Since 1982, California law has required contingent fee agreements between a lawyer and a "plaintiff" to meet certain tests.
Ten years after the law took effect, a California court of appeals held that the law doesn't apply "outside the litigation context." Franklin v. Appell, 8 Cal. App. 4th 875, 892 (Cal. App. 1992) (involving real estate transactions).
Two years after Franklin v. Appell, the Golden State's legislature changed "plaintiff" in most places to "client". See California Business and Professions Code § 6147.
See the train coming?
A California lawyer complied with the statute in two of his fee agreements with clients — almost. One related to tax matters, the second concerned investments. Both provided for a "success fee" on top of a monthly stipend. But neither document included, as section 6147(a)(4) required, "a statement that the [contingent] fee is not set by law but is negotiable between attorney and client."
The Second District Court of Appeal held yesterday that section 6147 barred the lawyer from recovering the success fees. Arnall v. Superior Court of Los Angeles County, No. B225264 (Cal. App. Nov. 22, 2010). It directed the trial court to grant summary adjudication to the lawyer's (former) clients on the point.
The lawyer may now receive a "reasonable fee".