Unethical Contingency Fee - State of CT

[noelburke]

PROBLEM:
A house was willed to us for 'purchase at a fair and reasonable price'. We 'hired a lawyer to negotiate what fair and reasonable was for us. In this case - $300,000 was the amount my wife and I had in mind. A lawyer 'friend' of ours agreed to take on the case and originally it was thought that we would sell the house within 5 years or so. We signed a contingency contract with the lawyer (under naivete) in the amount of 30% that would be calculated by the difference in the purchase price and appraised value of the home. We got our asking purchase price of $300,000 and the appraised value was set at $565,000 which means an amount of $88,000 as a continegency fee is expected. This seems ludicrous at this point in time... or any time for that matter! My wife and I had decided many months ago that we wanted to stay in the house for the next 15 - 20 years. Additionally, we feel that our lawyer dragged his feet in bringing this case to conclusion. What should have taken no more than a year - has stretched for 3 1/2 years. The appraisal of the property was significantly higher on the house... at least in our eyes and what we can realistically afford to pay. We entered this contract under a very naive understanding of exactly what we would end up having to pay - and we certainly don't feel like we got $88,000 worth of legal guidance from our lawyer. In fact, my wife and I did a lot of the maneuvering and talking to get the deal done, while the lawyer generated a lot of boilerplate and hyperbole throughout the last few years.

QUESTION: Is 30% a reasonable and ethical figure to charge under these circumstances and are we bound by our contract to pay the full amount of his fee - even though it seems unreasonable to us at this time. We can barely afford the $300,000 purchase of the house - never mind his $80,000 continegency! A one-third contingency seems appropriate for law suits and liability cases - but I think we may have been taken advantage of due to our ability to pay the lawyers traditional hourly rate... and in hopes of being able to buy our first home... we agreed to his 30% continegency fee as a way to 'pay' for our legal expenses.

Do we have any recourse - and have we been taken unfair advantage of?

Any help on this matter would be appreciated. We're supposed to close on our house Oct 12, 2001 and we don't want our lawyer to have part ownership in this deal - which is what he has suggested to us as well. I think the whole thing is beginning to stink!


Sincerely,

Noel Burke

 

[ALawyer]

There are several issues involved in this question, but first some questions.

At what point was the appraised value of the house determined? About the time you signed the contract or 3.5 years later? If the latter, then might one argue that that for him to share in the intervening appreciation is not reasonable, as if the matter was delayed 100 years the ensuing historical inflation would have been even more dramatic. If the former (or close thereto) then you would have known UPFRONT that the difference between the 2 prices was about $80k and having gotten what you wanted you'd be seen as trying to weasel out.

How much time and effort and on the part of the lawyer was involved? What may seem like a little to you may have been enormous. Also, the fact that it took time may not have been the lawyer's fault or it may have been his plan -- perhaps not to screw you but to wear the other side down to get you what YOU wanted.

What offers did you turn down in the meantime? How rigid were you?

Many states and bar associations offer fee arbitration panels, and some require disputes be heard by them. Call the CT state Bar association after thinking the matter through,