(4)  This is the point of Rohon v. Rosenblatt
    (a) Facts;
     (i) Plaintiff’s wife applied for a life insurance policy;
     (ii) After application, wife diagnosed with cancer;
     (iii) Policy issued–then wife died;
     (iv) Lawyer told husband that suit would be necessary to collect on the life insurance policy–and that lawsuit would be “horrendous;” It is unclear why the lawyer thought the lawsuit would be needed or why it would be difficult;
     (v) Insurance company paid policy plus interest;
     (vi) Lawyer collected 1/3 of $100,000, even though no suit ever filed;
     (vii) Plaintiff now sues to get legal fee back;
    (b) Is this case saying that there can NEVER be a situation in which a lawyer takes a case on a contingent fee basis, the case turns out easier than both parties thought and the lawyer gets a large fee?  NO
    (c) Is this case saying that a contingent fee can NEVER result in a large amount for a lawyer for a relatively small amount of work?  NO
    (d) This case does help us understand the relationship between lawyer and client and contingent fees;
     (i) Even though attorney is the agent, the attorney is a fiduciary to the client;
     (ii) As a result, the attorney has an obligation of proving fair dealing with the client–why?  Because of Wasserstrom–a distressed client may yield too easily to the demands of the lawyer, who knows more about the system;
     (iii) When is a contingent fee justified?
      1) When there is an actual risk that the client will get nothing;
      2) In this case, no reason for insurance company not to pay–there was no risk;
      3) Does this mean that you cannot take a contingent fee in an accident case in which it is absolutely clear that your client will win, but the only amount is damages?  NO
      4) In that case, the amount of damages is at risk and that is the basis for the fee;
    (e) Here the court finds the contingent fee unreasonable;
     (i) Does court then award the lawyer the reasonable value of the lawyer’s services?
     (ii) No, the court awards the lawyer nothing;
     (iii) It is clear that the court is penalizing the lawyer for the conduct;
     (iv) A court is always an expert in the amount of legal fees and here determines the lawyer should receive none based on combination of work and bad faith dealing with the client;
  vii. Problem (a)(4)
   (1) Contingent fee in structured settlement;  Note 3 following Rohon;
   (2) Here, the Restatement helps;
    (a) If there is an advance fee agreement about how to divide the fee in a structured settlement, the Restatement appears to suggest that it should be followed–BUT WHAT?
     1) The structured settlement agreement can always be reviewed for reasonableness;
     2) If lawyer is getting all the money and client is getting virtually none, the fee is likely be struck down as unreasonable;
    (b) If there is no advance agreement, the lawyer gets paid the lawyer’s share of each payment received by the client;
    (c) If lawyer gets all the fee at the time of the settlement, then fee is based on present value of the settlement;
  viii.  Look now at Note 5 following Rohon–you get a large check from the insurance company and you let the client know about it; You put the check into your trust account–can you immediately pay out on that check?
   (1)  No, of course not, you do not yet have the money;
   (2)  Probably need to explain this to the client;
  ix.  Now look at Note 6 following Rohon, the counterclaim issue; client is awarded $100,000 and you have a 30% contingent fee–the problem is that the defendant is awarded $50,000 on a counterclaim–do you get 30% of $100,000 or 30% of $50,000?
   (1)  This problem is compounded by fact that the client will have another lawyer on the counterclaim–a lawyer from the client’s insurance company;
   (2)  As a result, whatever the adverse party gets on the counterclaim is not lawyer’s “fault;” the lawyer representing client on the $100,000 claim will have little to say about the presentation of the counterclaim–because the lawyer hired by the client’s insurance company will control presentation of that claim;
   (3)  And the lawyer on the counterclaim will be getting paid from the insurance company;
  x.  That’s why Note 7 following Rohon is present, it sets out some of the considerations you might want in a retainer agreement with your client; you are asked what additional provisions you want?
   (1)  The immediate one is that payment check/draft will be deposited into trust and will not be immediately payable;
   (2)  Then certainly a better provision on Structured Settlement–I do not want to get my money with the client on each payment;
   (3)  What about appeal?  Does the contingent fee cover trial only or trial and appeal?
