Attorney’s Fees and Compensation for Legal Services

Problem Areas in Legal Ethics

Arellano University School of Law – Arellano Law Foundation
2019-2020

 CANON 20 - A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01 - A lawyer shall be guided by the following factors in determining his fees:

(a) the time spent and the extent of the service rendered or required;
(b) the novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;

 Cont…
(f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he
belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.

 Cont…
Rule 20.02 - A lawyer shall, in case of referral, with the consent of the client, be entitled to a division of
fees in proportion to the work performed and responsibility assumed.
Rule 20.03 - A lawyer shall not, without the full knowledge and consent of the client, accept any fee,
reward, costs, commission, interest, rebate or forwarding allowance or other compensation whatsoever
related to his professional employment from anyone other than the client.
Rule 20.04 - A lawyer shall avoid controversies with clients concerning his compensation and shall resort
to judicial action only to prevent imposition, injustice or fraud.

 Rule 138
Sec. 24. Compensation of attorneys; agreement as to fees. - An attorney shall be entitled to have and
recover from his client no more than a reasonable compensation for his services, with a view:
1) to the importance of the subject matter of the controversy,
2) the extent of the services rendered, and
3) the professional standing of the attorney.
No court shall be bound by the opinion of attorneys as expert witnesses as to the proper
compensation, but may disregard such testimony and base its conclusion on its own professional
knowledge. A written contract for services shall control the amount to be paid therefor unless found
by the court to be unconscionable or unreasonable.

 Cont…
Section 25, Rule 138 of the Rules of Court:

SEC. 25. Unlawful retention of client’s funds; contempt — When an attorney unjustly retains in his
hands money of his client after it has been demanded he may be punished for contempt as an officer of
the Court who has misbehaved in his official transactions; but proceedings under this section shall not
be a bar to a criminal prosecution.

1
  Rule on division of legal fees
Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee for legal services with persons not
licensed to practice law, except:
(a) Where there is a pre-existing agreement with a partner or associate that, upon the latter's death,
money shall be paid over a reasonable period of time to his estate or to persons specified in the
agreement; or
(b) Where a lawyer undertakes to complete unfinished legal business of a deceased lawyer; or
(c) Where a lawyer or law firm includes non-lawyer employees in a retirement plan even if the plan is
based in whole or in part, on a profit sharing agreement.

 CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT
THAT MAY COME INTO HIS POSSESSION.

Rule 16.01 - A lawyer shall account for all money or property collected or received for or from the client.
Rule 16.02 - A lawyer shall keep the funds of each client separate and apart from his own and those of
others kept by him.
Rule 16.03 - A lawyer shall deliver the funds and property of his client when due or upon demand.
However, he shall have a lien over the funds and may apply so much thereof as may be necessary to
satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also
have a lien to the same extent on all judgments and executions he has secured for his client as provided
for in the Rules of Court.

 Cont…
Rule 16.04 - A lawyer shall not borrow money from his client unless the client's interest are fully
protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he is
handling for the client.

This rule is intended to prevent the lawyer from taking advantage of his influence over the client. –
Junio v. Atty. Grupo, A.C. No. 5020, December 18, 2001

 Legal fees: Important principles of professional responsibility

Attorneys segregate client funds and property from their own. This requirement protects client property
from attorneys' creditors and from abuse by the attorneys themselves.
Second, we explained that an attorney may treat advance funds or other property submitted by the client
in exchange for legal services or other benefits only when the attorney performs those services or confers
the benefits. We agree with the Iowa Supreme Court that an attorney cannot earn a fee for doing nothing.
Third, we stated that attorneys cannot characterize fees as "non-refundable" because an attorney's fees are
always subject to refund if they are excessive or unearned and such a characterization misinforms a client
and may discourage a client from seeking refunds to which he is entitled.

………
An attorney earns a fee only when the attorney provides a benefit or service to the client.
A lawyer cannot charge a fee for doing nothing.
All client funds—including engagement retainers, advance fees, flat fees, lump sum fees, etc.—must be
held in trust until there is a basis on which to conclude that the attorney "earned" the fee, otherwise, the
funds must remain in the client’s trust account because they are not the attorney's property.

2
  The following are the circumstances to be considered in determining
the compensation of an attorney
Section 22 Rule 127 provides that "an attorney shall be entitled to have and recover from his client no
more than reasonable compensation for his services, with a view to the importance of the subject
matter of the controversy, the extent of the services rendered, and the professional standing of the
attorney." In amplification of such rule this Supreme Court "has held that the following are the
circumstances to be considered in determining the compensation of an attorney:
(a) the amount and character of the services rendered;
(b) the labor, time, and trouble involved;
(c) the nature and importance of the litigation or business in which the services were rendered;
(d) the responsibility imposed;

……………
(e) the amount of money or the value of the property affected by the controversy, or involved in the
employment;
(f) the skill and experience called for in the performance of the services;
(g) the professional character and social standing of the attorney;
(h) the results secured;
(i) and whether or not the fee is absolute or contingent, it being a recognized rule that an attorney may
properly charge a much large fee when it is to be contingent than when it is not.

 Client’s conformity to the amount is not controlling

“The fact that the client agreed to the [amount of the fee] does not relieve the attorney from the burden of
showing that the amount agreed upon was fair and reasonable." – Attorney Grievance Commission of
Maryland v. Korotki, 569 A.2d 1224, 1990

 Two commonly accepted concepts of attorney’s fees

 Award of (extraordinary) attorney’s fee is discretionary

The power of this Court to reduce or even delete the award of attorneys’ fees cannot be denied.
Lawyers are officers of the Court and they participate in the fundamental function of administering
justice. When they took their oath, they submitted themselves to the authority of the Court and
subjected their professional fees to judicial control. – Pineda v. Atty. De Jesus, et. al. G.R. No. 155224
August 23, 2006

 Attorney's fees and expenses of litigation proper (under the New Civil Code)
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim;
……..
6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

3
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.

 Primary characteristics which distinguish

the legal profession from business
1. A duty of public service, of which the emolument is a byproduct, and in which one may attain the
highest eminence without making much money.
2. A relation as an "officer of court" to the administration of justice involving thorough sincerity, integrity,
and reliability.
3. A relation to clients in the highest degree fiduciary.
4. A relation to colleagues at the bar characterized by candor, fairness, and unwillingness to resort to
current business methods of advertising and encroachment on their practice, or dealing directly
with their clients. 

 Bases for just compensation

With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money
but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any
attempt on the part of his client to escape payment of his just compensation. – Masmud v. NLRC, G.R.
No. 183385, February 13, 2009

 Attorney's fee is basically a compensation

Attorney's fee is basically a compensation. In its ordinary sense, "the term (compensation) applies not
only to salaries, but to compensation by fees for specific services.“ – Ruiz, et. Al. v. CA, et. Al., G.R. No.
116909 February 25, 1999

 Unconscionable fee
Attorney's fees are unconscionable if they affront one's sense of justice, decency or reasonableness, or if
they are so disproportionate to the value of the services rendered.
Under Section 24, Rule 138 of the Rules of Court, a written contract for services shall control the amount
to be paid therefor unless found by the court to be unconscionable or unreasonable. – Atty. Orocio v.
Anguluan and NPC, G.R. NO. 179892-93 : January 30, 2009

 Lawyer concedes that his/her professional fee is subject to court’s regulatory power
Upon taking his attorney’s oath as an officer of the court, a lawyer submits himself to the authority of
the courts to regulate his right to charge professional fees. – Rayos v. Atty. Hernandez, G.R. No. 169079,
February 12, 2007

 Lawyer’s compensation for professional services rendered

is subject to the supervision of the court
Under Section 24, Rule 138 of the Rules of Court, a written contract for services shall control the amount
to be paid therefor unless found by the court to be unconscionable or unreasonable.
It follows that a lawyer’s compensation for professional services rendered is subject to the supervision of
the court, not just to guarantee that the fees he charges and receives remain reasonable and
commensurate with the services rendered, but also to maintain the dignity and integrity of the legal

4
profession to which he belongs. Upon taking his attorney’s oath as an officer of the court, a lawyer
submits himself to the authority of the courts to regulate his right to charge professional fees. - Atty.
Orocio v. Angulan et. al., G.R. No. 179892-93 [2009]

 When is the best time to agree on the attorney’s fees?

As regards his professional fees, we stress that the proper time to deal with this delicate issue is upon the
commencement of the lawyer-client relationship. xxx Such prudence would have spared the Court this
controversy over a lawyer's compensation, a suit that should be avoided except to prevent imposition,
injustice or fraud. - Dolores Silva vda. de Fajardo v. Atty. Rexie Efren A. Bugaring, A.C. NO. 5113,
October 7, 2004

As regards his professional fees, we stress that the proper time to deal with this delicate issue is upon the
commencement of the lawyer-client relationship. – Silva v. Atty. Bugaring, A.C. No. 5113, October 7,
2004

 Effect if contract for legal services is made before or during the attorney-client relationship
It is important to determine at the outset whether the fee contract was made, as defendants contend and
the trial court found, during the existence of an attorney-client relationship between plaintiff and
defendants or, as plaintiff argues, at the inception thereof. It is more difficult for an attorney to enforce
such a contract if made during the existence of the relationship rather than at its inception.
Some courts hold a contract for a percentage of the recovery made while such a relationship exists is void
and no more than fair and reasonable compensation may be recovered no matter what sum is mentioned
in the contract.

Where such contracts made during the existence of the attorney-client relationship are not regarded as
void they are viewed with suspicion and closely scrutinized by the courts, as are all dealings between
trustee and cestui. There is a presumption of unfairness or invalidity attaching to a contract for
compensation made after the relationship has been established and the burden is on the attorney to show it
was fairly and openly made, that the client was fully informed concerning it and understood its effect. –
Lawrence v. Tschirgi, 57 N.W.2d 46 (1953)

 No breach of contract

 Fees must be earned

We hold that an attorney earns fees only by conferring a benefit on or performing a legal service for the
client. Unless the attorney provides some benefit or service in exchange for the fee, the attorney has not
earned any fees and, with a possible exception in very limited circumstances, the attorney cannot treat
advance fees as her property.

