July 31, 1983
A lawyer who is handling a personal injury action in the state of Michigan may not collect a contingent fee which exceeds the amount set forth by the Michigan Supreme Court, even though the client is a non-resident who entered into the contingent fee agreement in a jurisdiction where the fee is permissible.
References: DR-2-106(A); CI-548.
A Michigan lawyer was recently asked by an Ohio lawyer to represent a client in a personal injury action in this state. Prior to the time the Michigan lawyer agreed to represent such non-resident, the lawyer who referred this matter entered into a contingent fee agreement with the client in accordance with the laws of the state of Ohio.
Apparently, when the lawyer referred this matter, the lawyer also transferred or assigned the contingent fee agreement to the Michigan lawyer. While the fee set forth in the contingent fee agreement is permissible under the rules concerning contingent fees in the state of Ohio, the fee exceeds the amount otherwise permissible in this state. Accordingly, the inquiry presents the issue as to whether a lawyer who is handling a personal injury action in the state of Michigan may collect a contingent fee which exceeds the amount set by the Michigan Supreme Court, where the client is a non-resident who originally entered into a contingent fee agreement with a lawyer in a jurisdiction where such fee is permissible.
Michigan's Code of Professional Responsibility in conjunction with the Michigan General Court Rules ("MGCR) restricts the fee that a lawyer is allowed to charge his/her client for legal services rendered in this state. In particular, DR 2-106(A) provides that "a lawyer shall not enter into an agreement or, charge, or collect an illegal or clearly excessive fee." Emphasis added.
Although the term "excessive fee" is not defined by the Code of Professional Responsibility, it is defined by the MGCR which provides as follows:
"In any claim or action for personal injury or wrongful death based upon the alleged conduct of another, in which an attorney enters into an agreement, express or implied, whereby his/her compensation is dependent or contingent in whole or in part upon successful prosecution or settlement or upon the amount of recovery, the receipt, retention, or sharing by such attorney, pursuant to agreement or otherwise, of compensation which is equal to or less than the fees scheduled in sub-rule 928.2 is deemed to be fair and reasonable. The receipt, retention or sharing of compensation which is in excess of such a fee shall be deemed to be the charging of a "clearly excessive fee" in violation of Canon 2, DR 2-106(A) of the Code of Professional Responsibility and Canons. MGCR 928.1.
Moreover, by defining what is a reasonable fee, MGCR 928.2 specifically defines what constitutes an excessive fee in a claim or action for personal injury. It is set fort as follows:
"The maximum allowable fee for the claims and actions referred to in sub-rule 928.1 is one-third of the amount recovered. MGCR 928.2.
The above-references rules clearly indicate that in this state, a lawyer who is handling a lawsuit for personal injury may not charge a fee in excess of the amount set forth in MGCR 9-28.2, whether the client is a resident or a non-resident. Accordingly, because the fee set forth in the fee agreement executed by the client exceeds the rates set forth in MGCR 928.2, it constitutes an excessive fee under MGCR 928.1 and is thereby in violation of DR 2-106(A).
In CI-548, the Committee opined that although a lawyer practicing law in the state of Michigan may not collect a gross fee in excess of the percentage which is set forth by MGCR 928.2, even though the client is a non-resident who entered into a contingency fee agreement in a jurisdiction in which the fee set forth in the agreement was permissible. As noted in that opinion, the rules and regulations adopted by the Michigan Supreme Court govern the practice of law by Michigan lawyers in this state.
In conclusion, in Michigan, a lawyer may not collect a fee for legal services rendered in this state which is in excess of the amount set forth by MGCR 928.2, even though his/her client is a non-resident who entered into a fee agreement in a jurisdiction in which the fee was permissible.