October 2, 2009
LINDA S. MCCOURT, PLAINTIFF-RESPONDENT,
BRIAN J. MCCOURT, DEFENDANT-RESPONDENT.
IN THE MATTER OF BUDD LARNER, P.C., APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-760-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 16, 2009
Before Judges Fisher and Espinosa.
Petitioner Budd Larner, P.C., ("Budd Larner") filed an attorney fee lien pursuant to N.J.S.A. 2A:13-5 against its former client, Linda McCourt ("McCourt") in the amount of $56,515.28. Budd Larner appeals from an order entered by the trial court that reduced its attorney fee lien by establishing the amount of counsel fees due and owing by its former client as $26,210. We affirm.
This is the second time this attorney fee lien has come before this court. The full procedural history need not be repeated in order to address the issues raised on appeal.
Budd Larner represented McCourt in her matrimonial action from September 2007 until March 2008. Budd Larner filed a motion in March 2008 "to Recognize Attorney Withdrawal and to Enforce Contended Attorney Fee Lien Pursuant to N.J.S.A. 2A:13-5" in the amount of $56,515.28. At that time, Budd Larner was holding $48,837, one-half of the proceeds from the sale of the marital home, in its trust account. In May 2008, Budd Larner sought leave to appeal on an emergent basis from two orders of the trial court that, in part, required Budd Larner to transfer $45,000 of the funds it held to defense counsel without a decision on Budd Larner's motion for an attorney lien. Citing Levine v. Levine, 381 N.J. Super. 1, 9 (App. Div. 2005), this court reversed and directed that the matter "proceed as a plenary suit to be tried . . . to a judge of the Family Part."
After conducting a plenary hearing over the course of seven days, the trial court determined that the amount due and owing to Budd Larner for fees and costs was $26,210 and entered judgment in that amount. The court denied the request for prejudgment interest but permitted post-judgment interest. As to the disposition of the escrowed funds, the court ordered that, pending further orders of the court, Budd Larner could retain $26,210 in an interest-bearing escrow account but was directed to forward the balance of the escrowed funds to counsel for Brian McCourt for retention in a separate trust account.
In an eight-page written opinion, the trial court analyzed the fees sought pursuant to the factors identified in R.P.C. 1.5(a) in accordance with Rosenberg v. Rosenberg, 286 N.J. Super. 58 (App. Div. 1985). The court found that the hourly rates charged were "consistent with those of equal experience in the profession" and that "the services were rendered as stated on the billing sheets." The court viewed "the only question" as "whether the fees were fair and reasonable." The court addressed each of the R.P.C. 1.5(a) factors and, among its conclusions, noted the following: There was nothing novel or unusual about the case. The case was in the same position at the end of Budd Larner's representation as it was when representation was commenced. No issue had been affected other than the negotiation of a release of $10,000 to McCourt. The court gave full credit to those fees that involved "contact with an adversary, contact with the Court or mediator, Court appearances and the review of the custody report and business evaluation," a total of $13,710. The court disallowed disbursements, explaining that they were billed "without any identification as to the nature of those disbursements." The court also removed charges for the preparation of documents, including a Case Information Statement and a pendente lite motion that were never filed or shared with the client and "did not advance her interests." The court also excluded charges for an associate's attendance at two settlement conferences attended by the responsible partner, noting that neither the associate's preparation nor attendance benefited McCourt and that she had not requested his attendance.
After the trial court denied Budd Larner's motion to stay the portion of the order that required it to forward the balance of the escrowed funds to counsel for Brian McCourt, Budd Larner sought leave to appeal from the order and a stay of the turnover provisions. This court granted the motion for leave to appeal and denied the motion for a stay.
Budd Larner raises the following points on appeal:
IN ORDER TO GIVE FULL FORCE AND EFFECT TO PETITIONER'S ATTORNEY FEE LIEN RIGHTS PROVIDED BY N.J.S.A. 2A:13-5A, A STAY MUST BE GRANTED.
LEAVE TO APPEAL SHOULD BE GRANTED IN THE INTERESTS OF JUSTICE.
THE TRIAL COURT ABUSED ITS DISCRETION OR OTHERWISE ERRED AS A MATTER OF LAW BY REFUSING TO ENFORCE CRITICAL TERMS IN PETITIONER'S WRITTEN FEE RETAINER AGREEMENT AND IMPOSING ITS OWN SUBJECTIVE VIEW OF THE "REASONABLE VALUE" OF PETITIONER'S SERVICES RENDERED ON PLAINTIFF'S BEHALF.
THE TRIAL COURT ABUSED ITS DISCRETION BY NOT ESTOPPING DEFENDANT FROM ASSERTING AT THE PLENARY HEARING A POSITION INCONSISTENT WITH HIS SWORN CERTIFICATION FILED FOUR (4) MONTHS EARLIER IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW JERSEY.
THE TRIAL COURT ABUSED ITS DISCRETION BY REFUSING TO ENFORCE THAT PART OF PETITIONER'S FEE RETAINER AGREEMENT REQUIRING PLAINTIFF TO PAY FOR DISBURSEMENT CHARGES INCURRED ON HER BEHALF TOTALING $2,524.86.
THE TRIAL COURT ABUSED ITS DISCRETION BY REFUSING TO ENFORCE THAT PART OF PEITITIONER'S FEE RETAINER AGREEMENT REQUIRING PLAINTIFF TO PAY INTEREST COMPUTED AT THE RATE OF 12% PER YEAR COMPOUNDED MONTHLY ON AMOUNTS OVER 30 DAYS DUE.
