Beware
On August 30, in Balducci v. Cige, the Appellate Division of the Superior Court of New Jersey held that attorney Brian Cige had a duty to explain his legal-fee agreement to Lisa Balducci, his former client, so that she could have the opportunity to make an informed decision about her representation.
Balducci retained Cige, a personal friend, to represent her and her child in a New Jersey, statutory Law Against Discrimination action. Cige’s fee agreement required Balducci to pay the greater of either Cige’s hourly rate – thirty-seven and one-half of Balducci’s net recovery including statutory attorneys’ fees – or statutory attorneys’ fees.
Balducci claimed that Cige did not explain the terms of their agreement. Moreover, Cige admitted that he did not inform Balducci that his hourly rate and billing practices could be greater than her recovery, and he did not inform her that he had never tried a case like hers. Instead, when Balducci spoke to Cige about statutory attorneys’ fees and Cige’s hourly rate, Cige told Balducci that the terms were “standard for a case like this,” that Balducci would not be responsible for legal fees if she lost, and that Balducci should not worry about Cige’s hourly rate because they were “friends.”
After several years of Cige’s representation, Balducci terminated their attorney-client relationship due to Cige’s lack of preparation for depositions. Upon termination, Cige informed Balducci that she owed him approximately $250,000 in attorneys’ fees based on his hourly rate, and another $15,955.45 in expenses.
Ultimately, the court concluded that the fee agreement was unenforceable and void because Cige did not make a full and complete disclosure of all of the ramifications the agreement could have on Balducci. Among other principles, the court applied New Jersey Rule of Professional Conduct 1.4(c), which states that “[a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”
Specifically, the court held that since Cige’s fee was based on an hourly rate, Cige was ethically required to inform Balducci of the following and possibilities: 1) his hourly-based fee could exceed her potential recovery; and 2) other competent counsel could represent her solely on a contingent fee basis. Moreover, Cige must have provided Balducci with examples of how much hourly fees have totaled in similar cases and, if Balducci had to advance costs, with examples of approximate costs resulting from depositions and expert fees in similar cases.
Read the full opinion here.
Beware Beware Beware
