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 96-05
My law firm was consulted in the fall of last year by an old friend and client of mine whose sister had received serious injuries in an automobile wreck. I met with my friend and her sister. The sister was in the hospital and I did not ask her to sign a contract, but both of them authorized me and my firm to represent her in connection with the wreck on a contingency fee basis of twenty-five (25%) per cent of the amount recovered. During the meeting, we discussed the fact that we would need a written fee agreement. One was prepared and forwarded to my friends. We immediately undertook an extensive investigation and active representation of this injured lady. We employed an accident reconstruction expert to whom we have advanced a considerable sum. We have expended a great deal of time investigating this incident, negotiating with insurance carriers, effecting a sizeable discount of the health insurance subrogation and otherwise handling the case. After not receiving the signed fee agreement within several weeks, my office contacted my friend who stated that the agreement had been signed and mailed. We have now obtained a tender of all applicable insurance and have proposed a settlement for the plaintiff. Because the wreck arose out of the negligent operation of an automobile owned by a municipality, the South Carolina Tort Claims Act, and its limit of liability, apply. Because of the liability limit and the severe injuries sustained by the plaintiff, the total amount of insurance is inadequate to compensate the plaintiff fully for her injuries. Our repeated attempts to locate the fee agreement and replace it has been of no avail. Even though we have obtained a huge discount of the health insurance subrogation lien and have offered to reduce our fee by one-half in order to provide more net proceeds to the plaintiff, she and her sister are so frustrated by the lack of available funds, they have ceased any contact with us and do not respond to any communication. We have even been able to arrange for the plaintiff to collect her entire underinsurance benefits, which are substantial in this case, from which we would expect no fee. We have kept costs to a minimum. If these tenders are refused, we fully expect the insurance carriers to interplead their money and would not expect the case to ever be tried. We have explained all of this to our clients fully, but at this point, we have received no response. We are unable to proceed with the case. No litigation has been commenced.
1) Should we terminate our representation of the plaintiff? If so, how? 2) Can we recover any of our fees or costs if the representation is terminated? If so, how? 3) Do we have any further duty to the plaintiff?
Summary:
1) If you continue to disagree with the client as to the course of handling the case, you should terminate the representation by writing to the client and giving reasonable notice and information. 2) You can request recovery of fees and costs. Whether you are able to collect is a matter of substantive law. 3) If the client is competent, you owe no further duty.
Opinion:
1) Although, as discussed below, you may not have been formally retained by the plaintiff, you should consider terminating any representation in accordance with South Carolina Appellate Court Rule 407 Paragraph 1.16 (hereafter "Rule"). It appears that you consider not accepting the amounts being tendered to be imprudent. Consequently, you would have grounds to withdraw under either Rule 1.16(b)(3) or 1.16(b)(6). Since litigation has not been commenced and the matter is not therefore before a court, we would advise writing a full letter to the client (not her sister), setting forth the situation and notifying the client that you intend to withdraw and take no further action if you do not hear from the client by a certain date, allowing a reasonable time to respond. 2) Rule 1.5(c) requires that a contingency fee be in writing. Since you apparently do not have a written fee agreement with this client, any claim for recovery of fees or costs may be on a quantum meruit basis. Whether or not you are able recover these is a matter of substantive law, beyond the purview of this committee. There is no ethical prohibition to requesting fees and costs of the client. Retaining any portion of the file pursuant to Rule 1.16(d) may not be advisable in the absence of a written contingency fee contract. 3) If you believe the client is incompetent, the provisions of Rule 1.14 may apply. Since it does not appear that the client is under any disability in this case, you will owe the client no further duty once the suggestions of paragraph (1) above have been followed.