Legal Malpractice

Fees, Quantum Meruit and Seth Rubenstein

By (Andrew Lavoott Bluestone)

One of the more intriguing aspects of the attorney fee and disputes field is the interplay of a strongly put rule to attorneys, and the consequences of ignoring that rule.  The rule:  "You must have a retainer agreement."  What happens when an attorney sues for fees, yet failed to have a retainer agreement as defined in 22 NYCRR 1215 et seq ?  Really nothing.  The Second Department in Seth Rubenstein PC v. Ganea, 41 AD3d 54 (2nd Dept, 2007)

"22 NYCRR 1215.1, otherwise known as the "letter of engagement rule," was promulgated by joint order of the appellate divisions, and applies to all civil actions where the amount in controversy is $3,000 or more. The rule requires attorneys to provide all clients with a written letter of engagement explaining the scope of legal services, the fees to be charged, billing practices to be followed, and the right to arbitrate a dispute under Rules of the Chief Administrator of the Courts (22 NYCRR) part 137 (see 22 NYCRR 1215.1 [b]; see generally Grossman v West 26th Corp., 9 Misc 3d 414 [2005]). The rule is also satisfied if the attorney and client execute a formal written retainer agreement reflecting the same information as required for a letter of engagement (see Beech v Gerald B. Lefcourt, P.C., 12 Misc 3d 1167[A] [2006]). The rule became effective on March 4, 2002 (see 22 NYCRR 1215.1 [a]; Brown Rudnick Berlack Israels LLP v Zelmanovitch, 11 Misc 3d 1090[A] [2006]), approximately seven weeks before Ganea retained Rubenstein for the guardianship matter underlying this appeal.

The language of 22 NYCRR 1215.1 contains no express penalty for noncompliance (see 22 NYCRR 1215.1; Beech v Gerald B. Lefcourt, P.C., supra; Matter of Feroleto, 6 Misc 3d 680, 682 [2004]). Indeed, the intent of rule 1215.1 was not to address abuses in the practice of law, but rather, to prevent misunderstandings about fees that were a frequent source of contention between attorneys and clients. This intent was described by Chief Administrative Judge Jonathan Lippman upon the rule's adoption, that "this [rule] is not about attorney discipline in any way, shape or form, [*5]and we certainly do not expect in any{**41 AD3d at 61} significant degree there to be a large number of disciplinary matters coming out of this rule" (Caher, Rule Requires Clients Receive Written Letters of Engagement, NYLJ, Jan. 22, 2002, at 1, col 1, and quoted in Matter of Feroleto, supra at 683). The purpose of the rule therefore is to aid the administration of justice by prodding attorneys to memorialize the terms of their retainer agreements containing basic information regarding fees, billing, and dispute resolution which, in turn, minimizes potential conflicts and misunderstandings between the bar and clientele. "

Now, in Roth Law Firm, PLLC v Sands  we see the tortured path analysis must take.  Justice Madden of Supreme Court, New York County must decide what services were being offered by plaintiff law firm, who received the services and in what setting the services were offered, and then, determine the quantum meruit aspects of the whole case.

Full post as published by New York Attorney Malpractice Blog on September 30, 2010 (boomark / email).