September 2, 1982
A lawyer may enter into a contingent fee agreement with a divorced client to collect and enforce the client's property rights established in the divorce judgment, so long as the total fee charged for both the pre-judgment and post-judgment proceedings are reasonable.
References: MCPR DR 2-106(A), (B), and (C); CI-620, CI-712.
A lawyer obtained a favorable property settlement for a divorce client, secured by liens and promissory notes. The opposing party refuses to make the property settlement, support and alimony payments established by the judgment, and it is necessary to enforce collection. The client has no independent assets with which to pay for collection services, and has suggested a contingency fee agreement.
MCPR DR 2-106(C) prohibts a lawyer from charging a contingent fee "in a divorce case." DR 2-106(C) is based on public policy which encourages reconciliation of spouses. If a lawyer is permitted to charge a contingent fee on the amount recovered for a spouse out of the marital property, the lawyer may have less incentive to promote reconciliation. Once a divorce has been granted, this rationale for the rule becomes less significant.
In CI-620 a lawyer was allowed to charge a contingent fee for the modification of a divorce judgment, where the basis of the claim was fraud or misrepresentation perpetrated by the former spouse and the sole issue related to the client property rights. In arriving at this result, the committee concluded that an action to set aside a divorce judgment as to property rights only, would not be a "divorce case" within the intent of DR 2-106(C).
In CI-712 a lawyer was allowed to charge a contingent fee agreement with a divorced client to enforce the client's property rights. Litigation resulted with respect to the client's share of a chose in action. The chose in action litigation was ultimately settled, however, the lawyer asserted a lawyer's lien against the client's settlement proceeds for nearly the amount of the settlement. The propriety of the lawyer fee was litigated, and the lawyer sought to charge a contingent fee to appeal the fee determination.
We, therefore, conclude that a contingent fee agreement applied to post-judgment enforcement or property rights established in the Judgment of Divorce does not violate DR 2-106(C). The fact that a lawyer represented the client in the original divorce action and that legal fees for the earlier representation have not been paid, does not alter this conclusion so long as the admonitions of DR 2-106(A) and (B) are carefully considered and applied to the proposed lawyer/client relationship.