By Jennifer J. Rose
Sometimes the willingness of the family law client to sign a retainer agreement, and even pay the retainer, just isn’t enough to make sure that you are going to get paid. You may know that your client simply does not have the financial resources to fund costly litigation such as a child custody case, modification, appeal or other protracted litigation.
Perhaps the client’s mother, boyfriend, or even new spouse promises to pay your fee. Your first indication of their interest in the case may be that check which your prospective client brings to your office, drawn upon the account of a third party. Your client may indicate to you that the third party will pay your fees. You know that you will need more than the client’s assurances that the fee will ultimately be paid.
Get that promise in writing from that third party. Make sure that the payor understands exactly what his or her role is in the case: the payor is a source of payment only. Have the non-client sign a joinder and guarantee agreement. The cosigner should clearly understand that the guarantee does not create an attorney-client relationship between the cosigner and the attorney. Even though the cosigner guarantees payment of attorney’s fees, the consignor will have no rights to determine the course of litigation. You have an ethical obligation to exercise independent professional judgment on behalf of your client, which must be not impaired by the interests of the third-party payor. Make sure that both the client and the cosigner understand that the guarantee of payment will not get in the way of your loyalty to the client.
Stress to the cosigner that, while your acceptance of the prospective client is contingent upon execution of the guarantee agreement, and while you’re truly appreciative of his or her backing, you cannot discuss the case with the cosigner, divulge any client secrets or confidences with the cosigner, or allow the cosigner to in any way impair your ethical obligation to your client. Make certain that both client and cosigner understand that the representation you render would be the same, regardless of the fee guarantee. This message is often assuring news to a cosigner who fears that the guarantee agreement will encourage counsel to pad fees and expenses.
Before accepting a guarantee agreement, make certain that your client understands the agreement and consents to payment of fees by the third- party payor. Generally, this is not a problem: the prospective client dearly wants your representation and will almost always agree to payment of your fees by the guarantor! Lest you fall into an unwanted ethical conundrum, do not accept a cosigner’s agreement to guarantee your fees in the absence of the client’s consent.
While you will submit a duplicate itemized statement of your fees to the cosigner, under certain circumstances it may be appropriate to submit a “sanitized” statement to the cosigner, which deletes certain particulars. (In these cases, the client should be encouraged to share his complete copy of your statement to the cosigner so that the cosigner understands the work undertaken.) Because there is no attorney-client relationship between the attorney and the cosigner, the cosigner could be subject to a subpoena to testify. A subpoena duces tecum could yield valuable discovery information to the opposing party. Similarly, the client’s itemized bill may reveal confidential information which should not be disclosed to the cosigner.
JOINDER AND GUARANTEE AGREEMENT
FOR AND IN CONSIDERATION OF __________________________ (“Attorney”) performing legal services on behalf of and extending credit to
_______________________________ (“Client”), we join and guarantee to pay Attorney in full any indebtedness now or hereafter owing to the Attorney, arising out of services provided for by the terms of the Fee Agreement executed on ______________ (date of execution of Fee Agreement), a copy of which is attached hereto and by this reference incorporated herein. The liability of the undersigned (“Guarantors”) shall be full and absolute as though the same were parties to the Retainer Agreement.
The guarantors understand and agree:
- Liability for payment of this debt does not create an attorney- client relationship between Attorney and Guarantors.
- Execution of the joinder and guarantee agreement does not entitle Guarantors to control of litigation.
- The Guarantors are not entitled to inspection of Attorney’s files or information concerning this case.
- The Attorney will act and rely upon this agreement in extension of credit on behalf of the Client.
This joinder and guarantee agreement shall be immediately binding upon the Guarantors and shall continue in full force and effect until the Guarantors have given written notice to the Attorney not to extend further credit. Delivery of notice shall operate to prevent any liability on the part of the Guarantors for future indebtedness, but Guarantors shall remain liable upon all indebtedness then existing.
DATED this ________ day of ___________________, 20___.
This article was reprinted from 101+ Practical Solutions for Family Lawyers, published by the American Bar Association. Jennifer J. Rose is a writer, editor and recovering lawyer living in Morelia, Michoacan, Mexico. She spent 15 years as editor-in-chief of GP|Solo magazine.
Reprint with permission.