LEO: Advancing Costs of Litigation -  LE Op. 1237

 

Advancing Costs of Litigation - Contingent Fee Agreement - Filing

Suit Against Client: Recovery of Litigation Costs Advanced by

Attorney.

 

July 13, 1989

 

You have advised that Lawyer was retained by Widow to make a claim for

medical negligence as the cause of her husband's death. The Widow signed

Lawyer's standard engagement contract agreeing that Lawyer would advance

funds for investigation, medical reports and other expenses. Widow further

agreed that, if there was no recovery, she would make reasonable

arrangements to reimburse her attorney for expenses advanced. Widow

advanced initial monies and an additional sum when expenses of reproducing

and distributing a large presentation for the malpractice review panel

exceeded her available balance. On the day before the panel hearing, Widow

and children insisted on discontinuing the proceeding. The attorney

retained the balance in his trust account for several months, and,

assuming that printer would not seek payment for the balance of the bill,

remitted the trust account balance to the client. Approximately one year

later, the attorney received a bill from printer for balance due which the

printer will not address to the ex-client. To protect his own credit, the

attorney paid the printer and billed Widow for the amount paid. Widow

originally agreed to pay the balance in installments to the attorney;

however, she subsequently refused to make any payments although she is

able to do so.

 

You wish to know whether Lawyer is obligated to undertake collection

efforts knowing that the client is solvent and is responsible for those

costs associated with the litigation.

 

The Committee continues to be of the opinion that, in matters involving

litigation, or where a contingency fee agreement has been entered into

between an attorney and his client, advancement of court costs, expense of

litigation, expenses of medical examination, and costs of obtaining and

presenting evidence is permissible only if the client remains ultimately

liable for the actual costs incurred. (See DR:5-103(B) and LE Op. 1056)

 

The Committee opined in LE Op. 1060 that whether the attorney was

obligated to pay the medical provider for photocopies of medical records

was a legal question; but, should the attorney advance the costs for the

records, the client must still remain ultimately responsible for such

expenses.

 

The Committee is of the view that since the client is responsible for the

actual costs and expenses associated with the litigation, an attorney who

has advanced or guaranteed such expense may properly take appropriate

collection actions to recover any amount which he advanced on behalf of

his client for which he has not been reimbursed by the client pursuant to

 DR:5-103(B). The Code of Professional Responsibility is silent regarding

a specific course of action an attorney should follow under the

circumstances, but all legal means are presumed available. It is the

opinion of the Committee that you are not required to undertake collection

efforts against your client if you have reason to believe that such

efforts would be fruitless or involve so much expense that it would not be

worthwhile. A consistent policy of not proceeding against clients for the

collection of expenses advanced would be improper. (See also LE Op. 485)

 

Committee Opinion July 13, 1989