NEW YORK COURT FINDS 'PREMIUM FEE' CLAUSE IN RETAINER AGREEMENT UNENFORCEABLE
A recent case from the New York State Appellate Division, First Department, highlights the conflict between trying to use creative alternative billing arrangements in divorce cases and the harsh reality of the current rules governing matrimonial fee agreements.
In Sheresky Aronson & Mayefsky v. Whitmore, decided on July 8, 2008, the Appellate Division ruled that Ms. Whitmore’s attorneys could not enforce a clause in her retainer agreement relating to a ‘premium fee.’ That clause stated:
We reserve the right to discuss with you at the conclusion of your matter your payment of a reasonable additional fee to us, in excess of the actual time and disbursements, for exceptional results achieved, time expended, responsiveness accorded, or complexity involved in your case. However, no such fee will be charged to you without your consent.
The complaint filed by Sheresky against its client was dismissed as a matter of law by the trial court, and the Appellate Division affirmed the decision. The Appellate Division held that the clause violated the plain language and specificity provisions of the New York rules governing fee agreements in matrimonial cases. The Court also found that Ms. Whitmore’s oral agreement to pay Sheresky a premium fee of $150,000.00 was not enforceable because of those same rules.
By the way, Sheresky was the firm who represented Peter Cook in his highly publicized divorce case against Christie Brinkley.
I think the Court’s decision was correct under the rules, and I also think the rules are incredibly inhospitable to success or premium fees in matrimonial matters. In order for a premium or success fee to pass muster under the rules, the manner in which the fee is to be calculated must be spelled out in clear and plain language. That is nearly impossible in matrimonial practice, because of the inherently unpredictable and volatile nature of the work.
So, while premium fees might be welcome and appropriate in business or corporate law transactional matters or even certain types of civil litigation, they appear to be unwelcome in New York matrimonial practice.
