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Gair v. Peck

Court of Appeals of the State of New York
May 28, 1959
6 N.Y.2d 97 (N.Y. 1959)

Summary

In Gair v. Peck, 6 N.Y.2d 97, 188 N.Y.S.2d 491, 160 N.E.2d 43 (1959), the New York Court of Appeals considered a court rule adopted by an Appellate Division of the Supreme Court, which provided, with exceptions not material to our discussion, that contingent fees in personal injury or death cases in excess of one-third of the net recovery were unreasonable and unconscionable, unless authorized by a written order of the court.

Summary of this case from In re Union Carbide Cons. Prod. Bus. Sec.

Opinion

Argued January 20, 1959

Decided May 28, 1959

Appeal from the Appellate Division of the Supreme Court in the Third Judicial Department, HAROLD A. STEVENS, J.

Louis J. Lefkowitz, Attorney-General ( James O. Moore, Jr., of counsel), for appellants. Frank H. Gordon, Robert M. Benjamin, Phillip W. Haberman, Jr., and W. Mason Smith, Jr., for Association of the Bar of the City of New York, amicus curiae, in support of appellants' position.

Howard Hilton Spellman, Samuel G. Fredman and Henry A. Weinstein for respondents. David Stein and Harry Cohen for Bronx County Bar Association, amicus curiae, in support of respondents' position.

Louis E. Schwartz and Louis M. Brass for Brooklyn Bar Association, amicus curiae, in support of respondents' position.

N. Le Van Haver for Federation of Bar Associations of the Third Judicial District, amicus curiae, in support of respondents' position. Thomas Schleier for Richmond County Bar Association, amicus curiae, in support of respondents' position.

Joseph F. O'Brien for Suffolk County Bar Association, amicus curiae, in support of respondents' position.

Copal Mintz for New York County Lawyers Association, amicus curiae, in support of respondents' position.

Joseph J. Perrini for Queens County Bar Association, amicus curiae, in support of respondents' position.

James Dempsey and Paul L. Bleakley for Westchester County Bar Association, amicus curiae, in support of respondents' position.


This is an appeal from a judgment of the Appellate Division, Third Department, affirming a summary judgment in favor of plaintiffs, entered upon an order of the New York County Special Term. The appeal in the Appellate Division was transferred to the Third Department by the First Department. The judgment under review is a declaratory judgment, determining that the Appellate Division, First Department, lacked power to adopt a rule relating to "Contingent Fees in Claims and Actions for Personal Injury and Wrongful Death." The record on appeal discloses that in recent years contingent fee agreements have been filed with the Clerk of the First Department at an annual rate of 150,000 or more, of which upwards of 60% have fixed the attorneys' compensation at 50% of the amount of the recovery. Ninety-five per cent of the actions brought have been settled and not more than one and one-half per cent of all claims of this nature have gone to judgment after trial. Canon 13 of the Canons of Ethics of the New York State Bar Association provides: "A contract for a contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness."

The relevant portions of this rule are as follows:
"RULE 4. — CONTINGENT FEES IN CLAIMS AND ACTIONS FOR PERSONAL INJURY AND WRONGFUL DEATH.
(a) In any claim or action for personal injury or wrongful death, whether determined by judgment or settlement, in which the compensation of claimant's or plaintiff's attorneys is contingent, that is, dependent in whole or in part upon the amount of the recovery, the receipt, retention or sharing by such attorneys, pursuant to agreement or otherwise, of compensation which is equal to or less than the fees scheduled below is deemed to be fair and reasonable. The receipt, retention or sharing of compensation which is in excess of such scheduled fees shall constitute the exaction of unreasonable and unconscionable compensation in violation of Canons 12 and 13 of the Canons of Professional Ethics of the New York State Bar Association, unless authorized by a written order of the court as hereinafter provided.
(b) The following is the schedule of reasonable fees referred to above: either,
(1)
(A) Fifty per cent. on the first one thousand dollars of the sum recovered,
(B) Forty per cent. on the next two thousand dollars of the sum recovered,
(C) Thirty-five per cent. on the next twenty-two thousand dollars of the sum recovered,
(D) Twenty-five per cent. on any amount over twenty-five thousand dollars of the sum recovered; or
(2)
A percentage not exceeding thirty-three and a third per cent. of the sum recovered, if the initial contractual arrangement between the client and the attorneys so provides, in which event the procedure hereinafter provided for making application for additional compensation because of extraordinary circumstances shall not apply.
(c) Such percentages shall be computed on the net sum recovered after deducting taxable costs and disbursements, and expenses of legal, medical, investigative, or other services properly chargeable to the claim or action. But for the following or similar items there shall be no deduction in computing such percentages: Liens, assignments or claims in favor of hospitals, treating doctors, nurses, self-insurers or insurance carriers.
(d) In the event that claimant's or plaintiff's attorneys believe in good faith that the foregoing schedule (1), because of extraordinary circumstances, will not give them adequate compensation, application for greater compensation may be made upon affidavit with written notice and an opportunity to be heard to the client and other persons holding liens or assignments on the recovery. Such application shall be made to the justice of the trial part to which the action had been sent for trial; or, if it had not been sent to a part for trial, then to the justice presiding at the Trial Term Calendar part of the court in which the action had been instituted; or, if no action had been instituted, then to the justice presiding at the Trial Term Calendar part of the Supreme Court for the county in the First Judicial Department in which the attorneys filing the statement of retainer, pursuant to Rule 4-A, have an office. Upon such application, the justice in his discretion, if extraordinary circumstances are found to be present, and without regard to the claimant's or plaintiff's consent, may fix as reasonable compensation for legal services rendered an amount greater than that specified in the foregoing schedule (1), provided, however, that such greater amount shall not exceed the fee fixed pursuant to the contractual arrangement, if any, between the client and the attorneys. If the application be granted, the justice shall make a written order accordingly, briefly stating the reasons for granting the greater compensation; and a copy of such order shall be served on all persons entitled to receive notice of the application."

Taking cognizance of this situation, and noting that contingent fees are generally allowed in the United States because of their practical value in enabling a poor man with a meritorious cause of action to obtain competent counsel, the First Department adopted rule 4 with a preamble which concludes:

"When, however, the contingent fee reaches or approaches the 50 per cent level, it ceases to be a measure of due compensation for professional services rendered and makes the lawyer a partner or proprietor in the lawsuit. This is not a permissible professional relationship or a proper professional practice.

