NYSBA Committee on Professional Ethics
Background: A law firm represents a client in a domestic relations matter. The client has a balance due to the firm for services performed, and the firm believes that the client will not be able to pay the balance until she receives a final judgment for support. After consulting an actuary, the actuary advised that the firm should charge three times its rate to compensate for the risk of non-payment. The firm asked whether it may renegotiate with the client its retainer agreement to include this increase in fee, or whether it may get a security interest in the client’s share of the marital property, or whether it may have the client agree to file a confession of judgment as the fees accumulate.
Opinion: In a matrimonial matter, the likelihood of nonpayment of the legal fee does not alone justify charging a multiple of the firm’s normal hourly rates. The lawyer may obtain a confession of judgment from the client for legal fees already earned or take a security interest in property of the client to secure fees and expenses. Also, the lawyer may request a client to amend a retainer agreement.