NOTES ON LEGAL PROFESSION

Attorneys Fee, Ordinary and Extraordinary Concepts. In

Aquino v. Casabar,1 the Supreme Court explained attorneys fee
in its ordinary and extraordinary concepts:

In the case of Rosario, Jr. v. De Guzman, the Court

clarified a similar issue and discussed the two concepts
of attorneys fees that is, ordinary and extraordinary.
In its ordinary sense, it is the reasonable compensation
paid to a lawyer by his client for legal services rendered.
In its extraordinary concept, it is awarded by the court
to the successful litigant to be paid by the losing party
as indemnity for damages. Although both concepts are
similar in some respects, they differ from each other, as
further explained below:

The attorneys fees which a court may, in proper

cases, award to a winning litigant is, strictly
speaking, an item of damages. It differs from that
which a client pays his counsel for the latters
professional services. However, the two concepts
have many things in common that a treatment of
the subject is necessary. The award that the court
may grant to a successful party by way of
attorneys fee is an indemnity for damages
sustained by him in prosecuting or defending,
through counsel, his cause in court. It may be
decreed in favor of the party, not his lawyer, in
any of the instances authorized by law. On the
other hand, the attorneys fee which a client pays
his counsel refers to the compensation for the
latters services. The losing party against whom
damages by way of attorneys fees may be
assessed is not bound by, nor is his liability
dependent upon, the fee arrangement of the
prevailing party with his lawyer. The amount
stipulated in such fee arrangement may, however,
be taken into account by the court in fixing the
amount of counsel fees as an element of damages.
1 G.R. No. 191470, 26 January 2015.

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 The fee as an item of damages belongs to the
party litigant and not to his lawyer. It forms part
of his judgment recoveries against the losing
party. The client and his lawyer may, however,
agree that whatever attorneys fee as an element
of damages the court may award shall pertain to
the lawyer as his compensation or as part thereof.
In such a case, the court upon proper motion may
require the losing party to pay such fee directly to
the lawyer of the prevailing party.

The two concepts of attorneys fees are similar in

other respects. They both require, as a
prerequisite to their grant, the intervention of or
the rendition of professional services by a lawyer.
As a client may not be held liable for counsel fees
in favor of his lawyer who never rendered
services, so too may a party be not held liable for
attorneys fees as damages in favor of the winning
party who enforced his rights without the
assistance of counsel. Moreover, both fees are
subject to judicial control and modification. And
the rules governing the determination of their
reasonable amount are applicable in one as in the
other.

Form of Contract. Contracts for employment may either be

oral or express. It is oral when the counsel is employed without
a written agreement but the conditions and amount of attorneys
fees are agreed upon. A written agreement is not necessary to
prove a clients obligation to pay attorneys fees.2

Kinds of Payment that May be Stipulated. The kinds of

payment that may be stipulated by the lawyer and the client are
as follows: (1) a fixed or absolute fee which is payable regardless
of the result of the case; (2) a contingent fee that is conditioned
to the securing of a favorable judgment and recovery of money
or property and the amount of which may be on a percentage
basis; (3) a fixed fee payable per appearance; (4) a fixed fee
computed by the number of hours spent; and (5) a fixed fee
based on a piece of work.

2 See Peyer v. Peyer, G.R. No. L-145, 07 September 1946.

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Quantum meruit. Quantum meruit, meaning as much as he
deserved is used as a basis for determining the lawyers
professional fees in the absence of a contract but recoverable by
him from his client. Recovery of attorneys fees on the basis
of quantum meruit is authorized when (1) there is no express
contract for payment of attorneys fees agreed upon between the
lawyer and the client; (2) when although there is a formal
contract for attorneys fees, the fees stipulated are found
unconscionable or unreasonable by the court; and (3) when the
contract for attorneys fees is void due to purely formal defects of
execution; (4) when the counsel, for justifiable cause, was not
able to finish the case to its conclusion; (5) when lawyer and
client disregard the contract for attorneys fees.

In fixing a reasonable compensation for the services rendered by

a lawyer on the basis of quantum meruit, the elements to be
considered are generally (1) the importance of the subject matter
in controversy, (2) the extent of services rendered, and (3) the
professional standing of the lawyer. A determination of these
factors would indispensably require nothing less than a full-
blown trial where private respondents can adduce evidence to
establish the right to lawful attorneys fees and for petitioner to
oppose or refute the same.3

Retaining Fee. A retaining fee is a preliminary fee paid to

ensure and secure a lawyer's future services, to remunerate him
for being deprived, by being retained by one party, of the
opportunity of rendering services to the other party and of
receiving pay from him. In the absence of an agreement to the
contrary, the retaining fee is neither made nor received in
consideration of the services contemplated; it is apart from what
the client has agreed to pay for the services which he has
retained him to perform.4

General Retainer, Special Retainer. A general retainer, or

retaining fee, is the fee paid to a lawyer to secure his future
services as general counsel for any ordinary legal problem that
may arise in the routinary business of the client and referred to
him for legal action. The future services of the lawyer are
secured and committed to the retaining client. For this, the client
pays the lawyer a fixed retainer fee which could be monthly or

3 Rilloraza v. Eastern Telecommunications Philippines, Inc., G.R. No.

104600, 02 July 1999.