   (4)  What about the counterclaim issue?
  xi. Problem Question (b)--Note 9 following Rohon--
   (1) Rule 1.5(d)(1) forbids contingent fee in matrimonial case, including one seeking distribution of property or support;
   (2) All of these contingent fees are contingent upon the outcome of a matrimonial action and would be prohibited under Rule 1.5;
  xii. Problem Question (c)--This is different from Question (b) in that the divorce action is over and the past due amounts have been reduced to a judgment;
   (1) As Note 9 indicates, there is some authority for the idea that an action to collect only past due amounts for support, which have been reduced to a judgment, are actions that will support a contingent fee because they are really debt collection actions;
   (2)  In such cases, the public policy in favor of preservation of marriage is gone;
  xiii. Problem Question (d)–This is Note 8 following Rohon;
   (1) Rule 1.5(d)(1) forbids a contingent fee in any case the outcome of which is tied to the result of a criminal case;
   (2) This fee is contingent upon outcome of criminal case;  even though structured in a civil action, this fee is not permitted;
  xiv.  Two other Notes;
   (1)  Note 10–there is generally no prohibition against taking contingent fee cases in public policy matters, other than the public policy preventing such a fee in matrimonial and criminal cases;
   (2)  Second, Note 4 following Rohon is for those of you who want to know the income tax consequences of contingent fee cases; The courts are split as to whether the fee of the lawyer is part of the client’s gross income–but if the fee is to be a lien on the client’s award, courts less likely to find the fee part of the client’s gross estate;

 ff. Section E(3) Division of Fees:
  i.  Problem Question (a)
  ii. Here, we have to review some history before we can go forward;
   (1)  Please note distinction between prior D.R. 2-107 and current Model Rule 1.5(e)
   (2) Under D.R. 2-107, division of fees between lawyers not in same firm had to be made on the basis of the percentage of the work done by each lawyer;  Thus, in problem, question (a), under the former Disciplinary Rules, lawyer would have to return the "referral fee" check;
    (a) Why do I mention this?  Two reasons;
    (b) First, many lawyers for whom you work will not know about the provisions of Rule 1.5(e) allowing fee splitting;
    (c) Second, the old rule did not work–it was honored in the breach more than it was honored in reality;
  iii. Under Model Rule 1.5(e), division of fees between lawyers not in same firm can be made if:
   (1) First, either;
    (a) The division is in proportion to the services rendered, OR
    (b) If all lawyers who participate in the fee assume joint responsibility for the representation; AND
   (2) Second, the client is advised and agrees to the share of each lawyer (and here there is a change from the 2001 Rules which only required that client did not object); AND
   (3) Third, the agreement is confirmed in writing, AND
   (4) Fourth, the total fee charged the client is reasonable;
  iv.What does Chambers v. Kay do for us?
   (1)  Facts:
    (a) Chambers and Kay had separate law practices;
    (b) How do I know they are not partners–look at Rule 7.5(d);  these lawyers did not hold themselves out as partners–therefore they were not partners;
    (c) Kay had a client (Weeks) in a sexual harassment case;
    (d) Kay sought Chambers help in the case and Chambers worked on the case and advanced costs in the case;
    (e) There was an agreement between Kay and Chambers as to division of the fee–a copy of that agreement was sent to the client, Weeks, who never consented to it;
    (f) There was a falling out between Kay and Chambers and Kay fired Chambers, allegedly with the consent of the client;
    (g) Weeks won her liability case, Kay collected a fee and Chambers wants some;
   (2)  What does the court do?
    (a) First, it looks to whether Kay and Chambers were partners–Why?
     (i) If they were partners, they would not be governed by Rule 1.5(e);
     (ii) If they were partners they would not need an agreement and Chambers could share;
     (iii) The court finds they are not partners–how?