SUMMARY DISPOSITION IS WARRANTED FIXING PETITIONER'S ATTORNEY FEE LIEN IN THE CONTENDED SUM OF $56,515.28 (INCLUSIVE OF DISBURSEMENTS), WITH INTEREST COMPUTED AT THE AGREED UPON RATE OF 12% PER YEAR COMPOUNDED MONTHLY ON AMOUNTS OVER 30 DAYS DUE, AND ENTRY OF AN ORDER DETERMINING THAT THE ESCROW FUNDS HELD BY PETITIONER BELONG TO PLAINTIFF AND FROM WHICH PETITIONER SHALL BE PERMITTED TO IMMEDIATELY SATISFY AS MUCH OF ITS LIEN AS THE FUNDS ALLOW.
As noted, the issues raised in the first two points were resolved through prior orders of this court.
Budd Larner argues that the trial court abused its discretion regarding the issues raised in Points III, IV, V and VI. Although the trial court held a plenary hearing over the course of seven days to determine the amount of the fees that should be the subject of the attorney's lien requested, Budd Larner has not provided this court with transcripts of the hearing. At oral argument, counsel acknowledged that a conscious decision was made not to order the transcripts of the plenary hearing because the firm concluded that it would not be cost-effective to order them. Counsel also acknowledged that such transcripts would have been required for a factual analysis of the record and a determination as to whether the court abused its discretion in deciding the reasonable value of the services rendered and that unspecified disbursements and prejudgment interest should not be subject to a lien. Instead, Budd Larner argues that the trial court's decision must be reversed because it was an abuse of discretion as a matter of law for the court to review the reasonableness of the fees charged.
The argument can be summarized as follows. Budd Larner's retainer agreement with McCourt imposed an obligation upon the client to acknowledge the "acceptability of invoices and to promptly report billing/payment concerns." It is Budd Larner's contention that by failing to report any billing concerns as required by the retainer agreement, McCourt waived the right to challenge the reasonableness of the fees thereafter, including at a fee arbitration pursuant to Rule 1:20A-3 and in litigation such as this. Given this waiver, Budd Larner argues that once the court found that Budd Larner's billing rates were reasonable and that the billed services had been performed, the court was required to find that a lien for the entire amount claimed was appropriate, including claims for disbursements and interest.
As legal support for this argument, Budd Larner relies upon authority that retainer agreements are legally enforceable contracts. E.g., Cohen v. Radio-Electronics Officers Union, 146 N.J. 140, 156 (1996). This is so, "provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics" Ibid.
When contracting for a fee, therefore, lawyers must satisfy their fiduciary obligations to the client. The lawyer must explain at the outset the basis and rate of the fee. In addition, the lawyer should advise the client of potential conflicts, the scope of representation, and the implications of the agreement. [Ibid. (emphasis added).]
The Court explicitly instructed that "[a] retainer agreement may not provide for . . . the unreasonable waiver of the clients' rights." Ibid.
The question whether it is unreasonable per se to include a waiver of the right to challenge an attorney's fees need not be considered here because the language of the retainer agreement relied upon by Budd Larner fails to provide for such a waiver:
VI. YOUR OBLIGATION TO ACKNOWLEDGE ACCEPTABILITY OF INVOICES AND TO PROMPTLY REPORT BILLING/PAYMENT CONCERNS
In a further effort to avoid possible billing and fee payment disputes, periodically (e.g., monthly) the Firm will ask you to acknowledge in writing that you have received the Firm's invoice(s), that you agree with the services and charges set forth therein, and that you reaffirm your agreement to pay same. . . .
If at any time you are displeased or dissatisfied with the services rendered by the Firm, or have any questions concerning any services rendered, disbursements incurred, or invoices generally, it is your responsibility to promptly notify, in writing, the Firm's accounting department or the attorney primarily responsible for the handling of your matter to discuss same. In the event the Firm does not hear from you in a timely manner (e.g., within 21 days of the date of the enclosure letter), it will be assumed that the services rendered and disbursements incurred are deemed by you to be acceptable, reasonable and necessary toward your representation. [(Emphasis added).]
The only consequence identified for failing to provide written notice of a dispute is that "it will be assumed" that the client deems the services and disbursements "acceptable, reasonable and necessary." The agreement does not explain the "implications of the agreement," as construed by Budd Larner, as required by Cohen, supra, 146 N.J. at 156. Specifically, the agreement does not advise the client that she is waiving her right to challenge the reasonableness of the fees if she does not dispute them in writing within twenty-one days. We do not decide whether the waiver claimed by Budd Larner would be enforceable if such advice had been given. However, the failure to so inform the client forecloses the argument that McCourt waived any challenge to the reasonableness of the fees thereafter.
While deference to the parties' agreement and the fees charged may be appropriate, the court retains "the power and authority to review the fairness of the agreement and the reasonableness of the fee charged." Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 281 (App. Div. 2001). The very statute that provides for the lien sought by Budd Larner states that the court "may determine and enforce the lien." N.J.S.A. 2A:13-5. Where, as here, the client does not request fee arbitration, that determination is made by the court after conducting a plenary hearing. Musikoff v. Jay Parrino's the Mint, L.L.C., 172 N.J. 133, 140 (2002); see also, Levine, supra, 381 N.J. Super. at 11. It is entirely appropriate for the court to consider whether the agreement "is overreaching or is violative of basic principles of fair dealing or the services performed were not reasonable or necessary." Gruhin, supra, 338 N.J. Super. at 281. The trial court here applied the factors set forth in R.P.C. 1.5(a), in accordance with Rosenberg, supra, 286 N.J. Super. at 65-66, in determining the reasonableness of the fees for which Budd Larner sought a lien. Neither the fact of review nor the standard applied constituted an abuse of discretion. As a result, the request for summary disposition is moot.
We find insufficient merit in Point IV to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
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