The Lawyer and the Client
AVOID COMPENSATION CONTROVERSY WITH 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.
NOTES (Agpalo)
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Suits to collect fees should be avoided and only when the circumstances imperatively require should a lawyer resort to lawsuit to enforce payment of fees. This is but a logical consequence of the legal profession not primarily being for economic compensation. Lawyers should avoid the appearance of fulfilling duty merely for the compensation.η
Take note of Rule 138, Secs 24, 32 above Corpuz v. CA (2001)
F: Atty David and Corpuz were good friends. In Corpuz’s civil case, David became his counsel. Prior to rendering of final judgment, Corpuz gave the lawyer a check which the latter returned. After favorable decision was rendered, Atty. David demanded attorney’s fee which Corpuz refused to deliver alleging that David’s services were offered gratuitously. The Court decided that Atty. David should be paid attorney’s fees.
H: An attorney-client relationship can be created by implied agreement, as when the attorney actually rendered legal services for a person who is a close friend. The obligation of such a person to pay attorney’s fees is based on the law of contracts’ concept of facio ut des (no one shall unjustly enrich himself at the expense of others.) Absence of an express contract for attorney’s fees between respondent David and petitioner Corpus is no argument against the payment of attorney’s fees, considering their close relationship which signifies mutual trust and confidence between them.
ETCETERA NOTES.
(Agpalo)
Remedies in estate proceedings
η Lawyer should first administrator or executor to pay.
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If administrator or executor refuses, lawyer may: File independent civil action against administrator or executor in his personal capacity. If latter is ordered to pay, he may in turn include the amount paid in his account filed with probate court.File petition with probate court praying that court, after due notice to all persons interested, allow his claim and direct administrator or executor to pay.
η If administrator or executor dies before lawyer’s fees could be paid, he may file claim against (1) estate of deceased administrator or executor or (2) a petition for allowance of his fees with probate court, but not against substitute or new administrator.
η When to enforce right to fees: before estate proceeding is definitely closed. General rule: probate court loses jurisdiction to entertain and adjudicate fees after proceeding closes.
Exceptions: (1) when petition for allowance of fees filed before closure (2) distribution of assets made without prejudice to claim for attorney’s fees
η Allowance of counsel fees in estate proceedings rests on sound discretion of probate court but it may be modified by appellate court when fee allowed is inadequate or excessive.
η Order fixing fees continue to be under control of probate court until proceeding is closed and may increase or decrease depending on facts and circumstances even though fee has been fully or partially paid.
But an order of probate court which has been affirmed or modified by appellate court can no longer be changed by probate court. The latter cannot order immediate payment of fees after perfection of an appeal from order allowing it.
η In case where probate court has lost jurisdiction after final closure of estate proceeding, lawyer may file independent civil action against administrator in his personal capacity and against distributees of the assets of the estate.
Court jurisdiction
η Court having jurisdiction to try main action in which lawyer rendered services also has jurisdiction to pass upon the question of fees even though the total sum thereof is less than the jurisdictional amount cognizable by the court and continues to have jurisdiction until the proceeds of the judgment shall have been delivered to the client.
η If court has no jurisdiction or has lost it, court can have no power to award and fix attorney’s fees. Lawyer may, however, enforce claim in separate civil action subject to same jurisdictional req as any other ordinary civil suit.
η But if client not only fails to object to exercise by court of jurisdiction to entertain an action for recovery of atty’s fees but also asks for some affirmative reliefs, he may be estopped, on appeal, to assail the propriety of action taken by trial court in fixing and allowing counsel fees
Necessity of hearing
η Petition for recovery of atty’s fees has to be prosecuted and allegations established.
η Persons entitled to or must pay atty’s fees have the right to be heard upon question of their propriety or amount.
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Who may have right to intervene and be heard: lawyer himself, client, client’s assignee of the interest in litigation, stockholders in a derivative suit concerning atty’s fees sought to be charged against corporate funds, and administrator, executor, heir and creditor in an estate proceedings.η Burden of proof is upon lawyer to establish his allegations.
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Trial court who awards smaller fee than that sought without allowing lawyer to adduce evidence commits a reversible error correctable by certiorari.η Where there is written agreement for atty’s fees, no other piece of evidence is necessary to prove amount. Opinions of lawyers as expert witnesses are not binding upon court but may be taken into account along with professional knowledge and various factors affecting compensation.
η Court cannot authorize payment until all parties are given opportunity to be heard.
In the absence of evidence, court is presumed to have granted award for
counsel fees only after it has heard all parties involved.
η Court may not order immediate payment where question as to propriety or amount is pending resolution by appellate court.
Defenses
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Usual defenses apply: res judicata, want of jurisdiction, prescription of action, nullity of contract, negligence in discharge of lawyer’s duties, lack of atty-clientrelationship, payment or
unconscionableness of amount claimed.
