UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 02-08
Client, in Maryland hospital, communicates by telephone she desires to retain Lawyer A's services for car wreck, which occurred in Maryland. Lawyer A travels from South Carolina to Maryland, consults with Client who executes a contingency retainer. Lawyer A takes photos of Client and Client's car while in Maryland. Time spent on the case in Maryland consumed about seven hours. The trip from South Carolina to Maryland took approximately eight and one-half hours, as did the trip back. After returning, Lawyer A did an additional eight hours of work on the file over a one and one-half to two months' period. In total, Lawyer A spent thirty-two hours of work on the case.
Client then retained new counsel, Lawyer B, and instructed Lawyer A to discontinue services and to turn file over to Lawyer B. Lawyer A sent a letter to Lawyer B indicating that he would gladly release the file upon receipt of a letter of protection for statement of expenses incurred and fee (32 hours times an hourly rate fee of $100). Lawyer B and Client refuse to provide letter of protection.
Questions:
1. May Lawyer A withhold Client's file until Client or her new lawyer provides a letter of protection of expenses and fee?
2. May Lawyer A charge Client on an hourly basis for time spent on case with contingency fee agreement? If so, may Lawyer A include time he spent for travel to see Client in another state if the trip was made at Client's request?
Summary:
1. Lawyer A should not withhold Client's file but should promptly deliver the file to Client as requested.
2. Lawyer A should not charge Client on an hourly basis for time spent on the case, unless the contingency fee agreement to which Client agreed expressly provided for such an arrangement.
Opinion:
Under Rule 1.16(d) of the Rules of Professional Conduct, when a lawyer is dismissed or withdraws from the representation of a client, he or she "shall take steps to the extent reasonably practicable to a protect a client's interests, such as . . . surrendering papers and property to which the client is entitled . . . ." Id. The rule further allows an attorney to "retain papers relating to the client to the extent permitted by law." Id
Although the South Carolina Supreme Court has recognized that "an attorney's assertion of a retaining lien is not a per se" ethical violation, the attorney must still "consider whether the assertion of a retaining lien in a particular case would be unethical." In re an Anonymous Member of the South Carolina Bar, 287 S.C. 250, 252, 335 S.E.2d 803, 804 (1985) (Anonymous). The Court "warned that the attorney bears the burden of showing the circumstances justify assertion of a lien because 'the client is financially able but deliberately refuses to pay a fee that he has clearly agreed upon and is due.'" Matter of Tillman, 319 S.C. 461, 464, 462 S.E.2d 283, 285 (1995) (quoting Anonymous at 253, 335 S.E.2d at 805) (emphasis added in Tillman).
In his Ethics Watch column, John Freeman warns, "Though the ethics rule recognizes that the layer may have a right to withhold documents in order to assert a retaining lien, good lawyers understand that retaining liens are for the birds. The value of the lien to the lawyer is in direct proportion to the misery visited on the client, revealing a patent conflict of interest. Assertion of the lien invites a grievance." Turning Over "The File," S.C. LAW., July-Aug. 1998 at 10.
There are several factors an attorney should consider if he or she contemplates retaining a client's file and asserting a retaining lien:
(1) the client's financial situation;
(2) the client's sophistication;
(3) the reasonableness of the fee;
(4) the client's clear understanding and agreement to pay the amount of the fee owed;
(5) whether imposition of the lien would prejudice important rights of the client or other parties;
(6) whether failure to impose the lien would result in fraud or gross imposition by the client; and
(7) whether there are any other less stringent means to resolve the dispute or secure the fees owed.
Tillman at 464, 462 S.E.2d at 285; Anonymous at 252, S.E.2d at 805.
Based upon the facts as presented, none of the factors cited above appear to favor Lawyer A's retaining Client's file; several factors oppose such an action. Client intends to file an action or claim for the injuries that she incurred in the accident. Failure to provide the information contained in Client's file could very well prejudice her right in this action.
Moreover, in the case at hand, Lawyer A had a contingency fee agreement with Client. There is no information presented that this agreement allowed Lawyer A to charge an hourly rate for any time spent on the case. There is also no information presented that "the client is financially able but deliberately refuses to pay a fee that [s]he has clearly agreed upon and is due." Id. See also Matter of White, 328 S.C. 88, 92-93, 492 S.E.2d 82, 84-85 (1997) (Court held that retaining a client's file in order to have "a general assurance that whatever interest he may have would be protected" was an improper basis upon which to assert a lien where the record was clear that it "was not a situation where the client knew how much was owed and deliberately refused to pay it.") As such, Lawyer A should not withhold Client's file until or unless Client provides him with a letter of protection for his fees; rather, Lawyer A should promptly deliver the file to Client as requested.
With some exceptions inapplicable to the situation at hand, an attorney's fee can be based either upon an hourly or contingency fee basis. Rule 1.5(b) provides that "[w]hen the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing before or within a reasonable time after commencing the representation." In the case at hand, Lawyer A did enter into a fee agreement with Client, a contingency fee agreement. There is nothing in the facts presented to show that the fee agreement included a provision to allow Lawyer A to charge Client on an hourly basis for time spent on the case. As such, Lawyer A cannot charge Client by the hour for the time he invested in the case or withhold Client's file if Client refuses to pay.
While the Committee does not answer questions of substantive law, it notes for Lawyer A's benefit that depending on the language of the agreement he has with Client and the ultimate outcome of Client personal injury case, he may, however, be able to recover in quantum meruit for the reasonable value of the services that he rendered to Client.