"The court considers the schedule adopted to allow ample compensation for the best efforts and services of competent counsel. It recognizes the possibility that extraordinary circumstances may exist in a particular case which would make the resulting compensation inadequate. The court will make special allowance in such cases and grant an application for larger compensation."

The complaint does not attack the reasonableness of this rule or its need. One of the plaintiffs' moving affidavits states: "Whether the Rule is good or bad, necessary or unnecessary, desirable or undesirable, fair or unfair, responsive or not to the ethical and moral standards of the community, serving or damaging to professional and public interests, it is our contention that the Appellate Division was without power to adopt the Rule and is without power to enforce it."

Plaintiffs have not put in issue and have thus recognized for the purposes of the action that the rule is good, necessary, desirable, fair, responsive to the ethical and moral standards of the community and serving professional and public interests. The power to adopt the rule is challenged, but the question of power has to be decided in the light of these circumstances. The issues before us have been drawn in this manner by the parties.

This rule was held to be invalid by the Third Department upon two grounds: (1) that it is inconsistent with section 474 of the Judiciary Law providing that the compensation of an attorney is governed by agreement, and (2) that the Appellate Division lacks power of discipline over attorneys regarding excessive fees except "in the individual case and after the event." Mention is not made in the Appellate Division's opinion of any other ground in the opinion at Special Term, such as that the rule is one of substantive law applying to only a segment of the State, or that disciplinary power over attorneys is unrelated to how much they charge their clients. Special Term did recognize that there may be such a thing as an "unconscionable" contingent fee agreement, but remarked that this must be decided as a question of fact whereas rule 4 is said to establish it as a matter of law.

Special Term's criticism of the rule on the ground that it establishes substantive law applicable to but one segment of the State will first be considered. If this comment were well founded, it would be a fatal defect — the Appellate Divisions cannot make substantive law by rules, and, acute as the problem is in the metropolitan counties, it could hardly be held that the attorney and client relationship is governed by different substantive law in New York City or in different parts of New York City. Upon the other hand, if rule 4 does not change the substantive legal relation between attorney and client, but merely supplies a procedure for determining on the basis of the real facts whether a lawyer is subject to discipline for charging more than he could collect in court from his client under law applicable to every part of the State, rule 4 was properly adopted under section 83 of the Judiciary Law, which enables a majority of the Justices in each Department to make rules not inconsistent with any statute or rule of civil practice. The rules that have been adopted in the different Departments show that within these limits rules regarding procedure or disciplinary matters do not have to be uniform in all Departments, just as investigations of attorneys may be conducted in one Department without being conducted in others ( People ex rel. Karlin v. Culkin, 248 N.Y. 465).

It has been held by the judgment appealed from that rule 4 purports to alter the substantive law governing the relationship between attorney and client, and that in doing so it conflicts with section 474 of the Judiciary Law insofar as section 474 states that the compensation of an attorney is governed by agreement, express or implied. The Appellate Division, Third Department, and Special Term have both started with the assumption that rule 4 threatens disciplinary action against lawyers who make retainer agreements with clients that would otherwise be valid and enforcible under section 474 of the Judiciary Law. If follows from this false premise that the effect of rule 4 is to regulate fees of attorneys differently from the way in which they are regulated by statute. We find no basis for this assumption in the language of the rule, in its preamble, or in the evil which it proposes to remedy. The rule does not touch lawyers' fees except such as would be unenforcible in any event under section 474 of the Judiciary Law. It has been implied that rule 4 prevents lawyers from charging clients what they could otherwise legitimately charge, but that assumption overlooks that disciplinary action is not threatened except against exacting fees which could not legally be enforced in the absence of rule 4. Of course the threat of disciplinary action inhibits charging more than would be sanctioned under the rule, but that is not the test of its validity. That would have been true if the rule had simply announced that lawyers would be subject to disciplinary action for charging unconscionable fees. If the rule is limited, as we interpret it, to making provision for disciplining attorneys for receiving more from their clients than could legally be collected under retainer agreements, even with the aid of section 474 of the Judiciary Law, the judgment appealed from is without foundation. The standard of decision in disciplining a lawyer or in announcing that he will be subject to discipline for violation of this rule, is whether he has charged his client more than the client is legally obligated to pay — that is to say, has charged what the courts will refuse to enforce as unconscionable in amount under a contingent fee agreement made with all the support which section 474 can supply.

It is not necessary to enter into an elaborate historical discussion of the origin of section 474 of the Judiciary Law. On the adoption of the Field Code (Code of Pro.; L. 1848, ch. 379), and under successor statutes culminating in the present section 474 of the Judiciary Law, contingent fee contracts ceased to be outlawed (are "not restrained by law"), but the courts have continued to exercise a wary supervision over them. The retention of such supervision by the courts was acknowledged by the New York State Bar Association in adopting Canon 13 of Ethics in 1909, in force ever since, which states that a contract for a contingent fee "should always be subject to the supervision of a court, as to its reasonableness." The State Bar Association did not act in ignorance or in contravention of the law of the State. Notwithstanding section 474, which was in effect during all of that time, few propositions are better established than that our courts do retain this power of supervision. Contingent fees may be disallowed as between attorney and client in spite of contingent fee retainer agreements, where the amount becomes large enough to be out of all proportion to the value of the professional services rendered. It matters little whether under such circumstances the formula be that the size of the fee becomes "unconscionable" or "unreasonable". Each word means the same thing in this context. The special quality of a retainer contract is recognized by the cases holding that in spite of section 474 of the Judiciary Law the client may terminate it at any time, leaving the lawyer no cause of action for breach of contract but only the right to recover on quantum meruit for services previously rendered ( Matter of Dunn, 205 N.Y. 398; Martin v. Camp, 219 N.Y. 170). Section 474 confers upon the lawyer no inalienable right to impose on his client, and a retainer agreement becomes unenforcible in some situations where a contract would be enforcible if the parties to it were not attorney and client. In Ransom v. Ransom ( 147 App. Div. 835, 849-850) the language of Justice NATHAN L. MILLER, later a Judge of this court, is quoted from McCoy v. Gas Engine Power Co. ( 135 App. Div. 771, 772-773): "The word `unconscionable' has frequently been applied to contracts made by lawyers for what were deemed exorbitant contingent fees. But by that nothing more has been meant than that the amount of the fee, standing alone and unexplained, may be sufficient to show that an unfair advantage was taken of the client or, in other words, that a legal fraud was perpetrated upon him. ( Morehouse v. Brooklyn Heights R.R. Co., 185 N.Y. 520.)" In Matter of Friedman ( 136 App. Div. 750, affd. 199 N.Y. 537), where a contract for 50% of a recovery in an accident case was held not to be fraudulent per se in all instances, the court added ( 136 App. Div. 751-752): "But the recovery may be such that what was in the first instance a fair contract becomes unfair in its enforcement. * * * the recovery may be such that the lawyer's retention of it would be unjustified and would expose him to the reproach of oppression and overreaching. He is an officer of the court and is judged as such, and technical contractual rights must yield to his duty as such officer." In the decisions on this subject, of which there are many, it is recognized throughout that there comes a point where the amounts to be received by attorneys under contingent fee contracts are large enough to be unenforcible under the circumstances of the case. Sometimes these charges are unconscionable as matter of fact and in other instances as matter of law ( Ford v. Harrington, 16 N.Y. 285; Place v. Hayward, 117 N.Y. 487; Matter of Fitzsimons, 174 N.Y. 15; Morehouse v. Brooklyn Heights R.R. Co., 185 N.Y. 520; Matter of Friedman, 136 App. Div. 750, affd. 199 N.Y. 537, supra; Ward v. Orsini, 243 N.Y. 123). In the case last cited, an eminent lawyer presented to this court for approval his printed contingent fee agreement in a case where he claimed the modest sum of $300, due to the settlement of an action without his knowledge or consent against the New York Central Railroad Company. The reasonable value of the legal services rendered was easily $300, which amounted to 50% under the signed retainer agreement. The opinion notes (p. 129) that "The defendant does not question the reasonableness of the fee." In writing for the court, Judge POUND was careful to avoid setting a precedent for other cases saying (p. 128): "It may well be that in a supposed case the amount received by the client would be so completely out of proportion to the value of the attorney's services that it would be unconscionable as matter of law to permit him to enforce his contract."