 “Fee” v. “Lien”
They are two different matters.
It is axiomatic, of course, that [lawyer] must show that he is or will become entitled to a fee before he is
entitled to a lien. - The Industry Network System, Inc. v. Armstrong World Industries, Inc. 54 F.3d 150
(1995)
 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. - Yu v. Bondal, A.C. No. 5534, January
17, 2005

5
On the other hand, acceptance fee refers to the charge imposed by the lawyer for merely accepting the
case. This is because once the lawyer agrees to represent a client, he is precluded from handling cases of
the opposing party based on the prohibition on conflict of interest. Thus, the incurs an opportunity cost by
merely accepting the case of the client which is therefore indemnified by the payment of acceptance fee.
Since the acceptance fee only seeks to compensate the lawyer for the lost opportunity, it is not measured
by the nature and extent of the legal services rendered. – Dalupan v. Gacott, A.C. No. 5067, June 29,
2015

 Acceptance fee is not necessary to establish lawyer-client relationship

A lawyer-client relationship was established from the very first moment complainant asked respondent for
legal advice regarding the former’s business. To constitute professional employment, it is not essential
that the client employed the attorney professionally on any previous occasion. It is not necessary that any
retainer be paid, promised, or charged; neither is it material that the attorney consulted did not afterward
handle the case for which his service had been sought. - Burbe v. Atty. Magulta AC No. 99-634. June 10,
2002

 Options to enforce right to professional fees

A lawyer may enforce his right to his fees by filing the necessary petition as an incident of the main
action in which his services were rendered or in an independent suit against his client. The former is
preferable to avoid multiplicity of suits. - Pineda v. Atty. De Jesus, et. al. G.R. No. 155224 August 23, 2006
 Pay the law firm not the handling lawyer
When a client employs the services of a law firm, he does not employ the services of the lawyer who is
assigned to personally handle the case. Rather, he employs the entire law firm. In the event that the
counsel appearing for the client resigns, the firm is bound to provide a replacement. - Rilloza, et. al. v.
Eastern Telecommunications Phils., Inc., G.R. No. 104600 [1999]

 Forum does not qualify payment of compensation

We have noted in the beginning that the services here were rendered in a case of an administrative nature.
But that does not alter the application of the proper rule:

Professional services, to prepare and advocate just claims for compensation, are as legitimate as services
rendered in court in arguing a cause to convince a court or jury that the claim presented or the defense
set up against a claim presented by the other party ought to be allowed or rejected. Parties in such cases
require advocates; and the legal profession must have a right to accept such employment and to
receive compensation for their services. – De Guzman v. Visayan Rapid Transport Co. Inc. G.R. No.
46396 September 30, 1939

 Only reason to file suit

Rule 20.4 of the Code of Professional Responsibility advises lawyers to avoid controversies with clients
concerning their compensation and to resort to judicial action only to prevent imposition, injustice or
fraud. Suits to collect fees should be avoided and should be filed only when circumstances force
lawyers to resort to it. - Pineda v. Atty. De Jesus, et. al. G.R. No. 155224 August 23, 2006

 Quality of legal service should not vary if rendered for free

It is true that he is a court-appointed counsel. But we do say that as such counsel de oficio, he has as
high a duty to the accused as one employed and paid by defendant himself. Because, as in the case of
the latter, he must exercise his best efforts and professional ability in behalf of the person assigned to his
care. His is to render effective assistance. The accused defendant expects of him due diligence, not mere

6
perfunctory representation. We do not accept the paradox that responsibility is less where the
defended party is poor. - In Re: Atty. Adriano, G.R. No. L-26868 [1969]
Rule 14.04 - A lawyer who accepts the cause of a person unable to pay his professional fees shall observe
the same standard of conduct governing his relations with paying clients.

 “Money down first” policy

is unethical
The impropriety lies in the fact that she suggested that complainant borrow money from Domingo
Natavio for the payment thereof. This act impresses upon the Court that respondent would do nothing to
the cause of complainant’s mother-in-law unless payment of the acceptance fee is made. Her duty to
render legal services to her client with competence and diligence should not depend on the payment of
acceptance fee. – Ceniza v. Atty. Rubia, A.C. No. 6166, October 2, 2009

I, do solemnly swear that xxx I will delay no man for money xxx.

 Three important purposes of prohibiting commingling

 Why funds advanced by a client must be segregated

The rule requiring that an attorney segregate funds advanced by the client from the attorney's own
funds serves important interests. As a fiduciary to the client, one of an attorney's primary responsibilities
is to safeguard the interests and property of the client over which the attorney has control.
Requiring the attorney to segregate all client funds— including advance fees—from the attorney's own
accounts unless and until the funds become the attorney's property protects the client's property from
the attorney's creditors and from misuse by the attorney.

 Failure to remove or withdraw earned fees from trust account

The attorney’s practice of leaving unearned fees in his trust account for an indeterminate amount of time
violated the [rule] - Attorney Grievance Comm’n v. Thomas, 409 Md. 121, 150, 973 A.2d 185, 202 (2009)
The attorney violated both the [Rule] by failing, on multiple occasions, to remove earned fees held in trust
for periods of one year or more) - Attorney Grievance Comm’n v. Zuckerman, 386 Md. 341, 370-71, 872
A.2d 693, 710-11 (2005)
“The purpose of the anti-commingling rules is to protect client funds from the claims of creditors of the
attorney.” - Attorney Grievance Comm’n v. Webster, 348 Md. 662, 677, 705 A.2d 1135, 1142 (1998)

 Exception to the comingling rule

Although the default rule is that an attorney must hold flat fees in a client trust or escrow account until
earned, we note that an attorney may obtain informed consent from the client to deposit all of the money
in the lawyer's operating account or to deposit some of the money in the lawyer's operating account as it
is earned, per their agreement.

 Right of a client to compromise suit

The client has also an undoubted right to compromise a suit without the intervention of his lawyer.

Though there is a valid agreement for the payment to the attorney of a large proportion of the sum
recovered in case of success this does not give the attorney such an interest in the cause of action that it
prevents plaintiff from compromising the suit. – Rustia v. The Judge of First Instance of Batangas, G.R.
No. L-19695 November 17, 1922

7
We have recently held that a client has always the right to settle his cause of action and stop litigation at
any stage of the proceeding, subject, however, to the right of the attorney to receive compensation for
services rendered. - Aro v. The Hon. Nañawa, G.R. No. L-24163 [1969]

………..
A client has an undoubted right to settle her litigation without the intervention of the attorney, for the
former is generally conceded to have exclusive control over the subject matter of the litigation and may at
anytime, if acting in good faith, settle and adjust the cause of action out of court before judgment, even
without the attorney’s intervention. It is important for the client to show, however, that the compromise
agreement does not adversely affect third persons who are not parties to the agreement. – Malvar v. Kraft
Foods (Phils.), Inc. (KFPI), G.R. No. 183952, September 9, 2013

…….
By the same token, a client has the absolute right to terminate the attorney-client relationship at any time
with or without cause. But this right of the client is not unlimited because good faith is required in
terminating the relationship. The limitation is based on Article 19 of the Civil Code, which mandates that
"every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith." The right is also subject to the right of the
attorney to be compensated. – Malvar v. Kraft Foods (Phils.), Inc. (KFPI), G.R. No. 183952, September
9, 2013
 Applies only in civil and quasi-delict cases
Rule 1.04 - A lawyer shall encourage his clients to avoid, end or settle a controversy if it will admit of a
fair settlement.

 Limitation of client’s right to compromise suit

While We here reaffirm the rule that "the client has an undoubted right to compromise a suit without
the intervention of his lawyer", We hold that when such compromise is entered into in fraud of the
lawyer, with intent to deprive him of the fees justly due him, the compromise must be subject to the
said fees, and that when it is evident that the said fraud is committed in confabulation with the adverse
party who had knowledge of the lawyer's contingent interest or such interest appears of record and who
would benefit under such compromise, the better practice is to settle the matter of the attorney's fees
in the same proceeding, after hearing all the affected parties and without prejudice to the finality of the
compromise in so far as it does not adversely affect the rights of the lawyer. - Aro v. The Hon. Nañawa,
G.R. No. L-24163 [1969]

 Quantum meruit

 2 purposes of application Quantum meruit

The recovery of attorney’s fees on this basis is permitted, as in this case, where there is no express
agreement for the payment of attorney’s fees. Basically, it is a legal mechanism which prevents an
unscrupulous client from running away with the fruits of the legal services of counsel without paying
for it. In the same vein, it avoids unjust enrichment on the part of the lawyer himself. - Pineda v. Atty.
De Jesus, et. al. G.R. No. 155224 August 23, 2006

 When is Quantum meruit authorized

8
  Factors for application of quantum meruit
In fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum
meruit, factors such as the time spent, and extent of services rendered; novelty and difficulty of the
questions involved; importance of the subject matter; skill demanded; probability of losing other
employment as a result of acceptance of the proferred case; customary charges for similar services;
amount involved in the controversy and the benefits resulting to the client; certainty of compensation;
character of employment; and professional standing of the lawyer, may be considered. - Atty. Orocio v.
Angulan et. al., G.R. No. 179892-93, January 30, 2009

 The court shall fix the amount

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 attorney's fees and for petitioner
to oppose or refute the same. The trial court has the principal task of fixing the amount of attorney's fees.
Hence, the necessity of a hearing is beyond cavil. -Rilloza, et. al. v. Eastern Telecommunications Phils.,
Inc., G.R. No. 104600 [1999]

 What is a contingency contract

 Agreement to pay all expenses of proceedings is champertous

An agreement whereby an attorney agrees to pay expenses of proceedings to enforce the client's rights
is champertous. Such agreements are against public policy especially where, as in this case, the attorney
has agreed to carry on the action at his own expense in consideration of some bargain to have part of
the thing in dispute. The execution of these contracts violates the fiduciary relationship between the
lawyer and his client, for which the former must incur administrative sanctions. - Atty. Orocio v. Angulan
et. al., G.R. No. 179892-93, January 30, 2009

 Champerty and “Doctrine of Maintenance”

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."

 Avoiding Champertous contracts

The rule of the profession that forbids a lawyer from contracting with his client for part of the thing in
litigation in exchange for conducting the case at the lawyer’s expense is designed to prevent the lawyer
from acquiring an interest between him and his client.

 Example of a champertous contract

We the [Fortunados] agree on the 50% contingent fee, provided, you [respondent Ramon Gonzales]
defray all expenses, for the suit, including court fees.

9
 Alfaro T. Fortunado [signed]
Editha T. Fortunado [signed]
Nestor T. Fortunado [signed]

CONFORME:

Ramon A. Gonzales [signed]

 Advancing the expenses without reimbursement

Although a lawyer may in good faith, advance the expenses of litigation, the same should be subject to
reimbursement. The agreement between respondent and the Fortunados, however, does not provide
for reimbursement to respondent of litigation expenses paid by him. An agreement whereby an
attorney agrees to pay expenses of proceedings to enforce the client's rights is champertous xxx.

