A Philadelphia attorney received a public reprimand from the Disciplinary Board for failing to follow her own fee agreement when distributing proceeds to her client. The Disciplinary Board found that Venus Foster executed a fee agreement with her client that provided for reimbursement of her expenses plus a contingent fee of 33.3% of the amount recovered. The fee agreement failed to specify whether the contingent fee would be calculated on the gross recovery or the net recovery after expenses. Upon conclusion of the case, she issued to the client a settlement statement asserting a contingent fee of 40% of the gross recovery, and billed the client for an overpayment based on sums advanced.
The Disciplinary Board found that the fee agreement failed to comply with Rule 1.5(c) of the Rules of Professional Conduct, based on the failure to clarify whether the contingent fee was calculated on gross or net proceeds. In addition, the Board concluded that Foster charged an excessive fee in violation of Rule 1.5(a), and failed to explain the nature of the fee agreement to the extent necessary to allow the client to make an informed decision, in violation of Rule 1.4(b). The Board also found other violations relating to the advancement of expenses and the way Foster handled the funds.
The case provides a valuable reminder to lawyers on several points:
The lawyer must draft the fee agreement with care, to assure that it provides guidance for both lawyer and client as to how reasonably foreseeable situations, such as the incurring of expenses, will be handled in the calculation of the fee;
The lawyer should not simply put the fee agreement in front of the client, but must explain the fee agreement to the client in understandable terms, to be sure the client will not be surprised by the way the fee is calculated at the conclusion of the case; and
Finally, the lawyer needs to review the fee agreement at the time when calculation of the fee takes place, to assure that the distribution of funds occurs consistent with what the fee agreement provides, and not what the lawyer recalls.