis distinguish this case from the cases on which the Administrator relies. Given these differences, this case does not warrant a lengthy suspension. On the other hand, this case requires more than censure or a very brief suspension. The fee collected improperly exceeded $100,000. It should have been clear to Respondent that the contract with Davis did not provide for a contingent fee based on the proceeds of the sale of corporate real estate and that a fee taken based on such proceeds was improper. We are mindful of the public’s skepticism of fees charged by attorneys and the disciplinary system’s goal of maintaining the integrity of the profession.
(Mike Frisch)