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Attorney's Fees in Settlement Cases

The document discusses a dilemma regarding attorney's fees in a contingent fee agreement. The plaintiff's claim was for 1 million pesos, and the agreement stated the lawyer would receive 50% of any amount recovered. The client settled for 750,000 pesos against the lawyer's advice. The document suggests the lawyer could receive 50% of the full claim if the client acted in bad faith, or a maximum of 25% of the settlement if the client acted in good faith. It also discusses a relevant Supreme Court case where the lawyer was awarded reasonable compensation despite the case being withdrawn, not the full contingent fee.

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Ezra Joy Angagan Canosa
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43 views1 page

Attorney's Fees in Settlement Cases

The document discusses a dilemma regarding attorney's fees in a contingent fee agreement. The plaintiff's claim was for 1 million pesos, and the agreement stated the lawyer would receive 50% of any amount recovered. The client settled for 750,000 pesos against the lawyer's advice. The document suggests the lawyer could receive 50% of the full claim if the client acted in bad faith, or a maximum of 25% of the settlement if the client acted in good faith. It also discusses a relevant Supreme Court case where the lawyer was awarded reasonable compensation despite the case being withdrawn, not the full contingent fee.

Uploaded by

Ezra Joy Angagan Canosa
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Dilemma in Attorney’s fees:

The claim of the plaintiff is one million pesos and the contingent fee agreement between the
plaintiff and the lawyer is that the latter will get 50% of whatever the former recovers. The
client, against the advice of the lawyer, entered into an amicable settlement accepting the
settlement of seven hundred fifty thousand pesos. How much can the lawyer collect by way
of contingent fee?

Suggested answer:

If the client entered into that compromise agreement against the consent of his lawyer and
the client acted in bad faith, and he just wanted to escape paying his lawyer, the lawyer is
entitled to the full contingent fee computed from the claim of one million peso to penalize
the client for his bad faith. On the other hand, if he acted in good faith, the lawyer can only
claim a maximum contingent fee of 25% of seven hundred fifty thousand peso.

Cases:

National Power Corp. vs NCEWA G.R No. L-26169

In this case, the lawyer was engaged by the respondent union on the basis of
contingent fees. However, during the pendency of the case the private company and the
union came up with an amicable settlement which led to the withdrawal of the case. Atty.
Balcos now claims the full amount of the contigent fee as stipulated in their contract.

The Supreme Court ruled in this case that the charge that NPC and NPCEWA
intended to defraud Balcos of his fees is likewise without merit. The matter of attorney’s
fees is secondary and subordinate to the paramount interests of the real parties in interest
in adjusting their differences. The Court notes, moreover, that when the said agreement
was being negotiated and concluded, Balcos’ authority to act as NPCEWA’s counsel had
already been revoked And, although attorney’s fees were awarded to him by the court
below, the same were contingent and purely dependent upon the final outcome of the cases
before the Court.

Nonetheless, Balcos may not, by the withdrawal of these cases, be completely


deprived of any legitimate compensation for his professional services. Lawyers are officers
of the court and their fees are subject to the court’s sound discretion. In our opinion, the
court below, under the circumstances obtaining in the cases at bar and it appearing that
Balcos’ services to the union went far beyond the handling of these cases, was better
situated than the Court to determine the reasonable compensation that he should receive
from NPCEWA. In its appraisal thereof, the court a quo (now supplanted by the Secretary of
Labor under the new Labor Code) should take into consideration whatever sums have
already been paid to him by the union employees.

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