Law Lessons from JUSTINE P. COLE V. JOSEPH R. COLE, BUDD LARNER, P.C., App. Div., A-1710-08T3, February 8, 2010:

The Attorney’s Lien Act provides that an attorney asserting a claim in a suit has a lien upon his client’s claim which attaches “to a verdict, report, decision, award, judgment or final order in his client’s favor.” N.J.S.A. 2A:13-5. Upon petition by the attorney, the trial court in the underlying action will conduct a plenary hearing to determine the lien. Levine v. Levine, 381 N.J. Super. 1, 9-10 (App. Div. 2005); see N.J.S.A. 2A:13-5 (stating that “[t]he court in which the action or other proceeding is pending, upon the petition of the attorney . . . may determine and enforce the lien”).

A client may be entitled to a stay of the adjudication of an attorney’s lien issue pending the outcome of a legal malpractice case, see id. at 268 (determining a fee arbitration award will be stayed where a substantial claim of legal malpractice is also pending), provided that the client seeks such a stay.

Ordinarily an attorney will not be able to collect fees for services that were negligently performed. Saffer v. Willoughby, 143 N.J. 256, 271-72 (1996). As a result, a fee arbitration award will be stayed pending the outcome of a related legal malpractice case provided the court finds a “substantial basis” for the legal malpractice action. Id. at 268.

The fee charged by an attorney “must be reasonable both as to the hourly rate and as to the services performed.” Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 280 (App. Div. 2001); see also RPC 1.5(a) (setting forth the factors to be considered when determining whether an attorney’s fee is reasonable).

Retainer agreements will ordinarily govern the client’s obligation to pay counsel fees “provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics.” Cohen v. Radio-Elecs. Officers Union, Dist. 3, 146 N.J. 140, 155 (1996). Such an agreement is enforceable “unless it 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.

As the court stated in Gruhin:

[A]lthough the court has the power and authority to review the fairness of the agreement and the reasonableness of the fee charged, it should ordinarily defer to the parties’ agreement and the fee charged thereunder if it appears, as here, that they meet a prima facie test of fairness and reasonableness, the client utterly fails to come forward with anything of substance to rebut that prima facie showing, and no expert is produced to challenge the bill rendered as unreasonable.

[Ibid.]

See related Blog Post, published in the New Jersey Family Law blog.

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