 Why contingency fee is allowed

Contingent fee contracts are permitted in this jurisdiction because they redound to the benefit of the
poor client and the lawyer “especially in cases where the client has meritorious cause of action, but no
means with which to pay for legal services unless he can, with the sanction of law, make a contract for a
contingent fee to be paid out of the proceeds of litigation. Oftentimes, the contingent fee arrangement is
the only means by which the poor clients can have their rights vindicated and upheld.” - Atty. Orocio v.
Angulan et. al., G.R. No. 179892-93 [2009]

 Contingent fee arrangement must be written

It bears to stress that a contingent fee arrangement is valid in this jurisdiction and is generally recognized
as valid and binding but must be laid down in an express contract. – Felicisima Mendoza vda. De Robosa
v. Atty. Mendoza & Atty. Navarro, Jr., A.C. no. 6056, September 09, 2015
………..
Contingent fees depend on an express contract. Thus, "an attorney is not entitled to a percentage of the
amount recovered by his client in the absence of an express contract to that effect“. Where services were
rendered without any agreement whatever as to the amount or terms of compensation, the attorney is not
acting under a contract for a contingent fee, and a letter by the attorney to the client stating that a certain
sum would be a reasonable amount to charge for his services and adding that a rate of not less than five
percent nor more than ten would be reasonable and customary does not convert the original agreement
into a contract for a contingent fee . – Corpuz v. Court of Appeals, G.R. No. L-40424 June 30, 1980
 Limitations of a contingency agreement
However, in cases where contingent fees are sanctioned by law, the same should be reasonable under all
the circumstances of the case, and should always be subject to the supervision of a court, as to its
reasonableness, such that under Canon 20 of the Code of Professional Responsibility, a lawyer is tasked
to charge only fair and reasonable fees. - Atty. Orocio v. Angulan et. al., G.R. No. 179892-93 [2009]

…….
One court said a provision entitling a lawyer to the “present value” of his contingent fee in the event he is
discharged prematurely is contrary to public policy and unenforceable. - Hoover Slovacek LLP v. Walton,
206 S.W.3d 557, 22 Law. Man. Prof. Conduct 573 (Tex. 2006).

 No breach of contract

10
Because the power of the client to discharge his or her attorney is an "implied term of the retainer
contract," the client does not breach the contract when he or she terminates the attorney-client relationship
based on a reasonable subjective dissatisfaction with the attorney's services, even if the client does not
have "good cause." Furthermore, the fact that an attorney has been retained under a contingent fee
agreement does not affect the client's absolute right to discharge an attorney. – Somuah v. Flachs, 721
A.2d 680 (1998)

 Contingent fee as payment to a witness

Witnesses should always testify truthfully and should be free from any financial inducements that might
tempt them to do otherwise. A lawyer should not pay or agree to pay a non-expert witness an amount in
excess of reimbursement for expenses and financial loss incident to being a witness;  however, a lawyer
may pay or agree to pay an expert witness a reasonable fee for services as an expert.  But in no event
should a lawyer pay or agree to pay a contingent fee to any witness. – Swafford v. Harris, 967 S.W.2d 319
(1998)

 Contingent fee agreement does not violate Article 1491(5) of the NCC

 Whether or not an attorney who was engaged on a contingent fee basis may, in order to
collect his fees, prosecute an appeal despite his client's refusal to appeal the decision of the
trial court.
A practicing attorney, entered into a written agreement with the private respondent to appear as her
counsel in a petition for probate of the holographic will. Under the will, a piece of real property at Sales
Street, Quiapo, Manila, was bequeathed to private respondent. It was agreed that the attorney’s contigent
fee would be thirty-five per cent (35%) of the property that private respondent may receive upon the
probate of the will.
The payment of his fees is contingent and dependent upon the successful probate of the holographic
will. Since the petition for probate was dismissed by the lower court, the contingency did not occur.
Attorney Leviste is not entitled to his fee. - Leviste v. CA, G.R. No. L-29184 [1989]

 Whether or not an attorney who stopped providing legal services could recover based on a
contingent fee contract "prior to full consideration of the contingency”
The court held that, "under the circumstances of this case an attorney may not recover on the contract but
must seek recovery of fees on the theory of quantum meruit." That holding does not establish that any
attorney who withdraws from a contingent fee representation may always recover fees in quantum meruit.
Rather, it establishes that the measure of recovery should be quantum meruit, as opposed to some portion
of the contingent contract. The court concluded, "if Ross is entitled to attorney fees, the measure of those
fees is not the contingent fee agreed upon but the reasonable value of the services rendered.“ - Ross v.
Scannell, 97 Wash. 2d 598, 647 P.2d 1004 (1982)

 Is the lawyer entitled to a professional fee in a contingent fee arrangement if the client
terminates the relationship with or without cause?
When a client agrees to pay an attorney under a contingency fee agreement and terminates the attorney
before occurrence of the contingency, the attorney may recover based on quantum meruit. In contrast to
withdrawal, this rule applies whether the client terminates the relationship with or without cause."

 Effect of withdrawal as counsel

11
The attorney who withdraws with good cause is entitled to fees, but the attorney who withdraws
without good cause is not entitled to fees.
If an attorney is found to have violated the ethical rules, a court may find that any claim to fees from the
matter is invalid.
Accordingly, an attorney contemplating withdrawal must consider whether it would be with or without
cause to determine if the client is required to pay fees because an attorney's lien will always be invalid
when the client is not required to pay fees.

 Three remedies to recover legal fees when prematurely terminated without cause
An attorney who is discharged without cause has three remedies to recover the value of his or her legal
services:
1.the retaining lien,
2.the charging lien, and
3.the plenary action in quantum meruit."

 Case law
Mr. Culpepper sent Mr. Cole a letter in which he confirmed that he would accept the representation on
a contingent fee basis of one-third "of whatever additional property or money we can get for you.
After negotiation between Mr. Culpepper and counsel for the estate of Mr. Cole's mother, Mr. Cole was
offered property worth $21,600.03 over and above what he would have received under the terms of the
decedent's will. Mr. Culpepper thought the compromise was reasonable and recommended to Mr. Cole
that he accept the offer. However, Mr. Cole refused to settle his claim for that amount, believing he
was entitled to a larger share of his mother's succession as a forced heir. When Mr. Culpepper refused
to file suit in the matter, Mr. Cole terminated his representation.
Pursuant to the parties' agreement, Mr. Culpepper is entitled to one-third "of whatever additional property
or money" he obtained on behalf of Mr. Cole. It is undisputed that Mr. Cole recovered no additional
property or money as a result of the litigation against his mother's estate. Because Mr. Cole obtained no
recovery, it follows that Mr. Culpepper is not entitled to any contingent fee.
Nonetheless, Mr. Culpepper urges us to find that his contingency should attach to the settlement offer he
obtained on behalf of his client, even though his client refused to accept that offer. According to Mr.
Culpepper, he did the work for which Mr. Cole retained him, and he is therefore entitled to one-third of
the amount offered in settlement, notwithstanding Mr. Cole's rejection of the settlement offer.

Decision
To allow Mr. Culpepper to recover a contingent fee under these circumstances would penalize Mr. Cole
for exercising his right to reject the settlement. We find no statutory or jurisprudential support for such
a proposition. Indeed, this court has rejected any interpretation of the Rules of Professional Conduct
which would place restrictions on the client's fundamental right to control the case.
In summary, we find that Mr. Culpepper did not obtain any recovery on behalf of Mr. Cole. In the absence
of a recovery, it follows that Mr. Culpepper cannot collect a contingent fee for his services. - Culpepper v.
Cole 929 So.2d 1224 [2006]

 Rationale behind prohibition

of fee splitting with non-lawyers
The rationale usually given for the prohibition of fee splitting with non-lawyers is that "[a] person
entitled to share a lawyer's fees is likely to attempt to influence the lawyer's activities so as to maximize
those fees. That could lead to inadequate legal services.“ -Joseph M. Perillo, The Law of Lawyers'
Contracts Is Different, 67 Fordham L. Rev. 443 (1998).

 Referral fee is void

12
Referrals by one lawyer to another are treated differently. The rule is that a contract to pay an
improper referral fee to a lawyer who steers a client to another lawyer is void.
When the issue of the propriety of a referral-fee agreement arises in litigation-usually when the referring
attorney seeks to enforce the agreement-most courts look to the disciplinary rules.-Joseph M. Perillo,The
Law of Lawyers' Contracts Is Different, 67 Fordham L. Rev. 443 (1998).

 Commission/referral fees prohibited

By openly admitting he divided the Php70,000.00 to other individuals as commission/referral fees
respondent violated Rule 9.02, Canon 9 of the Code of Professional Responsibility which provides that a
lawyer shall not divide or stipulate to divide a fee for legal services with persons not licensed to practice
law. - Lijauco v. Atty. Terrado, A.C. No. 6317 [2006]

 Case of fee-splitting
"1. On all commission or attorney’s fees that we shall receive from our clients by virtue of the collection
that we shall be able to effect on their accounts, we shall divide fifty-fifty. Likewise you are entitled to
commission, 50/50 from domestic, inheritance and commercial from our said clients or in any criminal
cases where they are involved.”

We hold that the said agreement is void because it was tantamount to malpractice which is "the
practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or
brokers" Sec. 27, Rule 138, Rules of Court). Malpractice ordinarily refers to any malfeasance or
dereliction of duty committed by a lawyer. Section 27 gives a special and technical meaning to the term
"malpractice" (Act No. 2828, amending sec. 21 of Act No. 190). – Tan Tek Beng v. David, A.C. No. 1261.
December 29, 1983

 Justification for “referral fee” or “forwarding fee”

The honoring of a referral fee “xxx is merely heeding the Rules of Professional Conduct in rejecting a
case which he does not have the requisite skill or experience to handle competently.”
If the ultimate goal is to assure the best possible representation for a client, a forwarding fee (or referral
fee) is an economic incentive to less capable lawyers to seek out experienced specialists to handle a case.
Thus, with marketplace forces at work, the specialist develops a continuing source of business, the client
is benefited and the conscientious, but less experienced lawyer is subsidized to competently handle the
cases he retains and to assure his continued search for referral of complex cases to the best lawyers in
particular fields. – Moran v. Harris, 131 Cal.App.3d 913 (1982)

……………
Rule 14.03 - A lawyer may not refuse to accept representation of an indigent client if:
(a) he is not in a position to carry out the work effectively or competently;
Rules 18.01 - A lawyer shall not undertake a legal service which he knows or should know that he is not
qualified to render. However, he may render such service if, with the consent of his client, he can obtain
as collaborating counsel a lawyer who is competent on the matter.

