COMPENSATION OF ATTORNEY

RIGHT TO ATTY’S FEES

- The fact that the practice of law is a profession and not a money-making
trade does not operate to deny a lawyer the right to atty’s fees for his
professional services.
- He has the right to recover fair and reasonable compensation for his
services, except where he has agreed to render service gratuitously or
appointed as counsel de officio

- Compensation should be a mere incident of the practice of law, the

primary purpose is to render public service

- Being primarily an officer of the court charged w/ the duty of assisting the
court to render impartial justice, what a lawyer may collect as his fees is
always subject to judicial control

- In fixing his fees, always remember that practice of law is a profession,

not a business; avoid controversies w/ clients concerning compensation
and should resort only to lawsuits to prevent injustice, imposition or fraud

Right to protection for counsel fees

Requisites for right to accrue

- w/ atty-client relationship
- rendition by lawyer of services to the client
o services over the objection of client not entitled to recover fees
even if redounded to client’s benefit; objection should be before
beneficial services rendered, otherwise, he shall pay-based on
equity
o there should be a professional contract, express or implied
o written agreement not necessary

non-lawyer not entitled to fees

- requirement of atty-client relationship

o ie. agreement bet. Union lawyer & layman to divide legal fees is
illegal and immoral
o agreement for the payment to the widow and heirs of deceased
lawyer percentage of fees to be received from future business of
clients is prohibited because such payment will not represent
service performed

restriction on some lawyers to charge fees

- by reason of govt position – not practice law and charge fees

- charged w/ the duty to extend free legal services to indigent litigants
o except token compensation allowed by the rules
- local elective official may appear as counsel in any admin prcdg before a
local govt agency but prohibited from charging fees
fees may be affected by the conduct of the lawyer during litigation

- misconduct; except on honest mistake

- unceremonious w/drawal negates compensation
- dual representation (conflict of interest)

CONTRACT FOR ATTY’S FEES

- may be oral or in writing

o fees may be either absolute or contingent;
o may be a fixed percentage of the amount recovered in the action;
o contract may call for a down payment;
o provide fee per appearance, per piece of work or an hourly basis;
o may be a combination of these arrangements

- written retainer : if lawyer is dismissed by client w/o cause, may recover

full amt; w/o written agreement, may recover only reasonable worth of
services up to the date of his dismissal

- kinds of retainer fees

o general retainer or retaining fee – fee paid to a lawyer to secure

beforehand his services as general counsel for any ordinary legal
problem that may arise in the ordinary business of the client
 to insure and secure his future services for a particular case
or work and to renumerate him for being deprived, by being
retained by one party, of the opportunity of rendering
services to the other party;

 to prevent undue hardship on the part of the atty

 in the absence of an agreement, retaining fee is apart from

the agreed pay for services to be performed

 different from atty’s fees as damages

o special retainer – fee for a particular case or specific service to be

performed by a lawyer

- quantum meruit – lawyer entitled to recover what is justly due him based
on quantum meruit if contract bet. Client and atty is for want of authority,
but services are legitimate (unjust enrichment)

- unconscionable amt renders contract invalid – only based on quantum

meruit

contingent fee contract

- agreement in writing in which the fee, usually a fixed percentage of what

may be recovered in the action, is made to depend upon the success in
the effort to enforce or defend a supposed right.
 - The lawyer gets paid for his services only if he wins the case for the client
unless the client prevents the successful prosecution or defense of the
action, in which case the lawyer shall be entitled to recover on a quantum
meruit basis or to the full amt as fixed in a valid written agreement if the
client acted in bad faith.

- Depends upon the success of the litigation – higher depending on the risk;
court may reduce amt if unconscionable; given only after judgment has
been rendered

- Based only on an express contract; otherwise, quantum meruit

- Allowed even if there is an initial fee before or during progress of litigation

as long as the bulk is made dependent upon the successful outcome;
initial fee may be a retaining fee separate from the contingent fee

- Lawyer’s expenses may be advances subject to reimbursement

- Allowed but closely supervised by the court to safeguard client’s interest;

must be reasonable; may make use of property subject of litigation after
the termination of the case

Effect of agreement to pay litigation expenses

- Prohibited but lawyer may, in good faith, advance the expenses as a

matter of convenience but subject to reimbursement – to prevent a lawyer
from acquiring an interest in the litigation and avoid conflict of interests
between him and his client

- Champertous – agreement for lawyer to defray all expenses and receive

50 % contingent fee; prohibited

Construction of professional contract

- Favorable to client

MEASURE OF COMPENSATION

- Generally, compensation is based on contract; but if contract is set aside,

based on quantum meruit

Based on quantum meruit (“as much as a lawyer deserves”)

- Ie. agreement invalid

- Amt stipulated is unconscionable – exaggeration of the worth of the
lawyer’s services
- No agreement as to fees
- Client rejects amt as unconscionable and is found to be so
- Some act or event w/c prevented lawyer from concluding litigation

Factors taken into account in fixing amount of fees

 1) Quantity and character of the services rendered
2) Labor, time and trouble involved
3) Nature and importance of the litigation or business in which the
services were rendered
4) Responsibility imposed
5) Amount of money or the value of the property affected by the
controversy
6) Skill and experience called for in the performance of the service
7) Professional character and social standing of the lawyer
8) Novelty and difficulty of questions involved
9) Customary charges of the bar for similar services
10)Character of employment, whether casual or for established client
11)Results secured
12)Whether or not the fee is contingent, it being recognized that an atty
may properly charge a higher fee when it is contingent (higher risk)
than absolute

PROCEDURE TO RECOVER FEES

- File the necessary petition as an incident of the main action : if something

is due the client or when client waives his cause in favor of the adverse
party in fraud of the lawyer’s claim for compensation
o Question of fees can be determined only after the litigation has
been decided

- Independent civil action

o Where main action was dismissed or awarded nothing to client
o Court had no jurisdiction over the action or already lost it
o Person liable for atty’s fees is not a party to the action
o Court reserved to the lawyer the right to file separate suit to
recover fees
o Services of lawyer rendered in connection w/ a matter not in
litigation

- With hearing, like an ordinary money claim