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Lopez v. Munoz6/8/2000
's best interests. A lawyer and client's negotiations are often imbalanced in favor of the lawyer because of information inequalities and the client's customary reliance on the lawyer's legal advice. Consequently, a lawyer should fully explain to the client the meaning and impact of any contract between them. Here, for example, to best serve their client, and to protect their own interests, the Muñoz firm could have explained to the Lopez family at the time the contract was signed that the firm believed it would be entitled to an additional fee the moment Westinghouse preserved their right to appeal, even though an agreement in principle had been reached to settle the case.
Another ethical consideration that deserves mention is the lawyer's fiduciary duty not to collect an unconscionable fee from his client. See Tex. Disciplinary R. Prof. Conduct 1.04(a); Nolan v. Foreman, 665 F.2d 738, 741 (5th Cir. 1982) (holding under Texas law an attorney breaches a fiduciary duty to the client by charging an excessive fee). A fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable. See Tex. Disciplinary R. Prof. Conduct 1.04(a). The reasonableness of any fee depends on the circumstances of the services. See Tex. Disciplinary R. Prof. Conduct 1.04(b) (detailing factors to weigh in determining reasonableness of fees); Restatement (Third) of the Law Governing Lawyers, §§ 46, 47 (Proposed Final Draft No. 1, 1996). Generally, however, a lawyer's fee is unreasonable if it is grossly disproportionate to the work and the risks. See Tex. Disciplinary R. Prof. Conduct 1.04(b); Committee on Legal Ethics v. Tatterson, 352 S.E.2d 107, 113 (W.Va. 1986); The Florida Bar v. Moriber, 314 So.2d 145, 149 (Fla. 1975); see also General Motors Corp. v. Bloyed, 916 S.W.2d 949, 960 (Tex. 1996) (discussing lodestar method to calculate lawyer's fees in class actions as calculated by multiplying the number of hours expended by an appropriate hourly rate determined by a variety of factors, such as the benefits obtained for the class, the complexity of the issues involved, the expertise of counsel, the preclusion of other legal work due to acceptance of the class action suit, and the hourly rate customarily charged in the region for similar legal work).
The fee contract here compensated the lawyers for "services rendered." There is evidence in the record that the firm did some work in connection with an appeal both before and after the cash deposit in lieu of cost bond was filed. But the record also suggests that the Lopez family and Westinghouse had agreed in principle to a settlement, substantially lowering the risk to the law firm - a risk existing in all contingent fee contracts - that it might not collect its fees. While a contract may entitle a lawyer to a substantial fee for little or no work, a lawyer may nonetheless be required by his or her fiduciary duty to decline the fee. Additionally, a law firm may breach its fiduciary duty if it provides little or no services, but still collects a substantial part of its clients recovery in the face of a pending settlement.
By all appearances, the law firm did a good job representing its client against Westinghouse. The firm obtained a twenty-five million dollar jury award and participated in negotiating a fifteen million dollar settlement. The lawyers should be fully compensated for their work and the risks they assumed. I do not begrudge them for demanding compensation for services rendered according to their contract. But the demand must be clearly supported by the contract. And when construing contracts between lawyers and clients, it is not enough to simply say that a contract is a contract. There are ethical considerations
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