You are retained by Francie Alpert to represent her in a Small Claims Court debt collection. The defendant, John Bagnoli, owes your client $9,000. At the initial meeting, you explain to Francie Alpert that your fee will be contingent upon the amount that she recovers in the matter and the stage of the proceeding at which she recovers it. If the defendant admits owing the amount claimed after being served with the plaintiff’s claim, your fee, exclusive of disbursements, will be 15 percent of that amount. If the matter goes to pre-trial hearing, your fee will be 20 percent of any amount recovered. If the matter goes to trial, you will charge Francie 25 percent of any amount recovered at trial. If she is unsuccessful, you will charge her nothing.
After a brief discussion of these terms, Francie Alpert agrees to this arrangement. You draft the plaintiff’s claim and serve it on John Bagnoli, who delivers a defence in which he denies all liability and makes a counterclaim against Francie for $7,500.
When you receive the defence and counterclaim, you telephone Francie and tell her that you will have to change the payment terms to reflect the extra work involved in defending the counterclaim. At this stage, about a month after your initial meeting with Francie, you draft a formal contingency agreement and arrange for her to come to your office to go over it with you and sign it. The written agreement contains the original terms set out above. It also states that, in the event the defendant delivers a counterclaim, you will charge the client 30 percent of any amount recovered at the pre-trial stage, and 35 percent of any amount recovered at trial. Francie reads the agreement over. After some argument, she signs it. You give her a duplicate original.
After this meeting, Francie becomes very difficult to deal with. She phones and emails you constantly to find out how the action is progressing. She bombards you with irrelevant and scurrilous information about the defendant. When you try to reason with her, she shouts at you or hangs up the phone. She acts as if she owns your life.
At the pre-trial stage, John Bagnoli offers to withdraw the counterclaim and pay Francie $4,500 in full and final settlement of the matter. Both you and the pre-trial judge consider this a reasonable offer; but when you take your client aside to recommend that she accept it, she becomes extremely angry and abusive. She shouts at you and threatens to fire you, in front of several onlookers. The matter ends up going to trial.
After a three-hour hearing, the judge awards your client the full amount claimed, minus $3,000 owing to the defendant on account of the counterclaim, for a total award to Francie of $6,000. You are very relieved by this outcome.
When you send Francie your invoice for $2,100, being 35 percent of $6,000, she refuses to pay. After several demand letters, you end up commencing a claim against her for the amount owing. All that the claim states is that your client retained you to represent her in a certain matter, that there is a signed contingency agreement and that she was successful at trial. There is also a calculation of the fee owing.
Francie delivers a defence in which she denies all liability. In it, she alleges that you made serious misrepresentations about the terms of the retainer agreement and that you were incompetent in your handling of her claim. Numerous instances of your alleged incompetence are cited. Francie claims that you never returned her phone calls; that you constantly pressured her to settle so that you could collect your fee; and that you did not properly prepare for trial, with the result that she did not recover the full amount claimed.
Before answering the following questions, review the section on contingency fees in chapter 3.
a. What otherwise confidential information are you permitted to disclose (i) to support your claim and (ii) to defend yourself against the allegations of misrepresentation and incompetence?
b. Are there any weaknesses in your position? If yes, what are they, and what could or should you have done to avoid them? If no, why not?
c. Are there any weaknesses in Francie’s position? If yes, what are they, and what could or should Francie have done to avoid them? If no, why not?