In Morehouse v. Brooklyn Heights R.R. Co. ( supra, pp. 525-526) the court said: "An agreement to pay an attorney one-half of the recovery where the action was to recover a penalty of fifty dollars would not by any person be considered to be improper, but if it was for fifty thousand dollars it might be considered quite improper."

If the effect of the controversial portions of rule 4 is to provide for the disciplining of attorneys only where the contingent fee would be uncollectible in the full amount in an action between attorney and client under the general law of the State without reference to rule 4 — which an analysis of the rule indicates that it is — the rule is not subject to attack on the grounds that it is parochial or that it violates section 474 of the Judiciary Law. It is no answer to this reasoning that Surrogates' Courts and courts dealing with infants' claims or other cases may be vested with greater power to rule on lawyers' fees than merely to decide whether they are so large as to be unconscionable.

Except for what is called the graduated fee schedule, it is improbable that anyone would take exception to what has previously been stated, any more than objection was taken in court to the rules requiring the filing of contingent fee retainers, the special deposit of moneys collected by way of settlement or judgment, the furnishing of detailed statements to clients or the preservation of attorneys' records when rules concerning these were adopted in the First and Second Departments after the disclosures of the 1928 investigations ( Matter of Bar Assn. of City of New York, 222 App. Div. 580; Matter of Brooklyn Bar Assn., 223 App. Div. 149; People ex rel. Karlin v. Culkin, 248 N.Y. 465, supra). Rules on those subjects prescribe in advance standards of conduct for attorneys in relation to their clients. There is no lack of power to do that, yet the reasoning of the opinions below would forbid it also. Rule 1-B of the First Department has long prescribed a standard of professional conduct directly respecting the compensation of attorneys, in that it prevents an attorney assigned as counsel for a defendant in a criminal case from accepting compensation except as authorized by an order of the court. That rule was attacked but was upheld in Matter of Dresnick ( 2 A.D.2d 521). Section 308 of the Code of Criminal Procedure does not expressly authorize the Appellate Division to promulgate rule 1-B as respondents' brief indicates. It was done under the rule-making power. Rule 4-G makes a violation of the standards prescribed in the other special rules grounds for a finding of professional misconduct within the meaning of subdivision 2 of section 90 of the Judiciary Law. There can be no objection to that.

Rule 4, sub judice, is essential in order to put on record the data necessary to be used as a foundation for taking disciplinary action. Even under plaintiffs' theory of action, no objection would lie against the rule if every lawyer filing a contingent fee retainer agreement were also required to file in his closing statement the amount of time he devoted to the case and an enumeration of the other facts underlying the elements entering into the value of the lawyer's services ( Randall v. Packard, 142 N.Y. 47, 56). That would enable the court after the event and in the individual case to determine whether the lawyer was censurable for charging a contingent fee that was unconscionable as being out of all relation to the value of the work performed. The "fee schedule" in rule 4 dispenses with supplying that information where the agreed contingent fee is less than the percentages designated in the rule. If the stipulated fee is greater, the attorney is required to supply the information necessary on which to form a conclusion concerning the value of the professional services which have been rendered. This is merely supplying procedure whereby the lawyer may discharge his traditional burden of justifying his relations with his client where the circumstances prima facie call for explanation. Plaintiffs' objections reduce themselves to the fact that a declaratory determination is to be made regarding whether the amount of the contingent fee is censurable before rather than after the lawyer has received it. Rule 4 does not call for any determination until after the services rendered by the lawyer have been completed, nor even then unless the contingent fee exceeds the amounts in the schedule. The direction in the rule that the determination is to be made after the professional services have been completed is not without power, due to the circumstance that the question of professional conduct is to be decided before rather than after the fee has been paid. Rules regulating professional conduct are "to prevent the continuance" of unworthy practices ( People ex rel. Karlin v. Culkin, supra, p. 469). It is fairer and more considerate of the lawyer to determine the propriety of his conduct before he has received the fee.

If the consequence of the enforcement of this simple and practical disciplinary rule be to reduce the number of lawyers who are charging unconscionable contingent fees, that can furnish no basis on which to impugn the rule as a fee regulating measure. All regulation of improper practices has its consequences or should have in curtailing the practices. That is the purpose. The practice of charging unlawful fees is bound to be curtailed by the exercise of disciplinary powers, whether the fees are found to be unconscionable before or after they are paid.