 Associate referred a case to another law firm

The primary issue in this case is when an associate of a law firm may refer a matter to another firm or
lawyer without breaching a fiduciary duty to his or her employer.
We hold that an associate owes a fiduciary duty to his or her employer not to personally profit or realize
any financial or other gain or advantage from referring a matter to another law firm or lawyer,
absent the employer's agreement otherwise. – Johnson & Chang v. Brewer & Prithchard, P.C., 73
S.W.3d 193 (2002)

13
  Right to a lien versus duty to account
Lawyers who convert the funds entrusted to them are in gross violation of professional ethics and are
guilty of betrayal of public confidence in the legal profession.
It may be true that they have a lien upon the client’s funds, documents and other papers that have
lawfully come into their possession; that they may retain them until their lawful fees and disbursements
have been paid; and that they may apply such funds to the satisfaction of such fees and disbursements.
However, these considerations do not relieve them of their duty to promptly account for the moneys
they received. Their failure to do so constitutes professional misconduct. In any event, they must still
exert all effort to protect their client’s interest within the bounds of law. – Burbe v. Atty. Magulta AC No.
99-634. June 10, 2002
 Duty of accounting
When a lawyer receives money from a client for a particular purpose involving the client-attorney
relationship, he is bound to render an accounting to the client showing that the money was spent for
that particular purpose.
If the lawyer does not use the money for the intended purpose, he must immediately return the
money to his client. - Navarro & Presbitero, A.C. No. 9872, January 28, 2014

 Written v. Oral Agreements

An agreement between the lawyer and his client, providing for the former’s compensation, is subject to
the ordinary rules governing contracts in general. As the rules stand, controversies involving written and
oral agreements on attorney’s fees shall be resolved in favor of the former. - Conjugal Partnership of
the Spouses Vicente Cadavedo v. Atty. Lacaya, G.R. No. 173188, January 15, 2014

 Written contract of legal fees is ordinarily controlling

A stipulation on a lawyer’s compensation in a written contract for professional services ordinarily
controls the amount of fees that the contracting lawyer may be allowed, unless the court finds such
stipulated amount to be unreasonable or unconscionable. If the stipulated amount for attorney’s fees is
excessive, the contract may be disregarded even if the client expressed their conformity thereto.
Attorney’s fees are unconscionable if they affront one’s sense of justice, decency or reasonableness, or if
they are so disproportionate to the value of the services rendered. In such a case, courts are empowered to
reduce the attorney’s fee or fix a reasonable amount thereof taking into consideration the surrounding
circumstances and the established parameters. - Atty. Orocio v. Angulan et. al., G.R. No. 179892-93
[2009]

 Basis when there is no written contract

 CPR – retaining and charging lien

 Elements of retaining lien

An attorney's retaining lien is fully recognized if the presence of the following elements concur:

(1) lawyer-client relationship;

(2) lawful possession of the client's funds, documents and papers; and
(3) unsatisfied claim for attorney's fees.

14
Further, the attorney's retaining lien is a general lien for the balance of the account between the attorney
and his client, and applies to the documents and funds of the client which may come into the attorney's
possession in the course of his employment. - Valentin C. Miranda v. Atty. Macario D. Carpio, A. C. No.
6281, September 26, 2011

 Exception to the rule of not withholding property of client

Except only for the retaining lien exception under Rule 16.03, Canon 16 of the Code, the lawyer should
not withhold the property of his client. - Segovia-Ribaya v. Atty. Lawsin, A.C. No. 7965, November 13,
2013
 Special, particular, or Charging lien
Rule 138 Section 37. xxx He shall also have a lien to the same extent upon all judgments for the payment
of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of
his client, from and after the time when he shall have caused a statement of his claim of such lien to be
entered upon the records of the court rendering such judgment, or issuing such execution, and shall
have caused written notice thereof to be delivered to his client and to the adverse party; and he shall
have the same right and power over such judgments and executions as his client would have to enforce
his lien and secure the payment of his just fees and disbursements."

 There must be a favorable judgment

A charging lien to be enforceable as security for the payment of attorney's fees requires as a condition
sine qua non a judgment for money and execution in pursuance of such judgment secured in the main
action by the attorney in favor of his client. A charging lien presupposes that the attorney has secured a
favorable money judgment for his client. - Rilloza, et. al. v. Eastern Telecommunications Phils., Inc., G.R.
No. 104600 [1999]

 Retaining lien to Charging lien

If the funds recovered for the client come into the lawyer's possession, the lawyer may detain the
amount claimed as a fee. This use has some similarity to a retaining lien, except that the lawyer may
keep only proceeds of the matter in which the fee is claimed, and only the amount so claimed.
Suppose, however, the certificates of title belonging to a client, come to the possession of his lawyer,
but subsequently, by virtue of a compromise agreement judicially approved, the properties covered by
these are conveyed to other persons, is the retaining lien lost?
It is not.
The position of the lawyer in such a situation is similar to that of a creditor who holds an attachment lien
over the properties, and the client-debtor must discharge the lien before he can dispose the properties
of a third person free of such lien. - Ampil v. Agrava G.R. No. 27394, July 31, 1970.

 What if the title to the property is the very subject of the litigation?
A different rule obtains if the title to the property is the very subject in, dispute in the case, and the court
determines that the client's adversary is rightfully entitled to it. In this latter case, the title to the property
could not be said to be the properties of the client, over which the lawyer may claim a retaining lien. -
Carmelo V. Sison citing Vda. de Caifia v. Victoriano, 105 Phil. 194 (1959)

 Court can order the surrender of documents

“If it be entirely indispensable for the court to gain possession of the documents that have come to the
attorney and are held by him in the course of his employment as counsel, it can require the surrender
thereof by requiring the client or claimant to first file proper and adequate security for the lawyers'
compensation." – Ampil v. Hon. Juliano-Agrava, et. al., G.R. No. L-27394 July 31, 1970

15
  Public documents not subject to retaining lien
The privilege of a retaining lien granted to an attorney does not cover papers and documents which are
public in character and which have been introduced as exhibits. Such papers and documents are
properly subject to the Court’s custody.

 Features of an attorney's general, retaining or possessory lien

 Retaining lien not applicable to adverse party’s property

The situation would be different where title to the properties is the very subject in dispute in the case
and the court adjudges the client's adversary to be rightfully entitled thereto. In such a case, the titles to
the property could not be said to be properties of the client, over which the attorney may claim a
retaining lien.
Con’t….
The retaining lien's primary use is to compel a client to pay through embarrassment or worry.
Attorney lien is the exception to the rule prohibiting an attorney from attaining a proprietary interest in
the cause of action.
Lastly, it is irrelevant whether the papers were retained in connection with the fees in dispute.

 The documents and money must be in the possession of the attorney

A side question also arose because of the lawyer's claim that he "is from time to time also in possession
of the titles belonging to the estate.“
The rule is that the retaining lien is dependent on possession and does not attach to anything not in the
attorney's hands. It exists only so long as the attorney retains possession of the subject matter and
expires when the possession ends. - Carmelo V. Sison citing Vda. de Caifia v. Victoriano, 105 Phil. 194
(1959)

 Whether or not a charging lien can effectively be filed only before judgment is rendered
In a nutshell, the issue is whether the trial court committed a reversible error in denying the motion to
approve attorney's lien and order of payment on the ground that it lost jurisdiction over the case since
judgment in the case has already become final and executory. – Aquino v. Judge Ismael P. Casabar, et. al.,
G.R. No. 191470, January 26, 2015
 Fees for legal services
CONCEPTS:
Earned fees v. unearned fees
Advanced fees - "lump-sum" fees or "flat fees“
Non-refundable fees
Retainer fees
"general retainer" or "engagement retainer“
Negative retainer
Acceptance fee
 Fee labeled as "non-refundable"
A fee labeled "non-refundable" misinforms the client about the nature of the fee and interferes with the
client's basic rights in the attorney-client relationship. Attorney fees are always subject to refund if they
are excessive or unearned.

16
A fee agreement that suggests that advance fees are "non-refundable" undermines the client's
understanding of her rights and may discourage a client from seeking refunds to which the client may be
entitled.
…….
In addition to misinforming the client, "non-refundable fees" may discourage the client from discharging
his attorney for fear that the client will not be able to recover advance fees for which the attorney has yet
to perform any work.

Because the label is inaccurate and misleading, and discourages a client from exercising the right to
discharge an attorney, we hold that attorneys may not enter into "non-refundable fee" agreements or
otherwise communicate to their clients that the fees are "non-refundable."

 Non-refundable fee agreements pose two potential problems

The Committee’s Opinion recognized that nonrefundable fee agreements pose two potential problems.
First, they burden the client’s right to discharge a lawyer for any reason at any time, because the client
may be unable to afford to hire new counsel.
Second, they can give rise to excessive fees. As the Committee noted, “There is little doubt that some
attorneys have attempted to disguise excessive fees using a nonrefundable clause.”

 A client may advance professional fees

In contrast to engagement retainers, a client may advance funds—often referred to as "advance fees,"
"special retainers," "lump sum fees," or "flat fees"—to pay for specified legal services to be performed by
the attorney and to cover future costs.

 Features of Advance fees

Advance fees present an attractive option for both the client and the attorney. Like engagement
retainers, advance fees allow clients to secure their choice of counsel.

Additionally, some forms of advance fees, e.g., "lump sums" or "flat fees," benefit the client by
establishing before representation the maximum amount of fees that the client must pay.
…….
In these instances, the client knows how much the total cost for legal fees will be in advance, permitting
the client to budget based on a fixed sum rather than face potentially escalating hourly fees that may
exceed the client's ability to pay.

So long as the fees are reasonable, such arrangements do not violate ethical rules governing attorney
fees.

…….
Advance fees benefit the attorney because the attorney can secure payment for future legal services,
eliminating the risk of non-payment after the attorney does the work.

Often, attorneys collect a certain amount from the client in advance of any work and deduct from that
amount according to the hours worked or mutually agreed-upon "milestones" reached during
representation (e.g., investigation, pretrial work and motions, negotiations, filings, handling a company's
initial public offering, etc.).
…….
Attorneys often deduct costs from advance payments as they incur the costs, similar to the manner in
which they deduct their fees as they are earned. Advance fees represent an alternative method of obtaining

17
legal assistance that accommodates legitimate needs of both clients and attorneys, and by this opinion we
do not intend to discourage these fee arrangements provided the fee agreements comply with the ethical
principles discussed in this case.

 Whose money is it?

The basic question is, Whose money is it?

If it's the client's money in whole or in part, it is subject to the trust account requirements.

If it is the lawyer's money, placing it into a trust account would violate the anti-commingling rule.

 What is a “flat fee”?

A flat fee is one that "embraces all work to be done, whether it be relatively simple and of short duration,
or complex and protracted.“

A flat fee is different from an engagement retainer, which "is a fee paid, apart from any other
compensation, to ensure that a lawyer will be available for the client if required.“

"In contrast to engagement retainers, a client may advance funds-often referred to as ... `flat fees'-to pay
for specific legal services to be performed by the attorney and to cover future costs."

…….
In sum, a flat fee is an advance of unearned fees because it is money paid up-front for legal services that
are yet to be performed.
A corollary to the rule that a flat fee is an advance of unearned fees, is that the fee must be held as client
funds in a client's trust or escrow account until they are earned by the lawyer's performance of legal
services.
 Engagement retainer
An engagement retainer is a nonrefundable payment to assure the availability of the attorney whether
services are performed or not. Engagement retainers are earned when received, but it may become
necessary to refund even a portion of a retainer if the lawyer withdraws or is discharged prematurely.
these retainers typically compensate an attorney for agreeing to take a case, which requires the attorney to
commit his time to the client's case and causes the attorney to forego other potential employment
opportunities as a result of time commitments or conflicts.

