Florida Bar Clears Foreclosure Defense Attorney In Probe Into Billing Practices

The Palm Beach Post reports:

• Foreclosure defense attorney Peter Ticktin was cleared of wrongdoing by the Florida Bar following a complaint about his firm placing second mortgages on clients' homes to pay for services. Ticktin, who is based in Deerfield Beach but has offices throughout Florida, uses the unique payment plan in cases where homeowners wouldn't otherwise be able to afford an attorney.
• The Bar opened an investigation following media reports about how struggling homeowners were paying court costs. In addition to paying a monthly stipend - a common practice in foreclosure defense - Ticktin said he came up with the second mortgage as a type of contingency fee. If Ticktin's firm gets a case dismissed or a mortgage reduced, the client must take out a new mortgage that awards the firm 40 percent of whatever the homeowner saved.
• A letter from the Bar dated Monday says a grievance committee found "insufficient evidence to determine probable cause for disciplinary proceedings." "We knew we didn't do anything wrong," Ticktin said. "There is no logical reason why it wouldn't be appropriate or ethical."(1)

Source: Florida Bar clears foreclosure lawyer Ticktin over plan.

(1) However, there could be a problem if, once the case is over and the client's overall liability for attorney fees is determined, the amount of the contingent fee, coupled with the fixed monthly stipend paid, is found to be "clearly excessive." See (bold text is my emphasis):

• Rule 4-1.5, Florida Rules of Professional Conduct:
  
  (a) Illegal, Prohibited, or Clearly Excessive Fees and Costs
  
  An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost, or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.
  
  A fee or cost is clearly excessive when: [go here for more of Rule 4-1.5, Florida Rules of Professional Conduct].
• The Florida Bar v. Richardson, 574 So. 2d 60 (Fla. 1990):
  
  This Court recognizes that a lawyer's fee will vary in accordance with many factors; however, we fully concur with the expert witness's statement in this case that all of the time a lawyer spends on a case is not necessarily the amount of time for which he can properly charge his client.
  
  As explained by the expert witness, "[I]t's the time that reasonably should be devoted to accomplish a particular task." This statement is consistent with the principles we set forth in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), and Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), neither of which allows billing clients solely on billable hours or charging clients without determining what is the reasonable time to accomplish a particular task.
• The Florida Bar v. Moriber, 314 So. 2d 145 (Fla. 1975):
  
  Few, if any, areas of attorney discipline are as subject to differing interpretations as the matter of what constitutes an excessive attorney's fee. See The Florida Bar v. Winn, 208 So.2d 809 (Fla. 1968), cert. den., 393 U.S. 914, 89 S.Ct. 236, 21 L.Ed.2d 199. The answer turns upon multiple factors including the difficulty of the case; the contingencies, if any, upon which the fee is based; the novelty of the legal issues presented; the experience of the attorney; the quality of his work product; and the amount of time spent in preparation and litigation.
• Franklin & Marbin, PA v. Mascola, 711 So. 2d 46 (Fla. App. 4th DCA 1998): Commenting on attorneys fee contracts with clients and their enforceabilty, generally, the court observed:
  
  Of course, the supreme court has also long held that attorney's fee contracts are infused with the public interest and that attorneys are not free to negotiate just any fee. In Baruch v. Giblin, 122 Fla. 59, 164 So. 831 (1935), the court said:
  
  "Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation."
  
  164 So. at 833. To meet this public interest, the supreme court has adopted specific rules regulating attorney's fees.[7],[8] The issue of enforceability of lawyer fee contracts is set out in a specific rule that states:
  
  "Contracts or agreements for attorney's fees between an attorney and client will ordinarily be enforceable according to the terms of such contracts or agreements, unless found to be illegal, obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar, prohibited by this rule, or clearly excessive as defined by this rule."[9]
• Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995), where the Florida Supreme Court held that fee contracts that do not comply with the lawyer disciplinary rules are subject to being held void as against public policy. See also American Casualty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.1989); City of Miami v. Benson, 63 So.2d 916 (Fla. 1953); City of Leesburg v. Ware, 113 Fla. 760, 767, 153 So. 87, 90 (1934).

Go here for approximately 100 or so links to Florida cases addressing the issue of attorneys' fees that are 'clearly excessive.' (It may be that, given the Bar's seemingly slumbering approach recently in probing complaints against attorneys in connection with home foreclosures (see The Palm Beach Post: Foreclosure fraud complaints flood Florida Bar but no lawyer reprimands so far), a homeowner may have to file a civil lawsuit to seek redress rather than simply file a complaint with The Florida Bar in a case where one believes they've been clipped with legal fees that are 'clearly excessive'). In this regard, one needs to remember that, just because The Florida Bar says there is no ethical violation of the rules, it doesn't necessarily mean they are right. A court of law (probably an appellate level court) has the final say.

Go here for some links to cases from other jusrisdictions addessing 'clearly excessive' attorneys' fees (or GO HERE to refine a search for the jursidiction of your interest).

(On a side note, it is not unheard of for a court, in determining what constitutes a reasonable attorney fee, to disregard applying a percentage of value approach and, instead, use the lodestar method to calculate the amount of the fee an attorney is entitled to. See Nager v. Teachers' Retirement System of The City of New York, 57 A.D.3d 389, 869 N.Y.S.2d 492 (NY App. Div. 1st Dept. 2008):

• Supreme Court properly used the lodestar method in determining the reasonable value of plaintiffs' attorneys' services in instituting and settling this class action, rather than applying a percentage of the value of the settlement, in view of the enormous disparity in result between the two methods (see Goldberger v Integrated Resources, Inc., 209 F3d 43, 50 [2d Cir 2000]; In re Washington Pub. Power Supply Sys. Sec. Litig., 19 F3d 1291, 1297-1298 [9th Cir 1994]), [...].

Something for litigants to keep in mind when they think their attorney may be taking advantage of their vulnerable situation in getting them to agree to an unfavorable attorney fee agreement.)

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Further, there could also be a 'negligence' problem for any foreclosure defense attorney in Florida (and possibly in other states) who, after gaining a favorable ruling in court on behalf of a client facing foreclosure:

• fails to then file a motion with the court requesting prevailing party attorneys fees to be awarded (the liability for payment to be imposed by the court upon the losing party; ie. the foreclosing bankster), and,
• where a contingency fee is involved, fails to request that a contingency fee multiplier be applied when calculating the attorney fee award.

See:

• Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice,
• Defending A Foreclosure Defense Case Pro Bono? Don't Forget The Contingency Risk Factor When Sticking Losing Lender With Tab.