Subdivision 2 of section 90 of the Judiciary Law (formerly numbered § 88, subd. 2) is thus described in the opinion by Chief Judge CARDOZO for the unanimous court in People ex rel. Karlin v. Culkin ( supra, pp. 471-472): "`The supreme court shall have power and control over attorneys and counselors-at-law' (Judiciary Law, § 88, subd. 2). The first Constitution of the State declared a like rule in terms not widely different. Provision was there made that `all attorneys, solicitors and counselors at law hereafter to be appointed, be appointed by the court and licensed by the first judge of the court in which they shall respectively plead or practice; and be regulated by the rules and orders of the said courts' (Constitution of 1777, § 27). What was meant by this provision that lawyers should be `regulated by the rules and orders of the said courts?' Would the men who framed the Constitution of 1777 have been in doubt for a moment that a rule or order might be made whereby lawyers would be under a duty, when so directed by the court, to give aid by their testimony in uncovering abuses? We find the answer to these questions when we view the history of the profession in its home across the seas."

After describing the English origins of these provisions, Chief Judge CARDOZO's opinion in Karlin summarizes the constitutional and legislative history in this State (p. 477): "With this background of precedent there is little room for doubt as to the scope and effect of the provision in the Constitution of 1777 that attorneys might be regulated by rules and orders of the courts. The provision was declaratory of a jurisdiction that would have been implied, if not expressed. The next Constitution, that of 1821, was silent as to the whole subject, containing no reference either to regulation or to appointment. Promptly, to avoid misapprehension, the Legislature passed a statute, the act of April 17, 1823 (L. 1823, ch. 182, § 19), which continued in the same words the provision formerly contained in the Constitution of 1777. There was a revision of the statutes in 1827 (Act of Dec. 4, 1827), in which the provision was omitted, but the courts continued to act upon the theory that the power of regulation was either inherent or implied ( Matter of H., an Attorney, 87 N.Y. 521). The question does not now concern us whether the power may be withdrawn or modified by statute ( Matter of Cooper, 22 N.Y. 67, 68). Instead of being withdrawn, it has been explicitly confirmed. In 1912, by an amendment of section 88 of the Judiciary Law (L. 1912, ch. 253), the jurisdiction was removed from the realm of implication. The earlier statutes were restored through a renewed declaration that lawyers are subject to the control and power of the court. We are back to the law as it existed in 1777."

These broad rule-making powers, so recently and explicitly upheld, are ample and flexible enough to include rule 4. The rule-making power is not limited to prescribing only for the specific case after the event. The idea that imposition by lawyers on their clients, oppressive and unconscionable fee agreements or similar conduct is beyond the rule-making power of the court has no shadow of foundation. The idea is frivolous that disciplinary power over attorneys is unrelated to the exaction of excessive fees. Nor are the Appellate Divisions so helpless as to be denied the power of censure or of taking more incisive disciplinary action to curb the practice of excessive exactions against clients merely for the reason that the client himself has not elected to contest payment of the fee. The duty and function of the Appellate Divisions to keep the house of the law in order does not hinge upon whether clients, worn down by injuries, delay, financial need and counsel holding the purse strings of settlement, knowing little about law or lawyers, have had the stamina to resist in court by hiring other lawyers to be paid out of the other half of the recovery for defending against the first lawyer. This is not a picture of the courts and Bar as a whole in their relation to the public, but it accurately describes enough so that it cannot be said that the Appellate Division, First Department, has directed its attention without cause to correcting this situation. The independence of the Bar is not at stake in this action, nor are the best interests of the profession served by growing public resentment engendered by what this rule is designed to prevent. While liability in the negligence field has been continually expanding and the size and proportion of recoveries has mounted in constantly increasing progression, the risk of the lawyer under contingent fee agreements has been reduced and his remuneration magnified. On top of this the percentages of the clients' recoveries which this segment of the Bar insists upon the right to retain has been enlarged until in this one Judicial Department over 60% of the 150,000 contingent fee agreements filed each year provide that 50% of the recovery shall be paid to the lawyer.

Aware that when the contingent fee reaches or approaches 50% it ceases to be a measure of due compensation for professional services rendered and makes the lawyer a partner or proprietor in the lawsuit, the Appellate Division has sought a means of investigating and checking what it deems to be an improper professional practice in the great majority of instances where it occurs. It cannot be held that reasonable and effective disciplinary action is not demanded in order to prevent the exaction of more than lawful charges in this huge field of controversy and litigation.

Where the amount of the claim is small, as the preamble to rule 4 states, the percentage charged may be greater than where the recovery is larger without rendering the fee unlawful. As a practical approach the rule sets forth a tentative schedule, subject to variation if the facts warrant, characterizing as unreasonable and unconscionable the collection of contingent fees in excess of 50% on the first $1,000 of the sum recovered, 40% on the next $2,000, 35% on the next $22,000, and 25% on any amount over $25,000 of the sum recovered. The preamble states that the court considers that ample compensation for the best efforts and services of competent counsel will ordinarily be provided by the schedule. It is not necessary to take judicial notice that it does so in most instances, for the reason that plaintiffs have not disputed for the purposes of the action that the rule is fair, responsive to the ethical and moral standards of the community and serves professional and public interest. Moreover, what is of the utmost importance, these schedules are merely presumptive of what constitutes an exorbitant contingent fee in a particular case. The way is left open in any case to an attorney to come into court on a full showing of all the facts and circumstances, with opportunity to establish that these prima facie percentages do not indicate correctly that the stipulated contingent fee in his case is unlawful due to being unconscionable. The effect is to make a record in the individual case, to determine by the very ad hoc procedure which plaintiffs assert is the way to attack the problem, after the work of the lawyer has been finished, whether the contingent fee claimed is lawful or unconscionable — that is to say, whether it is in such an amount as to be collectible in an action between attorney and client on the contingent fee retainer agreement. The language of the rule bears no token of an intention to censure the lawyer unless the charge to the client is so large in amount as to be uncollectible as between attorney and client. The scheduling of the graduated scale of percentages in the rule, fair as these percentages are conceded to be for the purposes of the action, concludes nobody. They are simply a procedural means of avoiding the necessity of calling upon every lawyer who files a contingent fee agreement to show what he has done in the case as a basis for determining whether the fee agreement is exorbitant. Plaintiffs have not denied that it is within the power of the Appellate Division to call on all lawyers who have collected contingent fees to do exactly that. They could not deny it in the face of the decision by this court in People ex rel. Karlin v. Culkin ( 248 N.Y. 465, supra). The matter here claimed to be wrong about the rule is that it calls upon the lawyer to make this showing (if his contingent fee exceeds the scheduled percentages) before rather than after collection of the fee. It could not be denied, even on plaintiffs' theory of the case, that excessive exactions by lawyers from their clients is a proper subject for investigation and disciplinary action. Unless the work were shortened by presuming that fees within specified limits were lawful, the volume of the task would be too great for any court effectively to perform. By the fee schedule the rule sifts out all except those to which special attention need be given. Some of those will prove to be legitimate and others illegitimate. They will not be branded either way even if they exceed the scheduled percentages, if the lawyer has made special application under the rule, until the court decides, and the attorney will not be censured unless he accepts a fee in an amount which has been found to be unconscionable.