 Presumption
A fee payment that does not cover services already rendered and that is not otherwise identified is
presumed to be a deposit against future services.

 “Advance fees” or “Retainer”

The terms “advance fees” and “retainer” are often used loosely and have been the source of much
confusion. The “true,” “classic” or “general” retainer is rare. It is a fee paid to ensure the lawyer’s
availability for a representation that may or may not be necessary in the future. It is sometimes
characterized as an option agreement in which the client purchases the right to call upon the lawyer’s
services for a specified period of time or a specified case or matter.

 “Advance payment retainer”

18
This type of retainer consists of a present payment to the lawyer in exchange for the commitment to
provide legal services in the future. Ownership of this retainer passes to the lawyer immediately upon
payment.

 General Retainer 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. - Research and Services Realty, Inc. v. CA and Fonacier, Jr.,
G.R. No. 124074. January 27, 1997

 General retainer earned upon receipt

The most logical reading of In re Cooperman is that the court intended to (1) prohibit non-refundable
security retainers; and (2) permit lawyers to treat general retainers as earned upon receipt, but not to
describe them to clients as non-refundable.
After all, because a court may require any fee—including one earned upon receipt—to be disgorged or
refunded if it is ultimately determined to be unreasonable, describing a general retainer as non-
refundable is misleading. - Douglas R. Richmond; Understanding Retainers and Flat Fees; The Journal of
the Legal Profession Vol. 34 (2009)

“General” and “Special” retainers

“True," “General," or “Classic" retainer

Such a retainer is paid by a client to the lawyer to secure the lawyer's availability during a specified
period of time or for a specified matter. This type of retainer is earned when paid and immediately
becomes property of the lawyer, regardless of whether the lawyer ever actually performs any services for
the client.
 General Retainer
An analysis of the contract clearly shows that it was a general retainer, since its primary purpose was to
secure beforehand the services of the private respondent for any legal problem which might afterward
arise.

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. – Research and Services Realty Inc. v. CA and Fonacier,
Jr., G.R. No. 124074 January 27, 1997
……
Only general retainers are “retainers” in the genuine sense of the word; special retainers are in fact fee
advances.

19
Special retainers are further divided into two subcategories: “security retainers” and “advance fee
retainers” or “advance payment retainers.”
……..
The second type of retainer is referred to as a "security retainer."
Under this arrangement, the funds paid to the lawyer are not present payment for future services;
rather, the retainer remains the property of the client until the lawyer applies it to charges for services
that are actually rendered. Any unearned funds are refunded to the client. The purpose of a security
retainer is to secure payment of fees for future services that the lawyer is expected to perform.

 Features of a Retaining fee agreement

Two basic principles come into play:
The first is as stated earlier, viz., that the retaining fee is neither made nor received in consideration of
the services contemplated unless the contract itself so provides.

 Retainer fee is just to secure future services of a lawyer, not as payment for future services
An analysis of the contract clearly shows that it was a general retainer, since its primary purpose was to
secure beforehand the services of the private respondent for any legal problem which might afterward
arise. The fixed retaining fee was P800.00 a month.
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. -Research and Services Realty, Inc. v. Court of Appeals,
G.R. No. 124074 January 27, 1997
 An evergreen retainer
An evergreen retainer, on the other hand, contemplates that the client will pay regularly and that the
lawyer will not tap the retainer for payment until the final bill is due, or, in the case of a bankruptcy
representation, until the court approves the final fee application.

Because the retainer is intact and those funds are unused until the representation concludes, the retainer is
said to be “evergreen.” An evergreen retainer is designed to minimize a lawyer’s risk of nonpayment if
the client’s financial condition deteriorates over the course of the representation, or should the client for
some other reason decline or be unable to pay the lawyer’s fees as they come due.

 Flat fee
A flat fee is an advance fee payment intended to compensate a lawyer for all work to be done on a
matter or a discrete aspect thereof, regardless of the time required or the complexity of the assignment.

 A nonrefundable retainer
A nonrefundable retainer is defined as “a fee paid by a client in advance of services and denominated by
the lawyer as nonrefundable, irrespective of whether the client discontinues the representation or
whether the lawyer does any work.”

 Interest on overdue fees

Lawyers are allowed to charge clients reasonable interest on overdue fees if they specify that obligation
in their engagement letters or fee agreements.

20
  Assignment to third parties to collect unpaid fees
Affected clients might raise malpractice as a defense to payment.

 Labeling a fee "non-refundable" is unethical

Because fees are always subject to refund under certain conditions, labeling a fee "non-refundable"
misleads the client and may deter a client from exercising their rights to refunds of unearned fees.
Thus, we hold that attorneys cannot enter into "non-refundable" retainer or fee agreements. As is the case
with our holding that attorneys must place all unearned funds in trust until the attorney confers a benefit
on or performs a service for the client, we have not previously made this prohibition explicit.
…….
Some forms of advance fees called "non-refundable" fees are often treated by attorneys as earned on
receipt and thus as the attorney's property. In these agreements, attorneys inform their clients that the non-
refundable fee becomes earned on receipt and is the attorney's property irrespective of whether the
attorney performs future legal services and regardless of the time the attorney devotes to the client's case.
These arrangements are controversial because attorneys treat funds as their own property before
performing any legal services for the client.
……
A fee labeled "non-refundable" misinforms the client about the nature of the fee and interferes with the
client's basic rights in the attorney-client relationship. Attorney fees are always subject to refund if they
are excessive or unearned.
A fee agreement that suggests that advance fees are "non-refundable" undermines the client's
understanding of her rights and may discourage a client from seeking refunds to which the client may be
entitled.
…….
In addition to misinforming the client, "non-refundable fees" may discourage the client from discharging
his attorney for fear that the client will not be able to recover advance fees for which the attorney has
yet to perform any work.
Because the label is inaccurate and misleading, and discourages a client from exercising the right to
discharge an attorney, we hold that attorneys may not enter into "non-refundable fee" agreements or
otherwise communicate to their clients that the fees are "non-refundable."

 “Flat fee” or “fixed fee”

A flat fee (sometimes called a “fixed fee”) is a fee based on an agreed amount for particular services,
regardless of the time or effort involved and regardless of the result obtained.  
A “flat fee” is a type of fee paid in advance for specified legal services to be performed by the attorney.
…….
Flat or fixed fee arrangements can benefit the client by establishing in advance the maximum amount
the client will have to pay for legal fees, thus permitting the client to budget based on a fixed sum rather
than face potentially escalating hourly fees that may exceed the client's ability to pay.

 Post-discharge fee
The post-discharge fee must, of course, be reasonable.
Lawyer reprimanded for including “discharge clause” in contingent fee contract that would have required
client to pay greater of $350 hourly fee or 40 percent of settlement amount if lawyer were discharged.
The lawyer may not claim the full contingent fee upon discharge if it would constitute an excessive fee.
Not allowed in contingent fee agreement.

 Void contract still entitles lawyer to a fee

21
As a general rule an attorney may recover the reasonable value of services rendered under a void
contract. However, recovery is grounded on a quantum meruit theory, not on the terms of the voided
contract.
 When an acceptance fee must be returned
On July 22, 2013, the Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD) received
the Complaint-Affidavit executed by herein complainant alleging that he engaged the legal services of
respondent relative to certain criminal cases for grave threats, grave coercion, grave oral defamation and
unjust vexation which he intended to file against an Indian national; that in connection therewith,
respondent charged complainant P40,000.00 as acceptance fee and P3,500.00 as appearance fee; that
complainant paid respondent a total of P43,500.00;

……..
that the criminal cases did not materialize because these were amicably settled at the barangay level; that,
for this reason, he demanded that respondent return the amount of P43,500.00 because the cases were
settled without the latter's participation, and no complaint was actually filed in court; but that, instead of
heeding his demand, respondent replied in anger and shouted at him (complainant), saying that the
P43,500.00 complainant gave him was not enough for his services. – Flora III v. Atty. G. Luna, A.C.
No.11486, October 17, 2018

…….
In regard to the restitution of the amount paid to respondent by complainant, the Court has allowed the
return of acceptance fees when a lawyer completely fails to render legal service. While an acceptance fee
is generally non-refundable, this presupposes that the lawyer has rendered legal service to his client.
Here, not having rendered any legal service, respondent had no right to retain complainant's payment. –
Flora III v. Atty. G. Luna, A.C. No.11486, October 17, 2018

 Does not survive the death of the defendant

The Court ruled that an action for the satisfaction of attorney's fees is founded on a personal obligation
which does not survive the death of the defendant before adjudication.
……
Viewed in proper perspective, an action to recover attorney's fees is basically a monetary claim, which
under Section 21, Rule 3 of B.P. 129 is an action that does not survive.

 Can the free legal services offered by the Public Attorney's Office (PAO) prevent the award of
attorney's fees upon the successful conclusion of the litigation?

Can an indigent litigant and the PAO enter into an agreement assigning attorney's fees in favor
of the latter?
Nothing prevents [the indigent litigant] and the PAO from entering into an agreement assigning attorney's
fees in favor of the latter. - Alva v. High Capacity Security Force, Inc., G.R. No. 203328, November 8,
2017
…..
In fact, the matter of entitlement to attorney's fees by a claimant who was represented by the PAO has
already been settled.
The Court, speaking through Associate Justice Arturo D. Brion ruled that the employees are entitled to
attorney's fees, notwithstanding their availment of the free legal services offered by the PAO.
The Court ruled that the amount of attorney's fees shall be awarded to the PAO as a token recompense to
them for their provision of free legal services to litigants who have no means of hiring a private lawyer, to
wit:
……

22
It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the award of attorney's fees is legally and morally
justifiable. Moreover, under the PAO Law or Republic Act No. 9406, the costs of the suit, attorney's fees
and contingent fees imposed upon the adversary of the PAO clients after a successful litigation shall be
deposited in the National Treasury as trust fund and shall be disbursed for special allowances of
authorized officials and lawyers of the PAO.
Thus, the respondents are still entitled to attorney's fees. The attorney's fees awarded to them shall be paid
to the PAO. It serves as a token recompense to the PAO for its provision of free legal services to litigants
who have no means of hiring a private lawyer.
Thus, Alva's availment of free legal services from the PAO does not disqualify him from an award of
attorney's fees. Simply put, Alva should be awarded attorney's fees notwithstanding the fact that he was
represented by the PAO. – Alva v. High Capacity Security Force, Inc., G.R. No. 203328, November 8,
2017

 Improper for a lawyer to impose additional professional fees

 Quantum meruit does not apply

Respondent's further submission that he is entitled to the payment of additional professional fees on the
basis of the principle of quantum meruit has no merit. "Quantum meruit, meaning `as much as he
deserved' is used as a basis for determining the lawyer's professional fees in the absence of a contract but
recoverable by him from his client.“ The principle of quantum meruit applies if a lawyer is employed
without a price agreed upon for his services. In such a case, he would be entitled to receive what he merits
for his services, as much as he has earned. In the present case, the parties had already entered into an
agreement as to the attorney's fees of the respondent, and thus, the principle of quantum meruit does not
fully find application because the respondent is already compensated by such agreement. - Valentin C.
Miranda v. Atty. Macario D. Carpio, A. C. No. 6281, September 26, 2011

 Withdrew for unpaid attorney’s fee

There is sufficient evidence which indicates complainant's willingness to pay the attorney's fees. AS
agreed upon, complainant paid half of the fees in the amount of P7,500.00 upon acceptance of the case.
And while the remaining balance was not yet due as it was agreed to be paid only upon the completion
and submission of the brief, complainant nonetheless delivered to respondent lawyer P4,000.00 as the
latter demanded. This, notwithstanding, Atty. Dealca withdrew his appearance simply because of
complainant's failure to pay the remaining balance of P3,500.00 which does not appear to be deliberate.
The situation was aggravated by respondent counsel's note to complainant withdrawing as counsel which
was couched in impolite and insulting language.

