CONTINGENT FEE IN DIVORCE CASEAn attorney may properly contract for a contingent fee in a divorce case in Texas so long as the Texas courts recognize the validity and legality of a contingent fee contract in matrimonial actions.
Canons 11, 12.
Attorney Black represented Mrs. White in a divorce case. Her contract with Black provided for a contingent fee of 1/3 of the value of the property set aside to her in the divorce case. His fee, calculated on that basis, would have been several thousand dollars. Is it unethical or improper for an attorney to represent a divorce client on a contingent fee basis evidenced by a written contract, as in the hypothetical fact situation?
It is not unethical where the contingent fee contract does not call for an unreasonable fee.
By the great weight of authority, a contingent fee contract in a divorce case is void as against public policy where the contingency relates to the amount of alimony; Levine v. Levine, 206 Misc. 884, 135 N.Y.S. 2d 304 (1954); see Simpson, CONTRACTS 611 (1954); and Kelly v. Gross, 4 S.W. 2d 296 (1928 er. refused). It has been said that this general policy prohibits contingent fees in all matrimonial actions; see, e.g., Sobieski v. Maresco, 143 So. 2d 62 (Fla., 1962; "the majority opinion (is) that attorneys contingent fee employment contracts in matrimonial actions are against public policy and therefore unenforceable.") In State ex rel Nebraska State Bar Ass'n. v. Jensen, 171 Neb. 1, 105 N.W. 2d 459 (1960), the reason for the rule was stated to be that the attorneys "personal interest tends to prevent a reconciliation between the parties and destroy the family relationship."
The Texas view seems to be, however, that a contingent fee is permissible in divorce cases; White v. Hunt, 224 S.W. 2d 511 (1949, no writ history); cf. Kelly v. Gross, supra. Assuming this to be the Texas rule, and since Texas Canon 12 recognizes the propriety of contingent fee contracts generally, it follows that it is ethical for an attorney in a divorce case to make a written contingent fee contract with a client. Here, legality determines propriety. A contingent fee arrangement often facilitates employment of counsel when needed, but later controversy between attorney and client is often avoided it the contract is specific regarding such contingencies as the possibility of settlement.
There are many matters incidentally involved in this hypothetical fact situation which this committee does not feel called upon to discuss. For example, we are not attempting to indicate any view as to the wifes capacity to make a contingent fee contact, nor as to the effect of the time of making the contract (see Anno., A.L.R. 847), nor as to her right to recover a reasonable fee from the husband, nor as to what is the range of a reasonable fixed or contingent fee in the given situation (see Anno., 56 A.L.R. 2d 13). Canon 11 details the factors or general ethical standards to be considered in fixing a fee by a lawyer who conscientiously attempts to avoid both overcharging and undercharging; but it should also be noted that only a willful violation of the Canons breaches minimum ethical requirements or results in disciplinary action (Art. XII, sec. 8(b), Rules of the State Bar of Texas), a rule which is akin to the line of cases holding that an attorney may be disciplined for overcharging only when he acted fraudulently or without good faith or when he willfully imposed upon the clients confidence; see Anno., 70 A.L.R 2d 962 (1960). A grossly excessive fee may be evidence, of course, of the requisite conscious overreaching; see In re Myrland, 54 Ariz. 284, 95 P. 2d 56 (1930), and A.B.A. Opinion No. 27; cf. A.B.A. Opinion 302 (1961). While it is possible for a contingent fee as well as a fixed fee to be excessive, a contingent fee contract in a divorce case in Texas is not per se improper so long as that type of contract is not held by the Texas courts to be against public policy. (9-0.)