Or, as an alternative, in excess of 33 1/3% of the sum recovered.

There is no reason on account of which the Appellate Division could not proceed by this practical and equitable rule to attack this insistent problem. If a lawyer believes himself to be entitled to contingent fees in excess of the scheduled percentages, he can provide for them in his contingent fee contract without infraction of the rule, by stating in the retainer agreement that he belives in good faith that the scheduled percentages because of special or extraordinary circumstances will not give adequate compensation, and that application for greater compensation within the amounts provided by his contingent fee agreement will be made to the court at the conclusion of the litigation or on the settlement of the claim. The preamble to rule 4 acknowledges that the court "recognizes the possibility that extraordinary circumstances may exist in a particular case which would make the resulting compensation inadequate. The court will make special allowance in such cases and grant an application for larger compensation."

These scheduled percentages are, then, of merely presumptive effect, like a burden of proof which pertains to procedure and is not substantive law ( Wadsworth v. Delaware, L. W.R.R. Co., 296 N.Y. 206, 212). It lay within the competence of the First Department under section 83 of the Judiciary Law to adopt rule 4 as a procedural aid in rendering effectual its disciplinary power over attorneys in the case of unlawful contingent fees. The so-called fee schedule merely determines where the burden of proof shall lie in the determination of the censurability of contingent fees in the individual case. Neither plaintiffs nor any segment of the Bar have a vested interest in the exaction of unlawful fees, which is all that this rule is fashioned to prevent, nor can they be heard to say that the Appellate Division is precluded from taking preventive measures for the reason that the client has decided not to litigate the fee. The contention that this is a fee-limiting measure is reduced to an argument that lawyers cannot be disciplined for accepting fees which would be uncollectible in court, if the clients defended on the ground that they are so out of proportion to the value of the work as to be unconscionable.

The rule-making power of the Appellate Divisions in exercising their long-standing "power and control over attorneys and counsellors at law and all persons practicing or assuming to practice law" (Judiciary Law, § 90, subd. 2) has always been adapted to the exigencies of the times and to the ingenuity of lawyers who are trying to sail too close to the wind. We think that it extended to the adoption of rule 4. In view of the existence of subdivision 2 of section 90 of the Judiciary Law, it is not necessary to decide whether, as part of the Supreme Court which is vested by the Constitution with general jurisdiction in law and equity (N.Y. Const., art. VI, § 1), the Appellate Divisions possess similar powers over attorneys apart from statute.

The judgment appealed from should be reversed, and declaratory judgment entered in favor of the defendants and against plaintiffs, without costs.


The majority opinion suggests that we are to determine the question of the power of the Appellate Division, First Department, to promulgate rule 4 in the light of the concession by plaintiffs herein that the rule is reasonable, necessary and serves to advance the status of the profession. This reasoning is derived from a statement in the affidavit of one of the plaintiffs that the necessity and reasonableness of the rule are not in issue on this appeal. This statement is not, in terms, a concession, but was offered, as the affidavit states, solely for the purpose of limiting the issues in the action.

The sole issue before the court now is one of authority. However, since the majority finds it incumbent to defend the reasonableness of the rule, and its necessity, we should look into it with some degree of particularity.

The majority maintains this position despite the conclusions of Mr. Justice WASSERVOGEL, who, in reporting on the hearings held in connection with the rule, found that it was not necessary. Certainly his finding is not without basis in fact. Indeed, we find ample support for his position in the very records of the Appellate Division, First Department, itself. That court, as the preamble to rule 4 duly notes, has been opposed to contingent fee retainer contracts which provide that the fee shall be 50% of the recovery. As early as 1950 — by the very admission of the Appellate Division, First Department, that court regarded such an agreement unconscionable per se ( Buckley v. Surface Transp. Corp., 277 App. Div. 224). Yet in the 10-year period 1949-1958 inclusive, when the number of lawyers practicing in the First Department increased sharply, the number of attorneys subjected to disciplinary action each year averaged but 14 in number. In the preceding 10-year period, the average number of attorneys subjected to disciplinary proceedings was 27.4 each year. Few, if any, attorneys were disbarred, suspended, censured or struck from the rolls because they had provided services in return for contingent fees in excess of 33 1/3% of the amount of recovery.

Comparing the 1949-1958 period with the preceding 10-year period, we find that while the average number of contingent fee retainer contracts filed each year has doubled the average number of attorneys disciplined has been decreased by one half. The ratio is revealing; disciplinary proceedings have decreased in inverse proportion to the increase in the number of retainers filed. Indeed, the number of attorneys disciplined for extracting unconscionable fees have been so few in number that they are included in the records of the Appellate Division, First Department, concerning disciplinary matters under the heading "Miscellaneous".

Surely, we must assume that the First Department was not derelict in its statutorily mandated duty to discipline attorneys whose actions that court regarded as unconscionable or unreasonable. These contingent fee retainer agreements were filed with the Clerk of the First Department; the contracts were readily available for the scrutiny of the court. Under subdivision 2 of section 90 of the Judiciary Law, the Appellate Division need not have waited until a dissatisfied client protested the attorney's fee. That court admittedly has the power to initiate proceedings, sua sponte, in individual cases where it regarded the fee charged to be unconscionable. Since we must assume that the First Department has discharged its duty to the People of this State as well as to the members of the Bar, we can only conclude that the disciplinary action in this area, infrequent though it might have been, was sufficient to meet the threat imposed by attorneys filing such contingent fee retainers.

To sustain the necessity of the rule, we are told that upwards of 150,000 contingent fee retainers were filed annually during the 10-year period, 1949-1958, and that approximately 60% or 90,000 agreements provide that the fee shall be 50% of the recovery. But the actual fees received by attorneys which may be found in the closing statements required to be filed by the First Department are not disclosed. There are no statistics to show the percentages reserved as attorneys' fees on actual recoveries. The number of closing statements filed each year is about 50,000. The differential between the number of closing statements and the number of retainers filed annually indicates that in many instances no settlement is reached, no recovery is had, and no fee is retained. One would imagine that, to obtain a true picture of the amount received by attorneys under contingent fee retainers, one should look at these closing statements, which would show actual figures, rather than the retainer agreement itself, which contains little information but does serve to inform the court that a claim has been asserted, and that a particular attorney has agreed to pursue the claim for a stipulated percentage of the recovery, if any.

