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Hughes v. Eisner

April 20, 1950



JAYNE, J.S.C. The ancient doctrine of maintenance and champerty has had an interesting statutory and decisional lineage. In the passage of time the doctrine has lost most of its original animation and rigor. Indeed as early as 1792 it was determined to be "inapplicable" to the policy of this state. Schomp v. Schenck, 40 N.J.L. 195 (Sup. Ct. 1878). It seems, too, that courts of equity, from the earliest times, regarded the doctrine as "absurd" and declined to adopt it. Master v. Miller, 4 T.R. 320.

The present case projects for judicial consideration the propriety of a contingent fee agreement. The validity of such contracts has been sustained by the courts of this State.

Hassell v. Van Houten, 39 N.J. Eq. 105 (Ch. 1884); Wilson v. Seeber, 72 N.J. Eq. 523 (Ch. 1907); Soper v. Bilder, 87 N.J. Eq. 564 (Ch. 1917); Metropolitan Life Ins. Co. v. Poliakoff, 123 N.J. Eq. 524 (Ch. 1938); American Automobile Ins. Co. v. Niebuhr, 124 N.J. Eq. 372 (Ch. 1938); Marsh v. Murphy, 129 N.J. Eq. 302 (E. & A. 1941); In re Archdeacon, 134 N.J. Eq. 535 (Prerog. Ct. 1944).

Concisely stated, the relationship between an attorney and his client is conceived to be of a confidential and fiduciary nature. Thus, a court of equity may inquire into the fairness and reasonableness of a contract entered into by them during the period of such relationship concerning the compensation of the attorney for his professional services, and it may, if warranted, exercise its power to revise or indeed cancel such a contract. Brown v. Bulkley, 14 N.J. Eq. 451 (Ch. 1862); Porter v. Bergen, 54 N.J. Eq. 405 (E. & A. 1896); Kelley v. Schwinghammer, 78 N.J. Eq. 437 (Ch. 1911); Raimondi v. Bianchi, 100 N.J. Eq. 448 (Ch. 1926); reversed, 102 N.J. Eq. 254 (E. & A. 1928); Grimm v. Franklin, 102 N.J. Eq. 198 (Ch. 1928); affirmed, 146 A. 914 (E. & A. 1929); Proff v. Shirvanian, 110 N.J. Eq. 639 (Ch. 1932); Dwyer v. Anderson, 113 N.J. Eq. 210 (Ch. 1933); Lewis v. Morgan, 132 N.J. Eq. 343 (Ch. 1942); Bolte v. Rainville, 138 N.J. Eq. 508 (E. & A. 1946); Steiner v. Stein, 2 N.J. 367 (Sup. Ct. 1949).

A canon of professional ethics adopted by the American Bar Association in 1908 states:

"A contract for a contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness."

In such an inquiry, the attorney must assume the burden of establishing that the agreement was obtained in good faith and upon full disclosure, that the stipulated remuneration was fair and reasonable in the circumstances, and that he performed the services contemplated. Brown v. Bulkley,

supra; Grimm v. Franklin, supra; Bolte v. Rainville, supra. See, also, Shoup v. Dowsey, 134 N.J. Eq. 440 (Ch. 1944).

In weighing the fairness of the contingent fee, consideration must be given to such relevant elements as the hazards of the litigation implicating the uncertainty of the attorney's compensation, the difficulties, legal and factual, of sustaining the cause of action such as the novelty of the issue, the character and extent of the professional services contemplated and performed, the expenses disbursed, the time devoted, the result achieved through the efforts of the attorney, such as the amount of damages recovered, the experience, skill and professional standing of the attorney.

It was explained in Soper v. Bilder, supra, that "There is no yardstick by which the value of legal services can be measured; no rate per diem or percentages can be employed with justice to both parties. The legal ability of the attorney, the amount of work which he does, the skill with which he does it, and, of much importance, the amount involved, and the success of his efforts. There may also be considered the contingency that in case he is unsuccessful he will receive nothing, and the fact, if it be a fact, that the fund was created through the efforts of the attorney."

Whether the financial inability of the client to pay a retainer and to defray the expense of the litigation is also a factor to be considered is a subject concerning which there is a diversity of authority.

Basically, however, there must be in these cases some similarity of balance in the appreciation of the rights of the respective parties notwithstanding the position of superiority which the attorney is deemed to occupy. While an attorney will not be permitted to take an unfair advantage of his client, similarly a client will not be allowed to take an improper advantage of his attorney.

It was in 1938 that the plaintiff concluded that he had contracted a form of pneumoconiosis, more generally known as silicosis, while in the pursuit of his employment by Eureka

Flint & Spar Company, Inc. On August 5th of that year he consulted the defendant and engaged him in an effort to obtain some recompense from his employer for his affliction.

A memorandum bearing that date is expressive of the initial engagement. It reads:

"I, Thomas W. Hughes, residing at 1029 South Olden Avenue, Trenton, New Jersey do hereby retain Rudolph Eisner as my attorney to represent me in connection with my claim against Eureka Flint & Spar Co., Inc., Trenton, New Jersey for damages due to contraction by me of Silicosis while employed by said firm. I further agree to pay him out of the proceeds of any recovery, whether by settlement, suit or otherwise, reasonable compensation for his services. Any settlement which he shall make shall be subject to my approval, ...

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