In the recent Suffolk County Supreme Court decision, Salamone v. Cohen, a Long Island divorce attorney’s retainer agreement was deemed null and void as the court found that “the document contained a number of disturbing provisions,” one of which included usurious interest rates. In light of this decision, it is important that you remain vigilant to ensure that your divorce attorney does not overcharge you for his or her legal services.
Long Island Divorce Attorney Files Suit Against Client & Loses
In Salamone v. Cohen, the plaintiff-attorney commenced a breach of contract action against the defendant, a former client, claiming that she failed to pay the sum of $42,161.49 in legal services, along with $10,540.37 in counsel fees and interest at 18% per annum, pursuant to the plaintiff’s retainer agreement signed by the defendant. In the defendant’s opposing papers, she alleged, among other things, that the plaintiff stated that the cost of representation was estimated to be around $5,000.00, and “that she was the victim of ‘massive over-billing,’” and that the plaintiff was “opportunistic in trying to get more money.” Considering the defendant’s serious allegations, the court stated that they were “perplexed” that the plaintiff failed to file reply papers to the defendant’s opposition.
Court Finds Divorce Attorney’s Retainer Agreement “Disturbing”
The court also noted that the retainer agreement signed by the defendant contained a series of “disturbing provisions,” including:
“A waiver of the right to demand a trial de novo following part 137 arbitration, waiver of the client to receive billing as to the retainer amount, waiver of the attorney’s obligation to retain the file and documents for seven years, the assertion that any items that are provided to counsel for the benefit of the client’s case become property of the attorney, together with the minimum billing amounts.”
Court Finds Divorce Attorney’s Interest Rate “Usurious”
In addition, the court found that a provision regarding interest on unpaid bills equated to an annual interest rate of 18%, which is twice the statutory maximum pursuant to CPLR §5004. Because the plaintiff entered into an agreement with the defendant that provided for an interest rate in excess of 6% per annum, the General Obligations Law (which sets a 6% ceiling on interest charged) applied in this case. In granting reverse summary judgment in favor of the defendant, the court held that the interest rate contained in the retainer agreement was usurious and therefore rendered the agreement null and void.
Avoid Massive Overbilling; Understand Your Divorce Retainer
Becoming the victim of massive overbilling can be easily avoided by understanding what should and should not be included in a divorce attorney’s retainer agreement. Pursuant to 22 NYCRR §1400.3, a written retainer agreement is required to provide a client with certain information regarding legal fees. Among this information is the requirement to detail the nature of the services to be rendered in the written retainer. In addition, the retainer agreement must include the amount of an advance retainer fee and for what that fee is intended to be used. The agreement must further inform the client under what circumstances he or she may be refunded the retainer or cancel the agreement.
How Are Fees & Expenses Determined?
Arguably the most important aspect of the retainer agreement is that it must specify how fees and expenses are determined and must also include the hourly rate of each person whose time is being charged. In addition, the agreement must include the frequency of itemized billing, which must be at least every 60 days. The retainer should make clear to the client that they have the right to be provided with copies of all correspondence, as well as other documents pertaining to the case. Lastly, a retainer agreement must include:
“Under what circumstances the attorney might seek to withdraw from the case for nonpayment of fees, and the attorney’s right to seek a charging lien from the court. Should a dispute arise concerning the attorney’s fee, the client may seek arbitration; the attorney shall provide information concerning fee arbitration in the event of such dispute or upon the client’s request.” 22 NYCRR Sec. 1400.3
Concerned About Your Divorce Retainer?
Hornberger Verbitsky, P.C. is Here to Help
To learn more about what you need to know about How Much a Divorce Costs and how to get help to protect yourself and your future, visit this page: https://divorce-longisland.com/divorce-cost/ If you are currently involved in a matrimonial or family law matter in any of the Long Island Divorce Courts, whether in Nassau County or Suffolk County, and, you feel that your current attorney is overcharging you, please feel free to contact our office at 631-923-1910 or fill out the short form on this page for a free and confidential no obligation consultation.