Hence, an unbiased, objective appraisal of the relevant factors indicates that there is a singular lack of evidence to show the necessity of the rule. Similarly, the reasonableness of the rule is open to question. Attorneys, as everyone else in this country, have been subjected to inflation. But it is argued that plaintiffs' verdicts have similarly increased and, hence, contingent fees are much too high. The American Bar Association, however, has published studies indicating that compensation for attorneys has not increased correspondingly over these inflationary years as has the remuneration of other professions as medicine and dentistry. Also ignored is the fact that the courts themselves have additionally increased the burgeoning costs of an attorney by requiring him to file innumerable papers to serve the orderly administration of justice.

The rule fails to consider that an attorney, without initial cost to a client, makes available to that client his talents, his office facilities and his secretarial assistance to process the client's claim. An attorney may not be a partner in the claim, but he assumes a great risk in processing the claim. His money and time, which he has expended, may produce no return.

Rule 4 here fails to take into account, at the very beginning, that the case may be tried and retried, that appeals may be taken, before a judgment may be collected. And in some instances, after all these services have been rendered, there is no money judgment for the plaintiff. These are the hazards which an attorney assumes when he accepts a client on a contingent fee basis. How can a court be so omniscient to state that, at the outset, before the greater part of the work has been done, that a particular percentage is unreasonable under any and all circumstances? Under some circumstances, it is quite conceivable that a contingent retainer fee of 33 1/3% of the recovery may be unreasonable. It may very well be that fees in excess thereof should be the exception rather than the rule. But the reasonableness of the fee — regardless of the percentage chosen — can only be determined in an ad hoc proceeding, after the event.

But the reasonableness of the rule and the necessity of the rule are not in issue here. And rather than base this opinion — as has the majority based its opinion — upon an assumption which is rebutted by all the factual data in the Appellate Division archives, we examine the power to enact the rule not in the light of necessity and reasonableness, but from the history which has culminated in the acceptance of this rule by only one of the four departments of the Appellate Division.

The hearings held immediately prior to the promulgation of rule 4 did not consider the power of the Appellate Division to promulgate the rule, but dealt with its necessity. But other committees, formed on other occasions, have considered this question. Their conclusions that the courts do not have this power to regulate attorneys' fees, while not conclusive, nor binding upon this court, are certainly persuasive authority, and are entitled to great weight. (Association of Bar of City of New York Reports, Vol. 65, Set D No. 475 [1938 Annual Reports, pp. 295-296]; Vol. 80, No. 649 [1943]; Bronx County Bar Assn. Report in Library, Assn. of Bar of City of New York, fol. n p 1940 in folio pam. v. 245; 31 N.Y. State Bar Assn. Rep. 121 [1908].)

The Association of the Bar of the City of New York, which has before this court so militantly and ably defended the power of the Appellate Division to promulgate this rule, had concluded after investigation, hearings and mature thought not once, but at least twice, that the court's power to regulate contingent fees was circumscribed by law. In 1938, a special committee of that honored association, in its reports, after discussing the proposition that "there is little practical scope left for the argument that the courts retain any power in this field apart from fraud and overreaching" further stated: "However that may be, the lines of judicial and legislative doctrine are too firm by this time to sustain the hope of successful modification by the judiciary alone. There is definite and unquestioned need for a new deposit of authority in our courts, and this deposit of authority must come from new legislation." (Annual Reports of Association of Bar of City of New York [1938], pp. 295-296.)

And again in 1943, another committee of the Association of the Bar reviewed the problem. And again the committee concluded that the broad scope of section 474 of the Judiciary Law imposed restraints upon judicial regulation of contingent fees. And again the committee suggested remedial legislation: "We can only point the way in the hope that the legislature, where many of our professional brethren labor, may also recognize the evil and give to the courts the power to apply some remedy." (Association of Bar of City of New York Reports, Vol. 80, No. 649 [1943].)

This view — that the power to regulate contingent fees is not vested in the courts — is not new. Indeed, as far back as 1908, a committee of the State Bar Association deplored the abuses of the contingent fees by attorneys and recommended that control of such fees be specifically vested in the courts. (31 New York State Bar Assn. Rep. 121.) The Legislature, however, rejected this proposal.

The report is significant in that it clearly demonstrates that under the statutory law of this State which in this area has remained unimpaired since that time — there was a recognition that courts did not have the power to regulate fees. Further, it is also significant since it shows that the Legislature did not think that there were abuses, or that the courts should regulate fees. And this has been the thinking of the Legislature, since that time, for they have continually rejected such bills as would vest power in the courts to regulate contingent fees (see, e.g., N.Y. Senate Bill, Sen. Int. No. 419, Print No. 457, 1941 Sess.).

Special Term and the unanimous Appellate Division, Third Department, have similarly found rule 4 to regulate fees, and have similarly concluded that the Appellate Division, First Department, lacked the power to enact such a rule.

The majority opinion states: "The Appellate Division, Third Department, and Special Term have both started with the assumption that rule 4 threatens disciplinary action against lawyers who make retainer agreements with clients that would otherwise be valid and enforcible under section 474 of the Judiciary Law. It follows from this false premise that the effect of rule 4 is to regulate fees of attorneys differently from the way in which they are regulated by statute. We find no basis for this assumption in the language of the rule, in its preamble, or in the evil which it proposes to remedy. The rule does not touch lawyers' fees except such as would be unenforcible in any event under section 474 of the Judiciary Law."

The false premise to which the majority refers is not the threatened disciplinary action, for rule 4 obviously exposes any attorney charging, without court permission, a contingent fee in excess of the schedule set forth to disciplinary action. The false premise, according to the majority opinion, upon which the courts below rested their decisions, is that rule 4 prohibits contracts which are enforcible under section 474 of the Judiciary Law, which states that "[t]he compensation of an attorney * * * for his services is governed by agreement, express or implied, which is not restrained by law". The majority says that this assumption is not true. Or rather, it assumes that there is no basis for this assumption. The rule proscribes fees in excess of 33 1/3% of the amount of recovery. Yet there are cases in this court, of which the majority is aware because it has cited them continually to sustain its position, where this court has sustained a 50% contingent fee! ( Ward v. Orsini, 243 N.Y. 123; Morehouse v. Brooklyn Heights R.R. Co., 185 N.Y. 520; Matter of Fitzsimons, 174 N.Y. 15, 23-25.)

