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Judge: Miami Law Firm’s Contingency Fee Ruled ‘Excessive’

LegalLaw

On October 16th, 2019, a United States Bankruptcy Court judge ruled that a Miami law firm’s fees were “excessive”, declining to enforce a lien against a legal recovery. The case (In re: Miami Beverley, LLC) centered around a creditor—Miami Development & Holdings LLC—that switched its legal counsel in the middle of bankruptcy proceedings.

Excessive Fees By Law Firm Not Enforceable

Initially, Miami Development signed a contingency fee agreement that would give 50 percent of the total recovery to the law firm. Notably, the agreement called for a 50 percent contingency, and legal representation was switched in the middle of the proceedings.

Eventually, after switching legal representation, the creditor did recover nearly $225,000. Their original law firm attempted to obtain half of the recovery in accordance with the language of the contingency fee agreement that was signed by both parties. However, a judge disallowed the recovery—stating that the agreement violated the Florida Bar rules on excessive fees. For its part, the Miami-based law firm is appealing the decision.

Florida Bar Rule Rule 4-1.5(a): Limits on Fees  

Under Florida Bar Rule Rule 4-1.5(a), attorneys are prohibited from charging clients excessive fees in exchange for legal representation. What constitutes an excessive fee is not always clear. The specific circumstances of the case must be assessed. The Florida Bar states that the following factors will be considered in reviewing the validity of legal fees:

  1. The complexity of the case;
  2. The time and labor required in providing legal representation to the client;
  3. The opportunities that the attorney/law firm will miss out on as a result of offering representation;
  4. The standard rate of fees charged for similar services by other legal professionals in the same local area;
  5. The experience, demonstrated skills, and professional reputation of the lawyer; and
  6. The extent to which a client’s ability to pay rested on the outcome of representation.

The last point is extremely important: The Florida Bar is especially concerned with transparency and disclosure. Hourly billing rates are less likely to be considered impermissibly excessive since clients can better assess the total cost of representation. Though, misleading a client about the amount of hours needed to provide adequate representation could present a problem.

Still contingency fee are more strictly regulated. Generally, contingency fees in Florida are capped by the Bar Association at 40 percent, unless there are unique circumstances and prior approval. Attorneys and lawyers should take care to clearly disclose fees to clients. Transparency can go along way towards limiting the risk of a bar complaint. 

Get Legal Guidance From a Florida Bar Complaint Defense Lawyer

At Pike & Lustig, LLP, our West Palm Beach bar complaints & grievances attorneys have the skills and experience to protect the legal rights and professional interests of legal professionals. If you are facing a bar complaint or grievance, we can help. Call us now for a confidential consultation. With office locations in Miami and West Palm Beach, our law firm represents attorneys throughout South Florida.

Resource:

leagle.com/decision/inbco20191018663

https://www.turnpikelaw.com/florida-supreme-court-finds-lawyer-guilty-of-professional-misconduct-rejects-a-referees-conclusions/

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