 Letter to client for unpaid pf

28 February 1994

Pepe and Del Montano,

For breaking your promise, since you do not want to fulfill your end of the bargain, here’s your
reward:
Henceforth, you lawyer for yourselves. Here are your papers.

23
 Johnny

- Montano v. IBP & Atty. Dealca, A.C. No. 4215. May 21,
2001

 Backdoor dealings of a client not allowed

On considerations of equity and fairness, the Court disapproves of the tendencies of clients compromising
their cases behind the backs of their attorneys for the purpose of unreasonably reducing or completely
setting to naught the stipulated contingent fees. Thus, the Court grants the Intervenor’s Motion for
Intervention to Protect Attorney’s Rights as a measure of protecting the Intervenor’s right to its stipulated
professional fees that would be denied under the compromise agreement. The Court does so in the interest
of protecting the rights of the practicing Bar rendering professional services on contingent fee basis. –
Malvar v. Kraft Foods (Phils.), Inc. (KFPI), G.R. No. 183952, September 9, 2013

 Right of a client to settle

A client has an undoubted right to settle her litigation without the intervention of the attorney, for the
former is generally conceded to have exclusive control over the subject matter of the litigation and may at
anytime, if acting in good faith, settle and adjust the cause of action out of court before judgment, even
without the attorney’s intervention. It is important for the client to show, however, that the compromise
agreement does not adversely affect third persons who are not parties to the agreement. – Malvar v. Kraft
Foods (Phils.), Inc. (KFPI), G.R. No. 183952, September 9, 2013

…….
By the same token, a client has the absolute right to terminate the attorney-client relationship at any time
with or without cause. But this right of the client is not unlimited because good faith is required in
terminating the relationship. The limitation is based on Article 19 of the Civil Code, which mandates
that "every person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith." The right is also subject to the right of the
attorney to be compensated. – Malvar v. Kraft Foods (Phils.), Inc. (KFPI), G.R. No. 183952,
September 9, 2013

 The imposition of interest on the amount of attorney’s fees is not warranted

…….
Besides, the imposition of legal interest on the amount payable to private respondent is unwarranted.
Article 2209 of the Civil Code invoked by Atty. Moya and cited by the appellate court, finds no
application in the present case. It is a provision of law governing ordinary obligations and contracts.
Contracts for attorney's services in this jurisdiction stand upon an entirely different footing from contracts
for the payment of compensation for any other services. – Cortes v. Court of Appeals, GR No. 121772,
Jan 13, 2003
 Written contract prevails over oral agreement

 Duty to issue a receipt

Moreover, Atty. Camacho failed to issue a receipt to MDAHI from the moment he received the said
amount. In Tarog v. Ricafort, the Court held that ethical and practical considerations made it both natural
and imperative for a lawyer to issue receipts, even if not demanded, and to keep copies of the receipts for

24
his own records. Pursuant to Rule 16.01 of the CPR, a lawyer must be aware that he is accountable for the
money entrusted to him by the clients, and that his only means of ensuring accountability is by issuing
and keeping receipts. - Sison, Jr. v. Atty. Camacho, A.C. No. 10910 [Formerly CBD Case No. 12-3594],
January 19, 2016

 Null and void –

fee-splitting agreement
We ruled in Tan Tek Beng v. David that an agreement between a lawyer and a layperson to share the fees
collected from clients secured by the layperson is null and void, and that the lawyer involved may be
disciplined for unethical conduct. - Manuel G. Villatuya v. Atty. Bede S. Tabalingcos A.C. no. 6622, July
10, 2012
 Is the corporation liable to pay the legal fees?
Counsel alleged that he represented members of the Francisco family in the intestate estate proceedings of
the late Benita Trinidad. However, even after the termination of the proceedings, his services were not
paid. Said family members, he said, were also incorporators, directors and officers of Francisco Motors
Corporation. Hence, he filed a claim for the unpaid attorney’s fees against the corporation and family
members. Counsel sought to collect legal fees not just from certain Francisco family members but also
from the corporation on the claims that its management had requested his services.
…….
The corporation questions the propriety of its being made party to the case because it was not the real
party in interest but the individual members of the Francisco family concerned with the intestate case.
Further, the services for which counsel seeks to collect fees from the corporation are personal in nature.
Hence, it avers the heirs should have been sued in their personal capacity, and not involve the corporation.
Note also that counsel sought to collect legal fees not just from certain Francisco family members but also
from the corporation on the claims that its management had requested his services.
…….
The personality of the corporation and those of its incorporators, directors and officers in their personal
capacities ought to be kept separate in this case. The claim for legal fees against the concerned individual
incorporators, officers and directors could not be properly directed against the corporation without
violating basic principles governing corporations. It is plainly an error to lay the claim for legal fees at the
door of the corporation rather than individual members of the Francisco family. – see Francisco Motors
Corporation v. CA and Sps. Manuel, G.R. No. 100812. June 25, 1999

 Interpreting and enforcing attorney-client fee agreements

When interpreting and enforcing attorney-client fee agreements, it is "not enough to simply say that a
contract is a contract. There are ethical considerations overlaying the contractual relationship." - Lopez v.
Muñoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 868 (Tex.2000)

 Attorney hired on a contingent-fee basis is discharged without cause

Xxx if an attorney hired on a contingent-fee basis is discharged without cause before the representation is
completed, the attorney may seek compensation in quantum meruit or in a suit to enforce the contract by
collecting the fee from any damages the client subsequently recovers.
Both remedies are subject to the prohibition against charging or collecting an unconscionable fee. -
Hoover Slovacek LLP (Hoover) v. John B. Walton, Jr. 206 S.W.3d 557 (2006)

 Recovery in contingent fee agreement cannot exceed the actual amount received
In refusing to interpret "any amount received" as permitting collection of a contingent fee exceeding the
client's net recovery, we emphasized that the lawyer is entitled to receive the contingent fee "`only when

25
and to the extent the client receives payment.'" - Hoover LLP (Hoover)) v. John B. Walton, Jr. 206 S.W.3d
557 (2006)

 WON a pro se litigant who is also a lawyer may be awarded attorney's fees
The Circuits are in agreement, however, on the proposition that a pro se litigant who is not a lawyer is
not entitled to attorney's fees.

The question then is whether a lawyer who represents himself should be treated like other pro se
litigants or like a client who has had the benefit of the advice and advocacy of an independent attorney.
……
A rule that authorizes awards of counsel fees to pro se litigants —even if limited to those who are
members of the bar— would create a disincentive to employ counsel whenever such a plaintiff considered
himself competent to litigate on his own behalf. The statutory policy of furthering the successful
prosecution of meritorious claims is better served by a rule that creates an incentive to retain counsel in
every such case. – Kay v. Ehrler, et. Al., 499 U.S. 432 (1991)

 Disadvantages in contested litigation if lawyer represent himself

Even a skilled lawyer who represents himself is at a disadvantage in contested litigation.
Ethical considerations may make it inappropriate for him to appear as a witness.
He is deprived of the judgment of an independent third party in framing the theory of the case, evaluating
alternative methods of presenting the evidence, cross-examining hostile witnesses, formulating legal
arguments, and in making sure that reason, rather than emotion, dictates the proper tactical response to
unforeseen developments in the courtroom.
The adage that "a lawyer who represents himself has a fool for a client" is the product of years of
experience by seasoned litigators.

 Attorney’s fees of legal Counsel for the executor or administrator

The rule is that when a lawyer has rendered legal services to the executor or administrator to assist him
in the execution of his trust, his attorney's fees may be allowed as expenses of administration. The estate
is, however, not directly liable for his fees, the liability for payment resting primarily on the executor or
administrator.

If the administrator had paid the fees, he would be entitled to reimbursement from the estate.

…….
procedure to be followed by counsel in order to collect his fees is to request the administrator to make
payment, and should the latter fail to pay, either to:

(a) file an action against him in his personal capacity, and not as administrator, or
(b) file a petition in the testate or intestate proceedings asking the court, after notice to all the heirs
and interested parties, to direct the payment of his fees as expenses of administration.

Whichever course is adopted, the heirs and other persons interested in the estate will have the right to
inquire into the value of the services of the lawyer and on the necessity of his employment.

…….
We reiterate that as a general rule, it is the executor or administrator who is primarily liable for attorneys
fees due to the lawyer who rendered legal services for the executor or administrator in relation to the
settlement of the estate.

26
The executor or administrator may seek reimbursement from the estate for the sums paid in attorneys fees
if it can be shown that the services of the lawyer redounded to the benefit of the estate.
…….
However, if the executor or administrator refuses to pay the attorneys fees, the lawyer has two modes of
recourse.
First, the lawyer may file an action against the executor or administrator, but in his/her personal capacity
and not as administrator or executor.
Second, the lawyer may file a petition in the testate or intestate proceedings, asking the court to direct the
payment of attorney’s fees as an expense of administration.
If the second mode is resorted to, it is essential that notice to all the heirs and interested parties be made
so as to enable these persons to inquire into the value of the services of the lawyer and on the necessity of
his employment.

 Law firm not entitled to recover attorney’s fees when represented by partners or associates
First, when a law firm is the prevailing party in a lawsuit and is represented by one of its partners,
members, or associates, it cannot recover attorney fees even though the litigation is based on a contract
with a prevailing party clause. - Sands & Associates v. Martin Juknavorian, 209 Cal.App.4th 1269 (2012),
147 Cal.Rptr.3d 725

Finally, we conclude that a law firm cannot recover fees for representing itself. -Frank Settelmeyer

 Client has the final say in compromise agreement

Section 23, Rule 138 of the Rules of Court specifies a stringent requirement with respect to compromise
agreements, to wit:
Sec. 23. Authority of attorneys to bind clients. - Attorneys have authority to bind their clients in any case
by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary
judicial procedure. But they cannot, without special authority, compromise their client's litigation, or
receive anything in discharge of a client's claim but the full amount in cash.

