New York Law Review

Tag: contingent fee agreement

  • People v. Winkler, 71 N.Y.2d 592 (1988): Contingent Fees in Criminal Cases and Ineffective Assistance of Counsel

    People v. Winkler, 71 N.Y.2d 592 (1988)

    A contingent fee arrangement in a criminal case, while unethical, does not automatically constitute ineffective assistance of counsel; the defendant must demonstrate that the agreement adversely affected the quality of representation.

    Summary

    The New York Court of Appeals addressed whether a contingent fee arrangement between a criminal defendant and his attorney constitutes per se ineffective assistance of counsel. Winkler was convicted of murdering his father. After his conviction, he argued his attorney had a conflict of interest due to a contingent fee agreement, where a portion of the attorney’s fee depended on Winkler being acquitted and inheriting from his father’s estate. The Court of Appeals held that while such agreements are unethical and against public policy, they do not automatically render counsel ineffective. The defendant must show the agreement negatively impacted the quality of their legal representation.

    Facts

    Richard Winkler was convicted of second-degree murder for killing his father. Prior to trial, Winkler’s mother and grandmother retained Robert Hufjay as his counsel. The written contract specified a base fee and an additional $25,000, contingent upon Winkler’s acquittal or a finding of not guilty by reason of insanity, which would allow him to inherit from his father’s estate. Winkler himself increased the contingent fee amount. After being convicted, Winkler claimed ineffective assistance of counsel based on this contingent fee arrangement and other alleged deficiencies in his representation.

    Procedural History

    Following his conviction, Winkler filed a motion to set aside the conviction under CPL 440.10, alleging ineffective assistance of counsel due to the contingent fee arrangement and other failures by his attorney. The Westchester County Court denied the motion, finding no factual support for his claims of professional deficiency. The Appellate Division reversed, holding that contingent fee arrangements in criminal cases constitute a per se denial of effective assistance of counsel. The Court of Appeals then reversed the Appellate Division’s order.

    Issue(s)

    Whether a contingent fee arrangement for legal representation in a criminal case constitutes a per se violation of a defendant’s constitutional right to effective assistance of counsel.

    Holding

    No, because while contingent fee agreements in criminal cases are unethical, they do not automatically constitute ineffective assistance of counsel. The defendant must demonstrate that the contingent fee arrangement adversely affected the quality of the representation he received.

    Court’s Reasoning

    The Court of Appeals acknowledged the well-settled public policy against contingent fee arrangements in criminal cases, citing the Code of Professional Responsibility and the Restatement of Contracts. The Court emphasized that such arrangements create a conflict of interest, potentially compromising the client’s best interests. However, the court declined to adopt a per se rule requiring automatic reversal of convictions in such cases, finding that such a remedy would be disproportionate and would penalize the public without necessarily ensuring a fairer trial for the defendant. The court reasoned that other types of fee arrangements can also create conflicts of interest, and the focus should be on whether the attorney provided meaningful representation. The court stated that “a defendant is entitled to relief upon satisfying the defense burden of showing that the possible conflict of interest affected the defense in such a way, based on all relevant aspects of the representation directly or indirectly rooted in that impediment, that meaningful representation was not supplied under the Federal and State Constitutions.” The Court reasoned that a per se rule could be exploited by sophisticated defendants and unscrupulous attorneys. The court noted that most jurisdictions have rejected the per se test. The Court concluded that a fact-finding court should evaluate the specific impact of the contingent fee arrangement on the meaningfulness of counsel’s representation.

  • Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172 (1986): Attorney’s Contingent Fee Rights After Adverse Trial Verdict

    Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172 (1986)

    When a contingent fee retainer agreement drafted by an attorney is unclear regarding the scope of representation and responsibility for advancing litigation expenses, it will be construed most favorably to the client.

    Summary

    Plaintiff Shaw hired Fuchsberg & Fuchsberg to represent him in a personal injury claim under a contingent fee agreement. After an adverse jury verdict at trial, the firm refused to advance further litigation expenses for an appeal unless new terms were agreed upon. Shaw then obtained new counsel. The central issue was whether the retainer agreement terminated upon the initial adverse judgment and whether the firm was obligated to continue advancing litigation expenses for appeal. The New York Court of Appeals held that the ambiguous retainer agreement must be construed in favor of the client, terminating the agreement at the trial level. Therefore, the firm was not entitled to a fee for services rendered during the trial.

    Facts

    Leonard Shaw was injured during a bank robbery and retained Fuchsberg & Fuchsberg to represent him in a personal injury claim. The retainer agreement provided for a contingent fee of 33 1/3% of the sum recovered, after deducting disbursements. The agreement did not explicitly state whether representation extended through appeal or who was responsible for advancing litigation expenses.

    Procedural History

    The initial jury trial resulted in a verdict for the defendants. Fuchsberg & Fuchsberg informed Shaw that they would not advance costs for an appeal. Shaw then sought to substitute counsel. Special Term imposed a lien on any ultimate recovery for the firm on a quantum meruit basis. The Appellate Division affirmed. On appeal by Shaw’s new counsel, the Appellate Division reversed the initial judgment and ordered a retrial. Shaw then entered into agreements with both Fuchsberg & Fuchsberg and new counsel Max Toberoff to settle the fee dispute. The retrial resulted in a settlement, and the dispute over Fuchsberg & Fuchsberg’s fee reached the New York Court of Appeals.

    Issue(s)

    1. Whether the contingent fee retainer agreement terminated upon the entry of an adverse judgment after the initial trial, or whether the representation was to continue through the conclusion of the matter, including appeal.
    2. Whether Fuchsberg & Fuchsberg breached the retainer agreement by refusing to proceed with the appeal unless Shaw agreed to new terms regarding the advancement of litigation expenses.

    Holding

    1. Yes, the retainer agreement terminated upon the entry of the adverse judgment because the ambiguous agreement must be construed in favor of the client.
    2. Yes, Fuchsberg & Fuchsberg breached the agreement if the representation was to persist through appeal because the firm insisted on new terms for continued representation.

    Court’s Reasoning

    The Court emphasized the importance of clear attorney-client agreements, especially in contingent fee arrangements. It stated that ambiguous contracts are construed against the drafter, and courts scrutinize fee arrangements between attorneys and clients, placing the burden on attorneys to prove the contracts are fair and understood. The Court found the retainer agreement ambiguous regarding the term of representation and responsibility for advancing expenses. Because of this ambiguity, the court construed the agreement in favor of the client, holding that it terminated upon the adverse judgment. The Court stated, “From a reading of the language of the retainer agreement itself, both interpretations are reasonable. In such event the law requires that an agreement between client and attorney be construed most favorably for the client”. The court also noted that if the representation was to continue through appeal, the firm’s insistence on new terms constituted a breach, also precluding recovery of a fee. The court cited policy considerations, noting the difficult position the client was placed in, having to find new counsel while a lien was in place and the terms of the original agreement were uncertain. The court recognized the lawyer’s predicament but stressed the importance of clearly defined terms in retainer agreements to avoid such situations in the future. The court reiterated, “In order to avoid the consequences suffered here both by the client and by the lawyer, it is essential that the terms of representation — particularly in matters of fundamental, foreseeable and commonplace as those before us today — be set down with clarity. And the onus is upon the lawyers who draft such agreements to do so.”