Reisch & Klar v. Sadofsky

In an action on a retainer agreement, defendant appeals from an order of the Supreme Court, Nassau County, entered July 30, 1979, which upon granting plaintiff’s motion for reargument of a prior order of the same court dated June 11, 1979, which order (a) granted plaintiff summary judgment as to liability, and (b) directed a hearing as to "the service rendered and its value”, deleted from the prior order the words "and its value”. Order reversed, without costs or disbursements, order dated June 11, 1979 vacated [518] and motion for summary judgment denied. In the midst of matrimonial litigation, the defendant wife (who was the plaintiff in the matrimonial action) retained plaintiff as new counsel pursuant to an agreement submitted by said plaintiff that the fee was to be $100 for each out-of-court hour of legal services, $125 "for each hour spent in court but not on trial”, and "$1,000.00 per day (or any part thereof) for each day of trial.” Based thereon, and after crediting its client for $1,000 paid on the signing of the retainer, plaintiff sued for $10,338.75 and then sought summary judgment. (We note that plaintiff’s award of $8,500 pursuant to section 237 of the Domestic Relations Law, which was the basis for a judgment against the husband, has not been finally determined [see Sadofsky v Sadofsky, 78 AD2d 520]. We assume that whatever is ultimately paid on that award will be credited towards payment of the ultimate judgment in this case.) In granting summary judgment in favor of the plaintiff on the issue of liability, Special Term stated: "As for the amount due plaintiff, a hearing shall be held to determine both the service rendered and its value.” (Emphasis supplied.) On reargument, the words, "and its value” were deleted. We hold that, under the facts and circumstances of this case where a question is raised concerning the propriety of the retainer agreement, the services rendered and the amount sought in payment therefor by the plaintiff, summary judgment was inappropriate. We believe that a trial is necessary at which there will be a full exploration of all the facts and circumstances including the conditions under which the agreement was made, the extent of the services rendered and the value thereof. This kind of exploratory inquiry is necessary before a factual determination of unconscionability, if warranted, may be made by the court (Gross v Russo, 47 AD2d 655). We note also that the court in Gair v Peck (6 NY2d 97, 107), held that the attorney " 'is an officer of the court and is judged as such, and technical contractual rights must yield to his duty as such officer’ ”, and in this context, the court, in considering whether a retainer agreement was unconscionable because of the exorbitance of the amount demanded, adopted, with approval, the following language of Associate Justice Nathan L. Miller of this court in McCoy v Gas Engine Power Co. (135 App Div 771, 772-773): "the amount of the fee, standing alone and unexplained, may be sufficient to show that an unfair advantage was taken of the client or, in other words, that a legal fraud was perpetrated upon him. (Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520.)” The underlying and implicit control of the court over fee agreements between attorneys and clients is declared in Matter of First Nat. Bank of East Islip v Brower (42 NY2d 471, 474), as follows: "there should be recognition of the traditional authority of the courts to supervise the charging of fees for legal services under the court’s inherent and statutory power to regulate the practice of Law (Gair v Peck, 6 NY2d 97; cf. Judiciary Law, §§ 53, 90, art 15).” Further because of the social implications and public interest the court has been invested with a wider discretion in the control of matrimonial actions. (Winans v Winans, 124 NY 140.) Under this broad criterion and where, as here, the amount is challenged as excessive, the inquiry requires not only a consideration of the quantum of professional services rendered, but also whether the time claimed is reasonable for such work, and whether the amount demanded "is out of proportion to the value of the attorney’s services” (Gross v Russo, supra, p 655) and is, therefore, unconscionable. Under the circumstances presented, we should adhere to our rule in Gross v Russo (supra) in which we held that "A full trial of the issues has been the practice in prior cases and that procedure should be followed here (see Ward v. Orsini, 243 N. Y. [519] 123; Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520; Fellner v. Zuckerberg, 202 Misc. 611, revg. 202 Misc. 122).” Gibbons, Gulotta and Cohalan, JJ., concur.