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Compensation for
legal services
Problem Areas in Legal Ethics
Arellano University School of Law Arellano Law Foundation
2015-2016
Cont
(f) The customary charges for similar services and the schedule
of fees of the IBP chapter to which he belongs;
(g) The amount involved in the controversy and the benefits
resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or
established; and
( j) The professional standing of the lawyer.
Cont
Rule 20.02 - A lawyer shall, in case of referral, with the consent
of the client, be entitled to a division of fees in proportion to
the work performed and responsibility assumed.
Rule 20.03 - A lawyer shall not, without the full knowledge
and consent of the client, accept any fee, reward, costs,
commission, interest, rebate or forwarding allowance or other
compensation whatsoever related to his professional
employment from anyone other than the client.
Rule 20.04 - A lawyer shall avoid controversies with clients
concerning his compensation and shall resort to judicial action
only to prevent imposition, injustice or fraud.
Rule 138
Sec. 24. Compensation of attorneys; agreement as to fees. - An
attorney shall be entitled to have and recover from his client no
more than a reasonable compensation for his services, with a
view:
1) to the importance of the subject matter of the controversy,
2) the extent of the services rendered, and
3) the professional standing of the attorney.
No court shall be bound by the opinion of attorneys as expert
witnesses as to the proper compensation, but may disregard
such testimony and base its conclusion on its own professional
knowledge. A written contract for services shall control the
amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.
Cont
Section 25, Rule 138 of the Rules of Court:
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Cont
Rule 16.04 - A lawyer shall not borrow money from his client
unless the client's interest are fully protected by the nature of
the case or by independent advice. Neither shall a lawyer lend
money to a client except, when in the interest of justice, he has
to advance necessary expenses in a legal matter he is handling
for the client.
This rule is intended to prevent the lawyer from taking
advantage of his influence over the client. Junio v. Atty.
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Non-payment of loan is a
violation of PCR not
misappropriation or embezzlement
Respondents liability is thus not for misappropriation or
embezzlement but for violation of Rule 16.04 of the Code of
Professional Responsibility which forbids lawyers from
borrowing money from their clients unless the latters interests
are protected by the nature of the case or by independent
advice. In this case, respondents liability is compounded by the
fact that not only did he not give any security for the
payment of the amount loaned to him but that he has also
refused to pay the said amount. His claim that he could not
pay the loan because circumstances . . . did not allow it and
that, because of the passage of time, he somehow forgot about
his obligation only underscores his blatant disregard of his
obligation which reflects on his honesty and candor.
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We have recently held that a client has always the right to settle
his cause of action and stop litigation at any stage of the
proceeding, subject, however, to the right of the attorney to
receive compensation for services rendered. - Aro v. The Hon.
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Quantum meruit
The principle of quantum meruit (as much as he deserves) may
be a basis for determining the reasonable amount of attorneys
fees.
Quantum meruit is a device to prevent undue enrichment based
on the equitable postulate that it is unjust for a person to retain
benefit without paying for it. It is applicable even if there was a
formal written contract for attorneys fees as long as the agreed
fee was found by the court to be unconscionable. - Atty. Orocio
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2 purposes of application
Quantum meruit
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Champertous contract
"1. On all commission or attorneys fees that we shall receive from our
clients by virtue of the collection that we shall be able to effect on
their accounts, we shall divide fifty-fifty. Likewise you are entitled to
commission, 50/50 from domestic, inheritance and commercial from
our said clients or in any criminal cases where they are involved.
We hold that the said agreement is void because it was tantamount
to malpractice which is "the practice of soliciting cases at law for the
purpose of gain, either personally or through paid agents or brokers"
Sec. 27, Rule 138, Rules of Court). Malpractice ordinarily refers to any
malfeasance or dereliction of duty committed by a lawyer. Section 27
gives a special and technical meaning to the term "malpractice" (Act
No. 2828, amending sec. 21 of Act No. 190). Tan Tek Beng v. David,
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Orocio v. Angulan et. al., G.R. No. 179892-93, January 30, 2009
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Funding litigation
[A]s long as litigation and access to the courts remain
expensive, then anyone who has a right that stands in need of
vindication should be able to obtain funding from anyone
willing to offer it and on whatever terms it is offered.
