ETH 1156
Opinion 1156
New York Ethics Opinion
New York State Bar Association Committee on Professional Ethics
November 1, 2018
Topic:
Securing fee obligation with mortgage against divorce
client’s property
Digest:
For a lawyer to take a mortgage against a client’s
property to secure a fee in a divorce matter, the lawyer must
comply with all the requirements of Rules 1.5(d)(5) and
1.8(a), including approval by the court.
Rules:
1.0(f) & (g); 1.5(a) & (d)(5), 1.8(a)
FACTS
1. The
inquirer represents a client in a domestic relations matter
that resulted in a judgment of divorce. The inquirer’s
legal services for the client are almost complete, although
the representation continues. The client owes the inquirer
legal fees for the services provided to date.
2. The
client is not readily able to make timely payment of the fees
owed to the inquirer. The client is sole owner of a house in
New York State which the client intends to sell as soon as
possible, a transaction consistent with the client’s
rights under the divorce judgment. The client has requested
that the inquirer defer payment of the outstanding legal fees
until the client sells the house, with the fees to be paid
from the sale proceeds.
3.
Discussions between the client and the inquirer have led to a
tentative understanding, which the inquirer would like to
incorporate into a written agreement, to be signed by both
parties as a revision of the original retainer agreement. The
proposed revision would provide: (1) that the inquirer would
accept a specified amount – significantly less than the
amount currently owed – in full payment of the fee
obligation; (2) that the inquirer would take a mortgage
against the house in the amount of the reduced fees; and (3),
recognizing that the client may not be able to sell the house
immediately, the inquirer would charge no interest on the fee
balance for approximately seven months, after which interest
at a low rate would start to accrue.
QUESTION
4. In a
divorce matter in which there is a judgment, may an attorney
and a client, without court approval, amend the retainer
agreement to give the attorney a mortgage against property of
the client in order to secure the client’s obligation
to pay accrued legal fees in that matter?
OPINION
5.
Legal fees are always subject to certain general provisions...
