I've been in a car accident, I hired a lawyer to negotiate with the insurance company, after about a year, I went to another attorney to handle the case. Now I've signed to settle with the insurance company, but when I call my current attorney to get the check, he tells me that the insurance company sent the check to my former attorney, and then asks me to call him and negotiate to get him to release the check. I'm so confused, can he do that? is that legal? what are my rights?
From the Massachusetts Board of Bar Overseers site:
Take the common scenario where a client who changed lawyers had signed a one-third contingent fee agreement with each lawyer. The second lawyer, who resolved the case, is holding the client’s proceeds and wants to take her full contingent fee from those proceeds before making distribution to the client. But the discharged lawyer, whose work on the case contributed to the successful outcome, also wants to be paid for his services. The discharged lawyer most likely cannot collect a contingent fee. He is, however, entitled to be paid in quantum meruit for the reasonable value of his services, typically figured on an hourly basis. Opert v. Melios, 415 Mass. 634, 636-637 (1993); Salem Realty Co. v. Matera, 384 Mass. 803, 804 (1981).
This situation raises several questions. How does the first lawyer get paid, especially where he cannot establish a charging lien on the proceeds under G.L. c. 221, § 50, because the case was never put in suit? Can both lawyers enforce their fee claims in full even if the client will end up paying more than the one-third originally contemplated? Or must the payments to both lawyers be limited to a total of one-third of the gross recovery as specified in each lawyer's contingent fee agreement? If so, how is the fee apportioned between the two lawyers, and is the second lawyer responsible for paying the discharged lawyer from her own share?
Although there are no definitive answers to these questions in Massachusetts, the Supreme Judicial Court provided some guidance in Malonis v. Harrington, 442 Mass. 692 (2004). Malonis, the discharged lawyer, had started a lawsuit for his client, done considerable investigation and discovery before his discharge, and “contributed materially to the resulting $57,500 settlement” obtained by the second lawyer, Harrington. Id. at 699. Indeed, the tortfeasor, a self-insurer, had already decided to offer that amount before the client terminated Malonis’s services, although that offer was not communicated to Malonis.
Malonis noticed a lien under G.L. c. 221, § 50, after the discharge but then failed to respond to Harrington's requests for an itemized statement of services and charges. When Harrington subsequently settled the case, he assured the tortfeasor’s lawyer that he would “take care of” Malonis. Malonis v. Harrington, supra at 695. As a result, the tortfeasor issued settlement checks to the client and Harrington but did not include Malonis as a payee. Harrington claimed a fee of $17,500, representing a small reduction from the one-third specified in his fee agreement with the client.
Malonis claimed hourly fees of about $10,300. Malonis, the client and the tortfeasor all understood that Harrington had assumed responsibility for compensating Malonis from his contingent fee. Harrington nevertheless refused to pay anything to Malonis and further refused Malonis’s offer to resolve the dispute through fee arbitration. Malonis then sued Harrington, the client and the tortfeasor to recover his fee, although the client and the tortfeasor were later dropped from the action.
The Court reaffirmed that, although a lawyer’s right to collect under his contingent fee agreement is generally terminated by his discharge, the client ordinarily retains an obligation to compensate the discharged attorney for the fair and reasonable value of his services. Malonis v. Harrington, supra at 696 697, 701 n. 12. Here, however, the Court determined that Harrington had actually assumed this obligation and, on that basis, ordered Harrington to pay Malonis from his own fee.
In determining that Harrington was directly liable to Malonis, the Court emphasized that its holding did not announce new law but rather was limited to the specific circumstances presented, including, in particular, the reasonable expectation of all the affected parties that Harrington had taken responsibility for paying Malonis. Malonis v. Harrington at
In most states, a client can change attorney's at any time for any reason. In contingent fee cases, typically the new attorney calls the old attorney when the cases is settled and agrees on some division of the fees according to the amount of work each attorney put in on the case.
So your new attorney should call and work it out with the old attorney.
Your fees should not be increased just because you changed attorney's
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