4 Research and Services Realty, Inc. v. Court of Appeals, G.R. No. 124074, 27
January 1997.

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otherwise, depending upon their arrangement. The fees are paid
whether or not there are cases referred to the lawyer. The reason
for the remuneration is that the lawyer is deprived of the
opportunity of rendering services for a fee to the opposing party
or other parties. In fine, it is a compensation for lost
opportunities.

A special retainer is a fee for a specific case handled or special

service rendered by the lawyer for a client. A client may have
several cases demanding special or individual attention. If for
every case there is a separate and independent contract for
attorney's fees, each fee is considered a special retainer. 5

Acceptance Fee. An acceptance fee is not a contingent fee, but

is an absolute fee arrangement which entitles a lawyer to get
paid for his efforts regardless of the outcome of the litigation. 6

Champerty. Champerty is a bargain by a stranger with a party

to a suit, by which such third person undertakes to carry on the
litigation at his own cost and risk, in consideration of receiving, if
successful, a part of the proceeds or subject sought to be
recovered.

Champerty is prohibited on the ground of public policy. It

violates the fiduciary relationship between the lawyer and his
client. It has been called as buying into some elses lawsuit.
Champerty has also been described as a form of maintenance. 7

Champertous Contracts. Champertous contracts are

agreement between a third person and a party litigant or a
lawyer and his client wherein the third person with respect to his
client, supports the party litigants or the clients litigation in
exchange for a share of the proceeds emanating from the
litigation, if there are any.8

The Supreme Court explained the concept of champerty in

Cadavedo v. Lacaya:9

5 Traders Royal Bank Employees Union-Independent v. NLRC, G.R. No. 120592, 14

March 1997.

6 Funa, D. Legal and Judicial Ethics (2009 ed.), p. 345

7 Id. at 318-319.

8 Id. at 320.

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 Champerty, along with maintenance (of which
champerty is an aggravated form), is a common law
doctrine that traces its origin to the medieval
period. The doctrine of maintenance was directed
"against wanton and in officious intermeddling in the
disputes of others in which the intermeddler has no
interest whatever, and where the assistance rendered
is without justification or excuse." Champerty, on the
other hand, is characterized by "the receipt of a share
of the proceeds of the litigation by the
intermeddler." Some common law court decisions,
however, add a second factor in determining
champertous contracts, namely, that the lawyer must
also, "at his own expense maintain, and take all the
risks of, the litigation."

The doctrines of champerty and maintenance were

created in response "to medieval practice of assigning
doubtful or fraudulent claims to persons of wealth and
influence in the expectation that such individuals
would enjoy greater success in prosecuting those
claims in court, in exchange for which they would
receive an entitlement to the spoils of the
litigation." "In order to safeguard the administration of
justice, instances of champerty and maintenance were
made subject to criminal and tortuous liability and a
common law rule was developed, striking down
champertous agreements and contracts of
maintenance as being unenforceable on the grounds of
public policy."

In this jurisdiction, we maintain the rules on

champerty, as adopted from American decisions, for
public policy considerations. As matters currently
stand, any agreement by a lawyer to "conduct the
litigation in his own account, to pay the expenses
thereof or to save his client therefrom and to receive
as his fee a portion of the proceeds of the judgment is
obnoxious to the law." The rule of the profession that
forbids a lawyer from contracting with his client for
part of the thing in litigation in exchange for
9 G.R. No. 173188, 15 January 2014.

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 conducting the case at the lawyers expense is
designed to prevent the lawyer from acquiring an
interest between him and his client. To permit these
arrangements is to enable the lawyer to "acquire
additional stake in the outcome of the action which
might lead him to consider his own recovery rather
than that of his client or to accept a settlement which
might take care of his interest in the verdict to the
sacrifice of that of his client in violation of his duty of
undivided fidelity to his clients cause."

Contingent Fee. A contingent fee is the arrangement for the

payment of attorneys fees whereby such attorneys fees are due
only if the lawyer handles a case successfully. Lawyers and their
clients usually resort to this arrangement where money is being
claimed. In a contingent fee arrangement, a lawyer agrees to
receive a fixed percentage of the recovery by the client. The
attorneys fees will come from such recovered amount. If the
case was not pursued successfully, meaning the client failed to
recover any amount from the case, the lawyer bears some risk in
not receiving compensation for the services he has rendered. 10

10 Supra note 6, p. 333.