Application of client’s funds
η Lawyer who has in his possession funds of the client may not apply them to pay his fees without client’s consent, express or implied.
η If client refuses to give consent, lawyer should secure court order for the allowance of fees with notice to client to give client opportunity to be heard. After securing award, he may lawfully apply client’s funds in his possession for payment of his fees as fixed by court.
Execution
η Final award of atty’s fees may be enforced by execution. Award may be enforced against any property of client, including proceeds from judgment secured for client in the main action.
Attorney’s Fees as Damages
Two concepts of attorney’s fees compared η Indemnification: given by court to winning
litigant in the form of damages. It may be decreed in favor of party, not his lawyer, in any of the instances authorized by law.
η Compensation: atty’s fee paid by client to his counsel.
η Liability of losing party for atty’s fees (indemnification) awarded to winning party not bound by or dependent upon fee arrangement of winning party with his lawyer but court may take that fee arrangement into account as an element of damages.
η Fee as item of damages belongs to client, not to his lawyer. But client and lawyer may agree that whatever may be awarded by court as atty’s fees will go directly to lawyer, in which case, losing party shall pay directly to lawyer of prevailing party.
η Similarities: both require, as a prerequisite to grant, the intervention of or rendition of professional services by lawyer, both fees subject to judicial control and modification, and rules governing determination of their reasonable amount applicable to both.
Fee as damages not recoverable—general rule
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General rule: atty’s fees as damages not recoverable because it is not the fact of winning that ipso facto justifies the award but the attendance of any of the special circumstances and, in case of public litigant, the existence of the right to private counsel.η Public policy requires that no penalty be placed on the right to litigate, even if done erroneously. Otherwise, it will put a premium on right to redress grievances and tempt a party and his counsel to swell the fees to undue proportion and discourage out-of-court settlement.
Fees as damages recoverable—exception to the rule
η New Civil Code provides 13 exceptions to the rule:
1. When there is agreement Court may reduce if fee unreasonable or unconscionable.
2. When exemplary damages are awarded
Exemplary damages awarded by way of example.
3. When defendant’s action or omission compelled plaintiff to litigate Act or omission of other party must be in gross bad faith.
Plaintiff (in his complaint) or defendant (in his counterclaim) is entitled to award.
4. In criminal cases of malicious prosecution
Show that (1) he was acquitted and (2) person who charged him knowingly made a false statement of facts or that filing was prompted by sinister design to vex him.
5. When action is clearly unfounded
Action or proceeding must be so untenable as to amount to gross and evident bad faith depending on circumstances of case; good faith a defense.
6. When defendant acted in gross and evident bad faith
Refusal to pay valid claim must be made in gross and evident bad faith.
7. In actions for support
Person obliged to give support is also obliged to pay attorney’s fees as may be necessary to enable person entitled to such support to enforce his rights.
8. In cases of recovery of wages Covers household helpers, laborers and skilled workers
9. In actions for indemnity under
workmen’s compensation and
employee’s liability laws
10. In a separate civil action arising from a crime
Party entitled to recover damages arising from a crime can only do so in a separate civil action or in a civil suit to enforce subsidiary civil liability.
11. When at least double costs are awarded
Usually awarded in frivolous action or appeal—one which presents no justiciable question or is so readily recognizable as devoid of merit on its face.
12. When the court deems it just and equitable
There should be factual, legal or equitable justification which appears on record.
13. When a special law so authorizes
Purpose: to lessen unnecessary litigation
Right to private counsel a precondition
η Two reqs to recover atty’s fees as an item of damages: (1) case falls under any of the exceptions and (2) he must have employed and, in the case of public litigant, must show his right to employ a private counsel.
Award of attorney’s fees discretionary
η Exercise of discretion by court on awarding of atty’s fees as damages must be based on facts appearing on the text of decision.
Decision’s body, not just the disposition, must state reason for award, unless text shows case comes within one of the exceptions.
η In the absence of showing that trial court abused discretion, grant or denial of atty’s fees may not be disturbed on appeal.
Appellate court may, in the exercise of its discretion, award atty’s fees or increase or reduce amount whenever law and circumstances warrant.
Pleading and practice
η Trial and appellate court will not grant atty’s fees if claim of atty’s fees in the concept of damages and the grounds relied upon are not pleaded.
η But with claim for atty’s fees having been set up, appellate court may grant such fees even if party did not appeal from lower court’s decision denying such award.
η Claim for atty’s fees must not only be alleged, factual basis and amount must also be proved. That grant is discretionary does not dispense with need for proof even if party against whom it is asserted does not deny claim. Exception: when what is sought is in the nature of liquidated damages fixed in a valid written agreement.
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Amount must be proved and specifically prayed for, not just in “such other relief and remedy as the court may deem just and equitable.”η Since award of atty’s fees is the exception, not the rule, trial court should make findings of fact and law to bring case within the exception and justify the award.
CANON 21