 Non-payment of attorney’s fees cannot bar the approval of a compromise agreement

The client has also an undoubted right to compromise a suit without the intervention of his lawyer. Even
the lawyers' right to fees from their clients may not be invoked by the lawyers themselves as a
ground for disapproving or holding in abeyance the approval of a compromise agreement. The
lawyers concerned can enforce their rights in the proper court in an appropriate proceeding in accordance
with the Rules of Court, but said rights may not be used to prevent the approval of the compromise
agreement. - Municipality of Pililla, Rizal vs. Court of Appeals, G.R. No. 105909 June 28, 1994

 Funding litigation
“[A]s long as litigation and access to the courts remain expensive, then anyone who has a right that stands
in need of vindication should be able to obtain funding from anyone willing to offer it and on whatever
terms it is offered.”
- Neuberger, From Barretry, Maintenance and Champerty to Litigation Funding, Speech at Gray’s
Inn, May 8, 2013.

 WON a GOCC represented by OGCC is entitled to an award of attorney’s fees

In the petition at bar, petitioners claim that Philcotton, a government-owned or -controlled corporation,
is not entitled to an award of attorney’s fees;
Petitioners contend that the award of attorney’s fees was unwarranted and contrary to law, considering
that Philcotton is a government-owned and controlled Corporation which was represented by the Office
of the Government Corporate Counsel in this and other litigations. Petitioner argues that for an award

27
of attorney’s fees to be proper, one or more of the special circumstances mentioned in Article 2208 of
the Civil Code must exist and that Philcotton must have availed itself lawfully of the services of private
counsel. – Pacific Mills, Inc. and Lim v. Court of Appeals and Philippine Cotton Corporation, G.R. No.
87182. February 17, 1992
…….
The Court considers that there is, as a matter of principle, no reason why a government-owned or
controlled corporation, or any other government agency or entity for that matter, which is compelled to
bring suit against a private person or entity in order to protect its rights and interests, should not be
granted an award of attorney’s fees, where such an award would be proper if the suit had been brought
by a private entity.
While such a corporation, agency or entity may be represented by government lawyers, clearly, costs
are incurred either by the plaintiff-corporation or entity directly or by the general tax-paying public
indirectly, by reason of the default or other breach of contract or violation of law committed by the
defendant a stipulation for payment of attorney’s fees in case judicial enforcement thereof became
necessary. There can be no dispute that the petitioners’ failure to comply with their obligations under
the promissory notes compelled Philcotton to resort to enforcement of its rights under those notes
through the judicial process. - Pacific Mills, Inc. and Lim v. Court of Appeals and Philippine Cotton
Corporation

 WON an attorney, who was retained on a contingent fee agreement and discharged for cause
prior to the fulfillment of the contingency, may recover from his client the reasonable value of
the services rendered prior to his discharge?
We further hold that where an attorney is discharged because the client has a good faith basis to no longer
wish to be represented by the attorney and where the attorney has not engaged in serious misconduct, the
attorney may recover compensation from the client for the reasonable value of the services
rendered by the attorney prior to his discharge.  The attorney's compensation is to be measured in
light of the benefits obtained by the client as a result of the attorney's services and the nature and gravity
of the cause that led to the discharge. In a contingent fee contract the attorney's cause of action, however,
does not accrue until the contingency is fulfilled. – Somuah v. Flachs, 721 A.2d 680 (1998)

 Imposing additional professional fees in spite of prior agreement

It is highly improper for a lawyer to impose additional professional fees upon his client which were
never mentioned nor agreed upon at the time of the engagement of his services.
At the outset, respondent should have informed the complainant of all the fees or possible fees that he
would charge before handling the case and not towards the near conclusion of the case. This is
essential in order for the complainant to determine if he has the financial capacity to pay respondent
before engaging his services. - Miranda v. Atty. Carpio, A.C. no. 6281, September 26, 2011

 Principle of quantum meruit cannot justify additional fee

Respondent's further submission that he is entitled to the payment of additional professional fees on the
basis of the principle of quantum meruit has no merit.
"Quantum meruit, meaning `as much as he deserved' is used as a basis for determining the lawyer's
professional fees in the absence of a contract but recoverable by him from his client." The principle of
quantum meruit applies if a lawyer is employed without a price agreed upon for his services. In such a
case, he would be entitled to receive what he merits for his services, as much as he has earned.
In the present case, the parties had already entered into an agreement as to the attorney's fees of the
respondent, and thus, the principle of quantum meruit does not fully find application because the
respondent is already compensated by such agreement. - Miranda v. Atty. Carpio, A.C. no. 6281,
September 26, 2011

28
  Retaining Lien is not applicable
In complainant's Affidavit, complainant and respondent agreed that complainant was to pay respondent
Twenty Thousand Pesos (PhP20,000.00) as acceptance fee and Two Thousand Pesos (PhP2,000.00) as
appearance fee. Complainant paid respondent the amounts due him, as evidenced by receipts duly
signed by the latter. During the last hearing of the case, respondent demanded the additional amount of
Ten Thousand Pesos (PhP10,000.00) for the preparation of a memorandum, which he said would further
strengthen complainant's position in the case, plus twenty percent (20%) of the total area of the subject
property as additional fees for his services.
Complainant did not accede to respondent's demand for it was contrary to their agreement. As a result
of complainant's refusal to satisfy respondent's demands, the latter became furious and their
relationship became sore. – Miranda v. Atty. Carpio, A. C. No. 6281, September 26, 2011

…….
In defense of his actions, respondent relied on his alleged retaining lien over the owner's duplicate of
OCT No. 0-94. Respondent admitted that he did not turn over to complainant the owner's duplicate of
OCT No. 0-94 because of complainant's refusal, notwithstanding repeated demands, to complete payment
of his agreed professional fee and that he was ready and willing to turn over the owner's duplicate of OCT
No. 0-94, should complainant pay him completely the aforesaid professional fee.
The Court said that Respondent's claim for his unpaid professional fees that would legally give him the
right to retain the property of his client until he receives what is allegedly due him has been paid has no
basis and, thus, is invalid. – Miranda v. Atty. Car. C. No. 6281, September 26, 2011
……..
An attorney's retaining lien is fully recognized if the presence of the following elements concur: (1)
lawyer-client relationship; (2) lawful possession of the client's funds, documents and papers; and (3)
unsatisfied claim for attorney's fees. Further, the attorney's retaining lien is a general lien for the balance
of the account between the attorney and his client, and applies to the documents and funds of the client
which may come into the attorney's possession in the course of his employment.

In the present case, complainant claims that there is no such agreement for the payment of professional
fee consisting of 20% of the total area of the subject property and submits that their agreement was only
for the payment of the acceptance fee and the appearance fees. – Miranda v. Atty. Carpi, A. C. No. 6281,
September 26, 2011
………
The agreement between the parties only shows that respondent will be paid the acceptance fee and the
appearance fees, which the respondent has duly received. Clearly, there is no unsatisfied claim for
attorney's fees that would entitle respondent to retain his client's property. Hence, respondent could
not validly withhold the title of his client absence a clear and justifiable claim.

Respondent's unjustified act of holding on to complainant's title with the obvious aim of forcing
complainant to agree to the amount of attorney's fees sought is an alarming abuse by respondent of the
exercise of an attorney's retaining lien, which by no means is an absolute right, and cannot at all justify
inordinate delay in the delivery of money and property to his client when due or upon demand. – Miranda
v. Atty. Carpio, A. C. No. 6281, September 26, 2011

 The opinion of a judge as to the capacity of a lawyer

is not the basis of the right to a lawyer's fee
In his answer before this Court respondent judge justifies his order for the return of the P200.00 on the
ground that petitioner is "below average standard of a lawyer." The opinion of a judge as to the

29
capacity of a lawyer is not the basis of the right to a lawyer's fee. It is the contract between the lawyer and
client and the nature of the services rendered. - Atty. Manuel L. Fernandez v. Hon. Eloy B. Bello, G.R. No.
L-14277, April 30, 1960
 Non-lawyer cannot recover attorney’s fees

 Client discharges the attorney for cause, the attorney may not recover any compensation
There is authority for the proposition that an attorney who, without justification, terminates an agreed
undertaking, is not entitled to any fee at all, not even to one based upon the reasonable value of the
services already rendered.
This is simply a corollary to the prevailing rule that, if the client discharges the attorney for cause, the
attorney may not recover any compensation. – Attorney Grievance Commission of Maryland v. Korotki,
569 A.2d 1224 (1990)

 In premature termination, attorney’s fees cannot be

higher than the contingent fee agreement
In any event, where the representation is terminated, either by the client or, with justification, by the
attorney, the attorney is entitled to the reasonable value of the services not to a higher amount
produced by a contingent fee agreement. – Attorney Grievance Commission of Maryland v. Korotki,
569 A.2d 1224 (1990)
Contingent fee agreement and appeal
The ordinary rule of construction of contingent fee contracts is that, in the absence of an express
provision which addresses possible appeal, services rendered by an attorney in upholding a judgment
on appeal are within the undertaking under the contingent fee contract.

The attorney is not entitled to any additional compensation for such appellate representation, even if the
reasonable value of all of the services rendered through the successful, final outcome on appeal exceeds
the fee calculated under the contingent fee agreement.

 “Bad bargain” in contingent fee agreement

Numerous courts have held that the fact that an attorney may have made a “bad bargain” with a client will
not justify the attorney from either asking for additional compensation or from withdrawing from the
case upon a refusal of the client to agree to such request. – see Quarture Et Ux. v. Allegheny Co., 14 A.2d
575 (1940)
 Reasonable when agreed upon but unreasonable in the final fee
When the principal amount of [counsel’s fee] is still contingent, and 40% fee became quantified, it
remained subject to the prohibition against clear excessiveness and to testing for reasonableness under the
factors, including the risk of the contingency, [], as well as under other relevant factors.
The court said "that if at the conclusion of a lawyer's services it appears that a fee, which seemed
reasonable when agreed upon, has become excessive, the attorney may not stand upon the contract; he
must reduce the fee." Attorney 569 A.2d 1224 (1990)

 Non-lawyer who represents a litigant, not entitled to attorney’s fee

The permission for a non-member of the bar to represent or appear or defend in the said court on
behalf of a party-litigant does not by itself entitle the representative to compensation for such
representation.
Section 24, Rule 138, of the Rules of Court, provides:

30
Compensation of attorney's agreement as to fees. — An attorney shall be entitled to have and recover
from his client no more than a reasonable compensation for his services, ...imports the existence of an
attorney-client relationship as a condition to the recovery of attorney's fees. Such a relationship cannot
exist unless the client's representative in court be a lawyer.

