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Don’t Forget to Sign and Return Your Fee Agreement

When attorneys and clients get into a fee dispute, it is often the simple mistakes that cause big problems for attorneys. One such problem arises when attorneys forget or neglect to send each client a fully executed copy of the fee agreement.

For contingency fee agreements, Business and Professions Code section 6147(a) provides “An attorney who contracts to represent a client on a contingency fee basis shall, at the time the contract is entered into, provide a duplicate copy of the contract, signed by both the attorney and the client, . . . to the plaintiff . . . .” (Emphasis added.) “Failure to comply with any provision of this section renders the agreement voidable at the option of the plaintiff . . . .” See, Business and Professions Code section 6147(b).

For hourly, flat-fee, or hybrid arrangements under Business and Professions Code section 6148(a), where the “total expense to a client, including attorney fees, will exceed one thousand dollars ($1,000),” the contract must be in writing. That section further requires that, “[a]t the time the contract is entered into, the attorney shall provide a duplicate copy of the contract signed by both the attorney and the client, . . . to the client . . . .” (Emphasis added.) Business and Professions Code section 6148(c) provides “[f]ailure to comply with any provision of this section renders the agreement voidable at the option of the client . . . .”

In O&C Creditors Corp. v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546, the Court of Appeal recently addressed the harsh consequences where an attorney does not strictly comply with this simple rule. In this case, the court held a contractual attorney fee lien was unenforceable because the attorney did not sign the fee agreement. Trying to save the lien, the attorney’s assignee argued the client signed the fee agreement and understood the terms of the agreement, so the attorney substantially complied with the statutory requirement. Rejecting that argument, the court found substantial compliance would “render the dual signature requirement mere surplusage” and would “nullify the client’s ability to void the agreement.” Id. at 575. The court further rejected the assignee’s argument the client waited too long to void the agreement, holding “we decline to insert a timeliness component . . . where none exists.”

Given attorneys will be held to strict compliance with the statutory requirements for fee agreements, it is imperative attorneys remember to: (a) put all fee agreements for any matter potentially exceeding $1,000 in costs and fees in writing; (b) be sure the fee agreement is signed by all clients and the attorney at the commencement of the representation; and (c) provide the client with a copy of the fully-executed version of the fee agreement.

By . Michael practices at Klein & Wilson in Newport Beach, California, focusing on business litigation, legal malpractice, and attorney fee disputes.