      1) Looks at Rule 1.0(c) which defines “firm” and Rule 1.10 and determines that whether a firm exists is a factual question;
      2) The court reviews the facts and finds no “firm;”
    (b) Second, the court then looks at California’s version of Rule 1.5(e) and finds that like the ABA rule, there can be no division without the client’s consent;
     (i) Here, it is clear client was notified;
     (ii) But no consent;
     (iii) Court unwilling to consider the notice to the client to be consent;
    (c) Third, the court decides whether Chambers should be paid based on quantum meruit–that is, is it unfair for Kay to keep the entire fee under these circumstances;
     (i) What does court say about that?
     (ii) Cannot let Chambers skirt the rule by getting around it indirectly;
    (d) What, then, does Chambers get?  Nothing;
   (3)  Note 1 following the case makes all these points–the answers to all of the questions are “yes;” Chambers does not get paid simply because Kay did not comply with Rule 1.5(e) in obtaining client consent;
   (4)  Daynard, the case in Note 2 following Chambers, takes the opposite position holding that the lawyer in Kay’s position both breaches a contract and a fiduciary duty in breaching the agreement to split the fee;
    (a) This, of course, sounds like the language of quantum meruit;
    (b) The court does not make that clear in its decision;
  v.How does this help us with Question (b);
   (1)  If the client is notified, and does consent, the Rules allow for the pure referral fee,
   (2) Provided the requirements of the Rule are met regarding joint responsibility;
   (3) Assuming that to be the case, then, there is nothing wrong with the agreement in this problem;
  vi.  Look at a couple of the Notes:
   (1)  Note 4 following Chambers–where there is a valid fee splitting agreement, it can be overridden by the fact that the representation is infected with a conflict of interest;
   (2)  Note 5–if a firm starts a case, and then the firm splits up, the division of fees among the members of the former firm (not among non-members of the former firm) is not fee splitting within the meaning of Rule 1.5(e)–such a division is permissible;
   (3)  Note 6 deals with sharing fees with non-lawyers and this is Question (c)--Rule 1.5(e) will not allow a fee split with a non-lawyer;
    (a) As we saw in dealing with unauthorized practice, under Rule 5.4(a), a lawyer is not generally permitted to share a fee with a non-lawyer;  You can see the numerous examples of impermissible fee splits with non-lawyers in the examples in the note; BUT
    (b) There are numerous exceptions;
     (i) First, it is permissible to share with the estate of a former member of the firm over a reasonable period of time;
     (ii) Second, it is permissible to pay the estate of a deceased or disappeared lawyer the reasonable value of the practice of that lawyer when purchasing that practice under Rule 1.17;
     (iii) Third, non-lawyer employees of the lawyer may be included in a firm benefit plan even though that plan is funded entirely by law firm fees;
     (iv) Fourth, as you can see at the end of the Note, Rule 5.4(a)(4), a lawyer may share legal fees with a non-profit organization if that organization hired or recommended the lawyer;

 gg. Section F--Attorney Malpractice: Malpractice and Other Remedies
 
  i. F(1) Basic Obligation of Care:  Problem, Question (a) & (b)--Legal Theory for Malpractice and requisite proof;
   (1) Togstad v. Vesely, Otto, Miller & Keefe, is the same case we dealt with on the issue of the creation of the attorney-client relationship;
   (2) Facts:
    (a) Some 14 months following her husband suffering overly severe consequences of a medical procedure, Mrs. Togstad was referred by a friend to attorney Miller for discussions about a possible medical malpractice case;
    (b) Mrs. Togstad had no prior relationship--directly or through a family member--with Miller or the firm;
    (c) Mrs. Togstad and Miller met for about 45 minutes in his office and discussed the possibility of a medical malpractice action;
    (d) No fee was charged;
    (e) Miller kept no papers regarding Mrs. Togstad’s husband’s case;
    (f) Mrs. Togstad said that Miller indicated that he did not think that Mrs. Togstad had a case, but that he would discuss the matter with his partners and get back to her if he changed his mind;
    (g) When Mrs. Togstad did not hear, she assumed there was no case and did nothing further;
    (h) She was later advised there might have been a case;
    (i) By this time, statute of limitations had run on original action;
    (j) She filed a legal malpractice action against the law firm.
