Just Pay The Attorney Consultation Fee: You'll Thank Me Later

There is a saying among attorneys that lawyers do well in good economic times and bad. Of course, the latter hasn't been so true in the present bad economic environment, simply because collecting what is owed has been more challenging for attorneys than in the past. But for some, the adage seems to be backwards; that in good economic times, one does not need an attorney. This could not be further from the truth. 

As a litigator, it never ceases to amaze me when a new client walks in my door with contract in hand asking me to defend a lawsuit that has been filed against him, and one look at the contract reveals  the clients' ignorance of the contract's contents or the obligations the client agreed to. 

In good economic times, new business associates are giddy with anticipation when they venture into a new agreement together. They are in the honeymoon phase, shaking hands, back slapping, and congratulating each other on their new contractual arrangement, and pouring the champagne to celebrate how much money they are going to make. However, too often one party to a contract is handed a prewritten contract, that, though there may be some negotiation about the salient terms (e.g. how much is the monthly rent, what percentage of profits am I entitled to, etc.), they do not pay any attention to the "boiler plate" language, or do not recognize the obligations to which they are agreeing. This especially occurs where one party has more "bargaining power" than the other.  Generally, it is usually the small business owner who forgoes consulting an attorney to "save money." Thus, while everyone recognizes the need for the pre-nup, love is blind and one party may be blinded as to what the pre-nup should or should not say. 

Every party to a contract should consult an attorney to go over the contract with a fine toothed comb. Parties to a contract should not rely on one attorney to draw everything up, because the attorney must have allegiance to only one party. The attorney either represents Party One OR Party Two, OR the attorney represents the corporation, in which case she is not an attorney for EITHER Party One or Party Two. Small business owners must consult an attorney of their own to avoid buyer's remorse when five years later the deal goes south in an economic downturn. Here are some real life examples I have encountered over the years. 

Client A recognized that forming a corporation provided a layer of protection to keep his personal assets separate from the obligations of the business. Client A formed a corporation and entered into a commercial lease agreement for the benefit of the business, in the business's name only, but then signed a personal guarantee.  Client A did not realize that a personal guarantee made his personal assets available for collection for the debts of the corporation. Had Client A come to me before signing the lease, he would have known what he was committing himself to, and could have avoided incurring thousands of dollars in legal fees.

Client B signed a 10 year commercial lease that stated if he broke the lease and vacated the premises prior to the 10 year term, then even if the landlord re-leased the premises at exactly the same or even higher rent, Client A would still be held to the balance owed for all future lease payments on the 10 year lease. Had Client B come to me before signing the lease, he would have understood this commitment, and could have perhaps negotiated a shorter lease term with an option to renew.

Client C signed a signature page presented to her by her cousin without asking to see the full document. Nothing more need be said here.

Client D signed a purchase agreement for a condominium that stated he was obligated to pay even if he could not secure financing from a bank. Client D did not realize this, but would have if he had come to me before signing.

Client E signed a contract that stated any litigation arising regarding the contract was to be brought in Florida. I had to explain he could not file suit in Nevada, but had to find an attorney in Florida to bring suit there.

Client F was in the business of purchasing and selling real estate by borrowing money from others. Client F put the title in other's names, but believed he "owned" the property based on an oral agreement he had with these other people. Had he consulted me, I could have explained that courts do not recognize oral agreements for the transfer of real property. A written agreement could have been drafted to accomplish his goals and reasons for recording the title as he did.

A couple of things to note: Consulting an attorney before you sign a contract will not make you "bullet proof." Even if after getting the advice of an attorney, you are able to change the terms of the contract so they are more favorable to you (and that is not always possible depending on with whom you are negotiating), there are always arguments that can be made in litigation to challenge even the most "iron clad" contract.  An attorney also cannot tell you what the best business decision to make is, only you can make the business decisions. But an attorney can do two things: (1) Help you negotiate he best terms possible, and (2) explain the ramifications of the contract so you can make an informed decision before signing on the dotted line.

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Ninth Circuit Rules Lower Court Appropriately Considered Award of Attorney's Fees Under ERISA To Plaintiff After Grant of Summary Judgment Against Plaintiff's Claims

On June 24, 2010, the Ninth Circuit Court decided an ERISA case entitled
Simonia v. Glendale Nissan/Infinity.  Where a plaintiff's claim under ERISA 
has achieved "some degree of success on the merits," the plaintiff may seek
attoreny's fees under section 1132(g) under ERISA.

In this case, Plaintiff's claim for continuing disability benefits was dismissed on
summary judgment, and Plaintiff's "degree of success" amounted to Defendant
Hartford agreeing to dismiss its counterclaim for overpayment of benefits due
to retroactive SSDI payments received by Plaintiff, after Plaintiff informed
Hartford that the Social Security Administration subsequently retroactively
reduced his SSDI award.

The Ninth Circuit, relying on the recent Supreme Court case Hardt v.
Reliance Standard Life Insurance Co., 560 U.S. ___ (2010), concluded 
that in exercising its discretion to award attorney's fees, a trial court must apply
the factors enumerated in Hummell v. S.E. Rykoff & Co., 634 F.2d 446
(9th Cir. 1980), to guide the trial court's decision as to whether to award
attorney's fees a determination that the plaintiff has acheived "some degree of
success" under ERISA..
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Ninth Circuit Finds NY Attorney Entitled to Additional Fees for Value of Referring Case to Nevada Law Firm

The Ninth Circuit has remanded a fee dispute case between attorneys to the trial court for a recalculation of the fees the referring New York attorney is entitled to for the referral to the Nevada law firm that successfully settled the case.

New York attorney Brian Fitzgerald referred a medical malpractice case to the Nevada law firm and alleged that there was an oral agreement to share the fees 50/50. The trial court rejected this argument, instead awarding Fitzgerald fees based on quantum meruit in an amount totaling one third of the added value to the client for Fitzgerald convincing the Nevada law firm to lower its contingency fee arrangement with the client. Fitzgerald appealed both the rejection of the oral agreement and the award under the theory of quantum meruit. The Ninth Circuit affirmed the trial court's rejection of the oral agreement, but remanded the case for the trial court to recalculate the quantum meruit award. The Court concluded that the trial court did not properly consider the value to the Nevada law firm of Fitzgerald's referral of the case to the firm.

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