The only basis upon which the majority can sustain its decision is this: "If the rule is limited, as we interpret it, to making provision for disciplining attorneys for receiving more from their clients than could legally be collected under retainer agreements even with the aid of section 474 of the Judiciary Law, the judgment appealed from is without foundation."

This belated attempt to harmonize rule 4 with section 474 of the Judiciary Law does not survive analysis. As we have shown, the cases indicate that a 50% contingent fee may be enforced under section 474 of the Judiciary Law; it may not be enforced under the present rule 4, unless prior approval of the First Department is obtained. A court cannot predict a priori the reasonableness of a fee to be charged in the event of recovery, where there has been no recovery and, indeed, where there has been little work done in processing the claim.

We cannot conclude that the rule describes as censurable conduct that which has always been censurable. If it has been previously clear that contingent fees in excess of the recommended schedules were censurable, there would hardly be need for the Appellate Division to hold extensive hearings and promulgate a merely repetitive rule. Further, the premises that the rule proscribes conduct by attorneys which has always been censurable is belied by the fact that only in rare instances has the First Department censured attorneys for such conduct.

There is another evil inherent in this type of rule. The power to promulgate the rule necessarily implies the power to amend the rule. Admittedly, the Appellate Division, First Department, totally lacks the power to promulgate a rule which states that any percentage agreement would be unreasonable, since this would clearly controvene section 474 of the Judiciary Law — even if attorneys were granted the privilege to have their compensation fixed by a court upon proper application. While it does not seem likely that the First Department would test the extent of its power to that extreme, it can conceivably lower its present recommended schedule of fees to such a lower percentage that it would not be economically feasible for attorneys to enter into such contingent fee contracts. The other equally unpalatable alternative for attorneys would then be to contract for fees in excess of the prescribed rates and face the certainty of disciplinary action.

The innate mischief of the rule, and the conclusion that it does, in fact, fix fees, is apparent when the rule is carried to its logical extremes. Why, for instance, is a contingent fee of 33 1/3% of the recovery fair and conscionable under all the circumstances, but a contingent fee of 34% unfair and unconscionable under all the circumstances? The reasonableness of the fee is not determined solely on the amount charged, but also by the quality of the services rendered in light of the circumstances of the particular case. ( Ward v. Orsini, 243 N.Y. 123, supra; Matter of Friedman, 136 App. Div. 750, affd. 199 N.Y. 537; Morehouse v. Brooklyn Heights R.R. Co., 185 N.Y. 520, supra; Matter of Fitzsimons, 174 N.Y. 15, supra; Barry v. Whitney, 3 Sandf. 696.)

Since then the premise that rule 4 prohibits contracts which would be enforcible under section 474 of the Judiciary Law is correct, as I have attempted to indicate, it follows that rule 4 in effect fixes contingent fees. To conclude otherwise, from reading the rule, would be sheer sophistry.

Rule 4, as we have shown, conflicts with section 474 of the Judiciary Law. From this statement, several corollaries may be derived. The first is that the Appellate Division, First Department, may not promulgate a special rule in contravention of a specific statute even under the grant of power under section 83 of the Judiciary Law. ( Chase Watch Corp. v. Heins, 284 N.Y. 129; Moot v. Moot, 214 N.Y. 204; Ackerman v. Ackerman, 123 App. Div. 750, affd. 200 N.Y. 72; Glenney v. Stedwell, 64 N.Y. 120.) Another corollary is that, in usurping power not granted to it by the Legislature, the court has enacted legislation contrary to the method prescribed by the State Constitution.

Further, the rule changes the substantive law of the State for one particular group of lawyers practicing in one particular area of the State. In Matter of Mayor of City of New York (19 Barb. 588) local rules of the General Term of the Supreme Court in the First Judicial District, permitting the court to fix attorneys' fees in street opening proceedings, were held to be void. The court said (pp. 491-492) that the rules, if legal, "are general rules applicable to all cases of like character. Therefore, the general term in a district had no legal power to make them; for which reason, those rules are void and nugatory."

Rule 4 suffers from the same infirmity. If legal, it should be applicable to all cases of like character, not only to cases where the attorney has his office in the First Department, or to cases which are tried in the First Department. Hence, the Appellate Division, First Department, has no power under section 83 of the Judiciary Law to promulgate this "special rule". Hence, lawyers in one part of the State may seek enforcement of a contingent fee retainer in the courts of law but, in the First Department, an action may not be brought if the compensation provided for in the agreement exceeds the limits provided for in rule 4. Such discrimination between citizens of the State with regard to their access to our courts is a violation of the due process and equal protection clauses of the State and Federal Constitutions. (See Gregonis v. Philadelphia Reading Coal Iron Co., 235 N.Y. 152, 159.)

The judgment appealed from should be affirmed, without costs.


I concur with Judge BURKE for affirmance. Much has been said in this case that is completely irrelevant to the sole issue presented, namely: Did the Appellate Division of the First Department have the power to adopt rule 4 insofar as it provides that contingent fees equal to or less than the percentages fixed by it are "fair and reasonable", whereas those in excess "shall constitute the exaction of unreasonable and unconscionable compensation"? (Emphasis supplied.)

At the outset it may be noted that the very body charged by law (Judiciary Law, § 90) with disciplining attorneys has created by its own rule a presumption of guilt of unconscionable conduct, in the nature of a prior restraint, contrary to the express provisions of section 474 of the Judiciary Law. The challenged rule is not one of procedure. It interferes with the freedom of contract and impairs the obligation of existing contracts between attorneys and their clients, by arbitrarily fixing percentage fees, as to the amounts of which in many cases reasonable men might disagree.

We are not concerned here with what Edward I did with the courts and lawyers in 1292, for he assumed to regulate the lives of all his subjects. We live under an entirely different form of government today, under a written Constitution with its three separate branches of government (U.S. Const., arts. I, II, III; N.Y. Const., arts. III, IV, VI), each operating in its own sphere. And a court's first duty is to obey the law itself, no matter how well intentioned it may be in effecting a change.