   (3) As the opinion suggests, because this is a Malpractice--rather than Disciplinary--action, Privity is required--thus, there must be an attorney-client relationship between Miller and Mrs. Togstad for the action to proceed;
   (4) In setting out the 4 elements for a malpractice cause of action, the court actually mentions two distinct legal theories;
    (a) The first theory is Legal Malpractice under the Tort of Negligence and has the following elements:
     (i) Duty--Supplied by A/C relationship;
     (ii) Breach of one of those duties;
     (iii) Damages;
     (iv) Causation;
    (b) The second theory is Legal Malpractice under a Contract Theory and has the following elements:
     (i) Request by client that lawyer provide services (Offer);
     (ii) Consideration by client which can be based on reliance;
     (iii) Acceptance by attorney;
     (iv) Breach of one of the contracted for obligations;
   (5) As we decided in dealing with the attorney/client relationship, the court finds that when an attorney is asked to render advice and does so in a situation in which it is reasonable for the other person to rely on that advice, there is created either a duty, for tort law purposes, or a request coupled with reliance and acceptance, for contract law purposes;
   (6) That finding then creates the requisite privity needed for a malpractice action;
   (7) The court found that Miller could have done several things to have avoided prejudice to Mrs. Togstad;
   (8) Here, consider the lawyer's obligation under the Model Rules:
    (a) Rule 1.1 requiring competence--skill used by other similarly situated attorneys;
    (b) Rule 1.2(c) requiring that any limitations on representation be explained to and agreed upon by the client;
    (c) Rule 1.3 requiring diligence;
    (d) Rule 1.4 requiring communication;
    (e) Rule 1.16 on withdrawal;
     (i) The rule allows an attorney to withdraw if good cause exists;
     (ii) Good cause would exist if Miller and his firm did not think they could handle the case;
     (iii) The rule also requires that an attorney withdrawing must take steps reasonably necessary to protect the client's interests;
    (f) As the opinion indicates, lawyer did not do the things necessary to protect those client interests;
   (9) Use of these ethics rules to highlight the obligation of lawyer to client raises a couple of interesting additional points;
   (10) First: The court mentions negligence in advice and the fact that "but for" this negligence, Mrs. Togstad would have been successful;
    (a) As indicated in Note 6 following Togstad,--malpractice actions are usually viewed as "cases within a case;" Thus, to be successful, plaintiff must prove that client would have been successful in the underlying case; If the client would not have been successful in the underlying case, the attorney’s conduct does not cause the damage now;
    (b) That then brings up the notion of "but for" causation, mentioned in Note 3 following Togstad;  In both transactional and litigation cases, the client must show that “but for’ the attorney’s conduct, the result would have been different or that the attorney’s conduct was a concurrent cause of the harm;
    (c)  What about malpractice on appeal?  Note 9 following Togstad;
     (i) “But for” causation on appeal is established by showing that but for the poor performance on appeal, the appeal was lost; AND
     (ii) Because of the loss on appeal, the underlying case was unsuccessful;
   (11) Second, Note 11 following Togstad;
    (a) Under the prior Rules, many courts would not permit use of the Ethics Rules to set out a duty in a tort analysis, or to create a measure of contract performance in a contract case,
    (b) Those courts were looking at prior Model Rules Scope Notes, paragraph [6];
    (c) Today, court should look to paragraph [20] of the current Scope Notes indicating that violation of a rule does not automatically give rise to a cause of action;
     (i) Why doesn’t violation of a rule automatically give rise to a cause of action?
     (ii) Because as we have just seen, there is not automatically causation from violation of a rule; There also may be no damages;
    (d) As you can see from Restatement, Rules are the standard of care for attorneys and can be used to show that standard;
   (12)  Look at a couple of the other Notes:
    (a) Note 2 makes it clear that damages in a malpractice action are largely unlimited–the benefit of the bargain, the amount the client would have received in personal injury damages in the case below, as well as additional legal fees are all part of the mix;
    (b) Note 5–There is no requirement in most states that lawyers maintain malpractice insurance