Arbitration Clause: Many retainer agreements state that the client is required to arbitrate any dispute arising out of the retainer agreement, such as fee disputes and claims of legal malpractice.   However, an arbitration clause is not enforceable, unless the client is represented by an independent attorney in negotiating the retainer agreement.   See Rule 1.8(h) of the Maryland Lawyers’ Rules of Professional Conduct and Comment 14; Maryland State Bar Association’s Committee on Ethics in Opinion 90-12.  The rationale is that a client is unable to evaluate the desirability of agreeing to arbitrate a claim before a dispute has arisen.

Award of Attorney’s Fees:  Law firms usually state in their retainer agreements that they will be entitled to their reasonable attorney’s fees incurred in collecting the balance owed from a client.  However, some law firms state that they are entitled to a fix percentage of the disputed amount as attorney’s fees.  I just reviewed a retainer agreement that stated the client is obligated “to pay an additional 33.33% of any sum due and owing as reasonable attorney’s fees in the event arbitration and/or suits necessary to secure payment of any sum due under this agreement”.    Such a provision is unenforceable, because the law firm is not entitled to define what constitutes a reasonable a fee.   Monmouth Meadows Homeowners Association, Inc. v. Hamilton 416 Md. 325, fn.14 (2010) (“Our holding that where an attorney is entitled to reasonable fees under the terms of a contract, that attorney is not permitted to define that amount by use of a percentage of a judgment”).  It is the function of the court to determine what constitutes an award of a reasonable fee when an attorney sues a former client for money owed.  Myers v. Kayhoe 391 Md. 188, 207 (2006).

Moreover, a law firm that represents itself in a collections case against a former client is not entitled to any additional attorney’s fees, because it has not incurred any in representing itself.  Greenbriar Condominium, Phase I, Council of Unit Owners, Inc. v. Brooks 159 Md.App. 275, 318 (holding “there is nothing in the contract language to suggest that parties representing themselves are entitled to recover attorney’s fees that they have not incurred”); Greenbriar v. Brooks 384 Md. 581 (2005) (affirmed in part and reversed in part on unrelated issues).

For example, the contingency fee agreement may state:  “Attorney is hereby retained on a contingent basis and is to receive an amount equal to one-third (33 1/3%) of any amount which is received  for Client by settlement.  Attorney is hereby retained on a contingent basis and is to receive an amount equal to forty percent (40%) of any amount which is recovered for Client by suit or arbitration”.  If a lawsuit is filed and a settlement is reached, the attorney is only entitled to a one-third contingency fee, not a 40% contingency fee.  The reason why is that the operative word “recovered”  has two meanings.  Its broad meaning is “to get back or regain”.   But “recover” also has a narrow meaning in the context of jurisprudence: “to obtain by judgment in a court of law”.  At the very least, the subject retainer agreement is ambiguous and should be construed against the attorney as the drafter.

It a common mistake, even among attorneys, not to serve the Confessed Judgment Complaint and Notice of Confessed Judgment on the defendant/debtor.   See Maryland Rule 2-611(c).

Once a debtor is served with process, the debtor has 30-days to move to vacate or alter the confessed judgment on the grounds that the debt  is either not owed or that a different amount is actually owed.  Maryland Rule 2-611(d).   Another defense is that the amount owed should be reduced by a set-off, because the creditor owes money to the debtor.  Because the execution and enforcement of confessed judgment notes are ripe for abuse, courts liberally vacate confessed judgments so that the defendant/debtor may assert his or her defenses.  See Maryland Rule 2-611(e).

A confessed judgment note sometimes states that the attorney retained to obtain a confessed judgment is entitled to a fixed percentage (typically 15%) of the amount owed.   Such a provision is unenforceable, because the reasonableness of an award of attorney’s fees must be determined by the court, not by the maker of the note.   Meyer v. Gyro Transport Systems, Inc.  263 Md. 518, 531 (1971).

If an attorney is suing a client to enforce a confessed judgment note and the attorney is representing himself or herself, the attorney is not entitled to an award of attorney’s fees.   The reason is that a lawyer, who represents himself or herself, has not incurred any legal fees.   Frison v. Mathis 188 Md.App. 97 109 (2009).

In fiscal year 2011, the Fund paid 96 claims, totaling $1,300,052.  In fiscal year 2012, the Fund paid 63 claims, ranging from $66 to $272,633, totaling $436,885.

The amount reimbursed to an individual client cannot exceed 10% of the value of the Fund at the close of the prior fiscal year.   The year end value of the Fund is about $10 million.  The amount reimbursed by the Fund per claim by a client cannot exceed  10% of the value of the fund at the close of the prior fiscal year.

We have all heard horror stories where parties spend $100,000 or more on their divorce.  Some couples make their divorce the last fight of their marriage.  If the the parties have the financial means, attorneys will gladly represent the parties in a protracted divorce.  It is a dirty secret among divorce lawyers that they make more money by prolonging a divorce case than by resolving the case.

Money is the fuel that drives the divorce litigation machine.  If the parties don’t have money or they don’t want to spend a small fortune litigating their divorce case, they can and should enter into a Separation and Property Settlement Agreement to resolve their custody, visitation, support, and property issues.

I recently represented a physician in his divorce case in Montgomery County Circuit Court.  The physician had 3 minor children, owned multiple homes, earned over $250,000 per year, and had numerous retirement accounts.  His divorce case could have been extremely complicated, time-consuming and expensive.  However,  in 10-weeks, I was able to resolve all the issues  and obtain a judgment of absolute divorce.  The entire cost of the physician’s divorce was less than $6,000.00.

Clients are best served by attorneys who can both litigate a divorce case and negotiate a settlement.  In the physician’s case, his wife and her attorney were willing, ready, and able to discuss settlement, because neither party wanted to spend a small fortune on attorney’s fees.   My best advice is to find a divorce attorney who knows how to and wants to negotiate a separation and property settlement agreement at the onset of the divorce case.

The point is that some attorneys know what they’re doing and others definitely do not.   To find out how to select an attorney, please read my article on the subject: http://www.stewartsutton.com/10-things-you-need-to-know-about-retaining-an-attorney

FYI: Maryland Family Law Article § 12-204(i)(1) provides that the court may order that “expenses for attending a special or private elementary or secondary school to meet the particular needs of the child . . . may be divided between the parents in proportion to their adjusted actual incomes”.    Factors as to whether a child has a “particular educational need” to attend private school include (1) the child’s educational history, such as the number of years the child has been in attendance at that particular school; (2) the child’s perform while in the private school; (3) whether the family has a tradition of attending a particular school or whether there are other family members currently attending the school; (4) whether parents had made the choice to send the child to school prior to their divorce; (5) any particular factor that may exist in a specific case that might impact upon the child’s best interest; and (6) the parents’ ability to pay for the schooling.   See Witt v. Ristaino 118 Md. 155 (1997).

Thus, the non-custodial parent should not be required to contribute to a child’s private school tuition when (1) there is no showing of the child’s particular educational needs for private schooling and/or of the inadequacy of public schooling for the child; (2) when there is no showing that, but for the divorce, the child probably would have attended private school; and (3) there is no showing that the parties ever agreed that their child would attend private school.