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Hom v. Hom, 210 A.D.2d 296, 622 N.Y.S.2d 282

Facts

George Hom retained the appellant law firm on May 26, 1989, signing a retainer agreement that required him to pay a nonrefundable fee of $15,000 and a consultation fee of $500. After discharging the firm on July 15, 1991, the firm sought to establish a charging lien for $8,883.80. Hom cross-moved for the return of his file and the fees he had paid. The court found the retainer agreement invalid and valued the firm's services at $6,000, ordering a refund of $9,500 to Hom.

The respondent, George Hom, retained the appellant law firm on or about May 26, 1989. He signed a retainer agreement which provided that he, as the appellant's client, agreed to pay $15,000, which was “not to be returned to the client, in whole or in part, under any circumstances”. Hom paid the consultation fee of $500 and the retainer fee of $15,000. On or about July 15, 1991, Hom discharged the appellant from his service.

Issue

Whether the court had the authority to compel the return of fees paid by the client and whether the nonrefundable retainer agreement was valid.

The fact that the court was to determine the attorney's lien does not preclude the court from granting a refund to a former client, as long as that relief was requested.

Rule

The court has the inherent power to compel attorneys to restore assets to clients and to supervise the charging of fees for professional services. Nonrefundable retainer agreements are invalid if they violate the attorney's professional obligations.

It has long been recognized that courts have the traditional authority to supervise the charging of fees for professional services under the court's inherent and statutory power to regulate the practice of law.

Analysis

The court applied the rule by determining that the nonrefundable retainer agreement was invalid and that the attorney's compensation should be based on the reasonable value of services rendered, which was assessed on a quantum meruit basis. The court found that the firm was entitled to $6,000 for its services but had to refund the excess amount paid by the client.

The court properly found the nonrefundable retainer fee was invalid (see, Matter of Cooperman, 83 N.Y.2d 465, 611 N.Y.S.2d 465, 633 N.E.2d 1069), and determined the reasonable value of the appellant's services to be $6,000 and ordered a refund of $9,000 plus the $500 consultation fee.

Conclusion

The court affirmed the decision to deny the appellant's motion for a charging lien and ordered the firm to refund $9,500 to the client.

The court also has the inherent power to compel an attorney to restore assets, moneys, or papers of the client received or retained in violation of the attorney's professional obligations.

Who won?

George Hom prevailed in the case because the court found the nonrefundable retainer fee invalid and determined that he was entitled to a refund of the excess fees paid.

The court found that the retainer agreement was an invalid nonrefundable retainer agreement and therefore determined the value of the firm's services on a quantum meruit basis.

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