It is not uncommon for clients to discharge their attorneys prior to the occurrence of the contingency event specified in the contingency fee contract. Inevitably, these clients hire successor counsel to continue the pursuit of their claims.
To protect themselves and get compensated for their work, the discharged counsel typically file attorney liens in the pending action. That means that the clients will likely have to pay some portion of their recovery to the discharged counsel, as well as compensate their new attorney.
In light of that risk, successor counsel has an ethical duty to analyze their fee arrangements with clients to ensure they are not unreasonable in light of the predecessor firm’s potential right to be paid for services already rendered.
Indeed, “[b]ecause that risk exists, the successor attorney has an incentive to inform the client that the client may have to pay reasonable attorney fees to the discharged attorney for services already rendered, a fact which will help ensure that the client does not agree to a fee arrangement that over-compensates the successor attorney.”
The successor attorney bears “the risk that the discharged attorney will timely file an attorney’s lien in the underlying litigation prior to disbursement of the judgment proceeds, delaying complete resolution of the case and potentially causing satellite litigation over fees.“
Any time successor counsel takes over a pending contingency fee matter, he or she should discuss the attorney lien issue with the client and consider getting a written acknowledgment of the conversation.