- Neuberger, From Barretry, Maintenance and Champerty to
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Retaining lien
Rule 138 Sec. 37. Attorney's liens. An attorney shall have a lien upon
the funds, documents and papers of his client, which have lawfully
come into his possession and may retain the same until his lawful
fees and disbursements have been paid, and may apply such funds
to the satisfaction thereof. He shall also have a lien to the same
extent upon all judgments for the payment of money, and executions
issued in pursuance of such judgments, which he has secured in a
litigation of his client, from and after the time when he shall have
caused a statement of his claim of such lien to be entered upon the
records of the court rendering such judgment, or issuing such
execution, and shall have caused written notice thereof to be delivered
to his client and to the adverse party; and he shall have the same right
and power over such judgments and executions as his client would
have to enforce his lien and secure the payment of his just fees and
disbursements."
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Charging lien
Rule 138 Section 37. xxx He shall also have a lien to the same
extent upon all judgments for the payment of money, and
executions issued in pursuance of such judgments, which he
has secured in a litigation of his client, from and after the time
when he shall have caused a statement of his claim of such lien
to be entered upon the records of the court rendering such
judgment, or issuing such execution, and shall have caused
written notice thereof to be delivered to his client and to the
adverse party; and he shall have the same right and power over
such judgments and executions as his client would have to
enforce his lien and secure the payment of his just fees and
disbursements."
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A lawyer may enforce his right to his fees by filing the necessary
petition as an incident of the main action in which his services
were rendered or in an independent suit against his client. The
former is preferable to avoid multiplicity of suits. - Pineda v. Atty.
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Case law
Mr. Culpepper sent Mr. Cole a letter in which he confirmed that
he would accept the representation on a contingent fee basis
of one-third "of whatever additional property or money we can
get for you.
After negotiation between Mr. Culpepper and counsel for the
estate of Mr. Cole's mother, Mr. Cole was offered property worth
$21,600.03 over and above what he would have received under
the terms of the decedent's will. Mr. Culpepper thought the
compromise was reasonable and recommended to Mr. Cole that
he accept the offer. However, Mr. Cole refused to settle his
claim for that amount, believing he was entitled to a larger
share of his mother's succession as a forced heir. When Mr.
Culpepper refused to file suit in the matter, Mr. Cole terminated
his representation.
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Decision
To allow Mr. Culpepper to recover a contingent fee under these
circumstances would penalize Mr. Cole for exercising his right
to reject the settlement. We find no statutory or jurisprudential
support for such a proposition. Indeed, this court has rejected
any interpretation of the Rules of Professional Conduct which
would place restrictions on the client's fundamental right to
control the case.
In summary, we find that Mr. Culpepper did not obtain any
recovery on behalf of Mr. Cole. In the absence of a recovery, it
follows that Mr. Culpepper cannot collect a contingent fee for
his services. - Culpepper v. Cole 929 So.2d 1224 [2006]
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2, 2009
I, do solemnly swear that xxx I will delay no man for money xxx.
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2002
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Duty of accounting
When a lawyer receives money from a client for a particular
purpose involving the client-attorney relationship, he is bound
to render an accounting to the client showing that the money
was spent for that particular purpose. If the lawyer does not use
the money for the intended purpose, he must immediately
return the money to his client. - Navarro & Presbitero, A.C. No.
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Change of attorney
Section 26 of Rule 138 of the Revised Rules of Court provides:
"Sec. 26. Change of attorneys -- An attorney may retire at any
time from any action or special proceeding, by the written
consent of his client filed in court. He may also retire at any
time from an action or special proceeding, without the consent
of his client, should the court, on notice to the client and
attorney, and on hearing, determine that he ought to be
allowed to retire. In case of substitution, the name of the
attorney newly employed shall be entered on the docket of the
court in place of the former one, and written notice of the
change shall be given to the adverse party.
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Withdrawal of counsel
A lawyer may retire at any time from any action or special
proceeding with the written consent of his client filed in court
and copy thereof served upon the adverse party. Should the
client refuse to give his consent, the lawyer must file an
application with the court. The court, on notice to the client
and adverse party, shall determine whether he ought to be
allowed to retire. The application for withdrawal must be
based on a good cause. - Orcino v. Atty. Gaspar, A.C. No. 3773.
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179892-93 [2009]
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179892-93 [2009]
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Limitations of a contingency
agreement
However, in cases where contingent fees are sanctioned by law,
the same should be reasonable under all the circumstances
of the case, and should always be subject to the supervision
of a court, as to its reasonableness, such that under Canon 20
of the Code of Professional Responsibility, a lawyer is tasked to
charge only fair and reasonable fees. - Atty. Orocio v. Angulan
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