From the earliest days, the Legislature of this State has exercised exclusive power with respect to attorneys' fees. In 1848, all statutes regulating the fees of attorneys or "restricting or controlling the right of a party to agree with an attorney * * * for his compensation" were abolished. It was then provided that "The measure of such compensation shall be left to the agreement, express or implied, of the parties" (L. 1848, ch. 379, § 258). In 1876, the precise language of the first clause of what is now section 474 of the Judiciary Law was adopted, namely, "The compensation of an attorney or counsellor for his services is governed by agreement, express or implied, which is not restrained by law" (L. 1876, ch. 448, § 66).

In 1908, after an investigation into the abuses of contingent fees, the New York State Bar Association recommended an amendment of the law to allow a court to pass upon the reasonableness of contingent fee contracts in negligence cases and to reduce the attorney's compensation when it was found excessive (31 New York State Bar Assn. Rep. 105-106, 136). This proposal was rejected by the Judiciary Committee of the Assembly, which thought it was an effort "to invade a constitutional right" between lawyer and client (32 New York State Bar Assn. Rep. 194). In 1938, as Judge BURKE points out, a committee of the Association of the Bar recognized that "this deposit of authority must come from new legislation". (Annual Reports of Association of Bar of City of New York [1938], p. 296.)

The case law under section 474 of the Judiciary Law clearly indicates that the function of the court is to determine whether the facts surrounding the agreement in any given case show that the attorney took advantage of the confidential relationship or perpetrated a fraud upon his client ( Rodkinson v. Haecker, 248 N.Y. 480, 488-490; Ward v. Orsini, 243 N.Y. 123, 127-128; Matter of Reisfeld, 227 N.Y. 137, 140; Ransom v. Cutting, 188 N.Y. 447, 450; Morehouse v. Brooklyn Heights R.R. Co., 185 N.Y. 520, 526, reaffd. after new trial 123 App. Div. 680, affd. 195 N.Y. 537; Matter of Fitzsimons, 174 N.Y. 15, 23-24; Matter of Peters [ Bachmann], 271 App. Div. 518, 523, mod. on other grounds 296 N.Y. 974; Matter of Sasson, 231 App. Div. 524, 526; Matter of Liebergall, 189 App. Div. 681, 684; Matter of Lessig, 165 Misc. 706, 708 [in which the attorney claimed that an agreement was unconscionable to his disadvantage]).

In the absence of such showing, we have repeatedly held that under section 474 of the Judiciary Law the measure of an attorney's compensation is fixed by his agreement with his client, unless otherwise provided by law (as, e.g., in Judiciary Law § 474 [as to infants]; Surrogate's Court Act, § 231-a; Real Property Law, §§ 122, 122-a; General Corporation Law, §§ 63-68; Workmen's Compensation Law, § 142, subd. 1), and that a court may not disregard that agreement and substitute its own judgment as to what it believes to be the appropriate compensation for the attorney's services. Nevertheless, the majority is now approving a rule of the Appellate Division which in effect overrules our decisions.

There is neither constitutional nor statutory authority for the enactment of rule 4. While section 83 of the Judiciary Law provides that "A majority of the justices of the appellate division in each department, by order of such majority, shall have power, from time to time, to adopt, amend or rescind any special rule for such department", this may only be done when "not inconsistent with any statute or rule of civil practice". By the same statute, the Justices of the Appellate Division are empowered to amend the Rules of Civil Practice only if "not inconsistent with any statute". When the Legislature declared that the compensation of an attorney for his services is governed by agreement, express or implied, which is not restrained by law, the Appellate Division had no right to enact a rule to the contrary, at the same time creating a presumption of guilt of unconscionable conduct because a lawyer may have contracted for a larger percentage (such as 35% or 40%) than the rule prescribes as reasonable for his services in a personal injury action.

A great deal is said in the prevailing opinion and in appellant's brief about the desirability of rule 4, but, as I have already indicated, these considerations are completely irrelevant in our determination of the Appellate Division's power. In McKinney's Consolidated Laws of New York (Book 1, Statutes, § 73, p. 110), "Avoidance of judicial legislation", it is said (citing numerous cases): "The Constitution of this state vests the legislative power in the Senate and Assembly [N Y Const., art. III, § 1], and that the courts may not divest or usurp this power has been announced so frequently and in such varying language as to defy complete repetition. Thus it is said that courts may not make, change, amend, or repeal a statute, since their function is to interpret, declare, and enforce the law; not to make it. No matter what disastrous consequences may result from following the expressed intent of the Legislature, the Judiciary cannot avoid its duty."

Whether such usurpation of power is effected by rule or by the interpretation and construction of statutes, the result is the same. Section 474 and its predecessor have been on the statute books for well over a century and, despite efforts to secure an amendment thereof, the Legislature has thus far declined to make a change. This does not authorize the courts to usurp its power, for to "supply omissions transcends the judicial function" ( Iselin v. United States, 270 U.S. 245, 251). "A plea that a statute imposes inconvenience or hardship upon a litigant should be addressed to the Legislature; we may not usurp its functions by legislating judicially ( United States v. Carolene Products Co., 304 U.S. 144)" ( People v. Friedman, 302 N.Y. 75, 79); and "`Nothing is more certain than that beneficent aims, however great or well directed, can never serve in lieu of constitutional power.' ( Carter v. Carter Coal Co., 298 U.S. 238, 291.)" ( Matter of Fink v. Cole, 302 N.Y. 216, 225.)

The judgment appealed from should be affirmed, without costs.

Chief Judge CONWAY and Judges DESMOND, DYE and FULD concur with Judge VAN VOORHIS; Judges FROESSEL and BURKE dissent in separate opinions.

Judgment reversed, without costs, and the matter remitted to Special Term for further proceedings in accordance with the opinion herein.


Summaries of

Gair v. Peck

Court of Appeals of the State of New York
May 28, 1959
6 N.Y.2d 97 (N.Y. 1959)

In Gair v. Peck, 6 N.Y.2d 97, 188 N.Y.S.2d 491, 160 N.E.2d 43 (1959), the New York Court of Appeals considered a court rule adopted by an Appellate Division of the Supreme Court, which provided, with exceptions not material to our discussion, that contingent fees in personal injury or death cases in excess of one-third of the net recovery were unreasonable and unconscionable, unless authorized by a written order of the court.

Summary of this case from In re Union Carbide Cons. Prod. Bus. Sec.
Case details for

Gair v. Peck

Case Details

Full title:HARRY A. GAIR et al., Respondents, v. DAVID W. PECK et al., Individually…

Court:Court of Appeals of the State of New York

Date published: May 28, 1959

Citations

6 N.Y.2d 97 (N.Y. 1959)
188 N.Y.S.2d 491
160 N.E.2d 43

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