………
Since respondent Muning is not one, he cannot establish an attorney-client relationship with Enrique
Entila and Victorino Tenezas or with PAFLU, and he cannot, therefore, recover attorney's fees.
Certainly public policy demands that legal work in representation of parties litigant should be entrusted
only to those possessing tested qualifications and who are sworn, to observe the rules and the ethics of the
profession, as well as being subject to judicial disciplinary control for the protection of courts, clients and
the public. - PAFLU et al. vs. Binalbagan Isabela Sugar Co., et al.“, G.R. No. L-23959 November 29,
1971
The weight of the reasons heretofore stated why a non-lawyer may not be awarded attorney's fees
should suffice to refute the possible argument that appearances by non-lawyers before the Court of
Industrial Relations should be excepted on the ground that said court is a court of special jurisdiction;
such special jurisdiction does not weigh the aforesaid reasons and cannot justify an exception. – PAFLU

 Habitual appearances in court as “representative” in labor cases

Petitioners allege that respondent Muning is engaged in the habitual practice of law before the Court of
Industrial Relations, and many of them like him who are not licensed to practice, registering their
appearances as "representatives" and appearing daily before the said court. If true, this is a serious
situation demanding corrective action that respondent court should actively pursue and enforce by
positive action to that purpose. But since this matter was not brought in issue before the court a quo, it
may not be taken up in the present case. Petitioners, however, may file proper action against the persons
alleged to be illegally engaged in the practice of law. –
The weight of the reasons heretofore stated why a non-lawyer may not be awarded attorney's fees should
suffice to refute the possible argument that appearances by non-lawyers before the Court of Industrial
Relations should be excepted on the ground that said court is a court of special jurisdiction; such special
jurisdiction does not weigh the aforesaid reasons and cannot justify an exception. - PAFLU FLU et al. vs.
Bina Isabela Sugar Co., et al.“, G.R. No. L-23959 November 29, 1971

Whenever fees or other compensation are shared among two or more professionals, there is incentive to
adjust upward the compensation sought in order to offset any diminution to one's own share.
Consequently, sharing of compensation can inflate the cost of [the case].... The potential for harm makes
such arrangements reprehensible as a matter of public policy as well as a violation of the attorney's ethical
obligations. - Worldwide Direct, Inc., v. United States Bankruptcy Court, D. Delaware, 316 B.R. 637
(2004)
 Attorney terminate lawyer-client relationship without justification
There is authority for the proposition that an attorney who, without justification, terminates an agreed
undertaking, is not entitled to any fee at all, not even to one based upon the reasonable value of the
services already rendered.
This is simply a corollary to the prevailing rule that, if the client discharges the attorney for cause, the
attorney may not recover any compensation.

 Excessive attorney’s fees may warrant discipline

It is settled that gross overcharge of a fee by an attorney may warrant discipline. The test is whether the
fee is "`so exorbitant and wholly disproportionate to the services performed as to shock the conscience.'“
– Bushman v. The State Bar of California, 522 P.2d 312 (1974)

31
  Oppressive methods of attempting to collect legal fees have
been held to involve moral turpitude
Various oppressive methods of attempting to collect legal fees have been held to involve moral turpitude.
The fact that the attorney may be entitled to the fee he sought to obtain or to a fee does not exonerate him.
In McGrath the attorney intentionally withheld his client's funds in an attempt to coerce payment of a fee.
In [one case] the attorney, in an attempt through fear to force the payment of his bill for legal services,
made threats of action injurious to his client and another. [] in holding that the attorney's conduct involved
moral turpitude, noted that his acts constituted the crime of attempted extortion. - Bluestein v. State Bar of
California, 175, 529 P.2d 799 (1974)
…….
There is also authority holding invalid an increase in fee obtained by an attorney through threats to
terminate a representation which the attorney was obliged to continue threat to withdraw following
favorable verdict unless compensation increased for appeal.

 Fee agreements "between lawyers who are not in the same firm" or who are "not associated
in the same law firm"
Xxx rules of professional conduct [] contain similar requirements governing fee agreements "between
lawyers who are not in the same firm" or who are "not associated in the same law firm" where there will
be a division of legal fees.
As relevant here, for such a fee agreement to be valid:
(1) the agreement must include language stating the manner in which the fees will be divided, whether in
proportion to services performed by each lawyer or by stating that each lawyer assumes joint
responsibility for the representation;
(2) the client must be informed of the fee-splitting arrangements at or before entering into the fee
agreement; and
(3) the client must consent to those arrangements in writing.
The contingency fee agreement between the Administratrix and the Hilliard and Henry firms contains no
language stating the manner in which the fees will be divided between litigation counsel, nor that the two
firms share joint responsibility for representing the estate. - Matter of Hayes (Quigley) 2018 NY Slip Op
28034 Decided on February 7, 2018

 WON a government-owned or controlled corporation,

is entitled to an award of attorney’s fees

Petitioners contend that the award of attorney’s fees was unwarranted and contrary to law, considering
that Philcotton is a government-owned and controlled Corporation which was represented by the Office
of the Government Corporate Counsel in this and other litigations.
Petitioner argues that for an award of attorney’s fees to be proper, one or more of the special
circumstances mentioned in Article 2208 of the Civil Code must exist and that Philcotton must have
availed itself lawfully of the services of private counsel.
………….
Whenever a government-owned and controlled corporation, or corporation the majority stock of which
is owned or controlled by the Government, or an instrumentality of the Government performing
proprietary functions, is awarded attorney’s fees in a judicial proceeding handled by the Office of the
Government Corporate Counsel, one-half of said attorney’s fees shall be paid directly to the General
Fund."
Section 10, Chapter III of the 1987 Revised Administrative Code which reads as follows:
"The OGCC is authorized to receive the attorney’s fees adjudged in favor of their
government-owned or controlled corporations, their subsidiaries, other corporate offsprings

32
 and government acquired asset corporations. These attorney’s fees shall accrue to a Special
Fund of the OGCC, and shall be deposited in an authorized government depository as a trust
liability and shall be made available for expenditure without the need for a Cash
Disbursement Ceiling, for purposes of upgrading facilities and equipment, granting of
employees’ incentive pay and other benefits, and defraying such other incentive expenses not
provided for in the General Appropriations Act as may be determined by the Government
Corporate Counsel.“ - Pacific Mills Inc and Lim v. CA, G.R. No. 87182. February 17, 1992

 Lawyer who represent himself

The adage that "a lawyer who represents himself has a fool for a client" is the product of years of
experience by seasoned litigators.
A rule that authorizes awards of counsel fees to pro se litigants -- even if limited to those who are
members of the bar -- would create a disincentive to employ counsel whenever such a plaintiff considered
himself competent to litigate on his own behalf. The statutory policy of furthering the successful
prosecution of meritorious claims is better served by a rule that creates an incentive to retain counsel in
every such case. - Kay v. Ehrler, 499 U.S. 432 (1991)

 Attorney as pro se litigant not entitled to attorney’s fees

A party that represents itself, however, is not eligible for attorney fees. We have held that another
attorney fee provision, NRS 69.030, which provides that a prevailing party shall receive reasonable
attorney fees and costs, does not authorize an award of attorney fees to a prevailing proper person
litigant, even if that litigant is an attorney. The reasoning for that decision is that "an attorney proper
person litigant must be genuinely obligated to pay attorney fees before he may recover such fees."
Here, Smith & Harmer represented itself in the attorney fees litigation, and thus it was not genuinely
obligated to pay attorney fees. As with fees awarded under NRS 69.030, we conclude that attorneys who
represent themselves in litigation generally may not recover attorney fees for doing so. -Frank
Settelmeyer & Sons, Inc. v. Smith & Harmer, Ltd., 197 P.3d 1051 (2008)

 Lawyer who represented himself in frivolous or

harassing litigation is entitled to attorney’s fees
Appellant next contends that attorneys' fees should be denied to certain appellees who are attorneys and
who represented themselves. The law in this area is far from clear. Here, we conclude that the award was
proper. The award of attorneys' fees in this case furthers the underlying policy of discouraging frivolous
or harassing litigation. - Ellis v. Cassidy, 625 F.2d 227 (9th Cir.1980)

 Is a pro se litigant entitled to attorney’s fees?

A party that represents itself, however, is not eligible for attorney fees. We have held that another
attorney fee provision, xxxx, which provides that a prevailing party shall receive reasonable attorney fees
and costs, does not authorize an award of attorney fees to a prevailing proper person litigant, even if
that litigant is an attorney.
The reasoning for that decision is that "an attorney proper person litigant must be genuinely obligated to
pay attorney fees before he may recover such fees."
Here, Smith & Harmer represented itself in the attorney fees litigation, and thus it was not genuinely
obligated to pay attorney fees. Xxx we conclude that attorneys who represent themselves in litigation
generally may not recover attorney fees for doing so. - 197 P.3d 1051 (2008)

 Non-lawyer not entitled to attorney’s fees

33
On the last issue of attorney's fees or service fees for private respondents' authorized representative,
Article 222 of the Labor Code, as amended by Section 3 of Presidential Decree No. 1691, states that non-
lawyers may appear before the NLRC or any labor arbiter only (1) if they represent themselves, or (2) if
they represent their organization or the members thereof. While it may be true that Guillermo H. Pulia
was the authorized representative of private respondents, he was a non-lawyer who did not fall in either of
the foregoing categories. Hence, by clear mandate of the law, he is not entitled to attorney's fees.
Furthermore, the statutory rule that an attorney shall be entitled to have and recover from his client a
reasonable compensation for his services necessarily imports the existence of an attorney-client
relationship as a condition for the recovery of attorney's fees, and such relationship cannot exist unless the
client's representative is a lawyer. – Five J Taxi v. NLRC, G.R. No. 111474, August 22, 1994

 Is the right of a client to enter into a compromise agreement without the consent of his lawyer
defeated by a contrary written contract ?
It appears from the record that on July 31, 1921, the respondents by means of a written contract,
retained the petitioner to represent them as their lawyer. The contract fixed the petitioner's fee at P200
in advance with an additional contigent fee of P1,300. It was also provided in the contract that
respondent should not compromise the claim against the defendant in the case without express consent
of his lawyer.

Through the sole effort of respondents the case was dismissed without notice to their counsel.

 “Lodestar Method” for Assessing Reasonable Attorney Fees

The lodestar figure: the number of hours reasonably expended multiplied by the reasonable hourly
rate. [] courts have consistently held that a computation of time spent on a case and the reasonable
value of that time is fundamental to a determination of an appropriate attorneys' fee award.
xxx the attorney fee award need not bear any specific relationship to the dollar amount of the
recovery.
There is no hard-and-fast rule limiting the factors that may justify an exercise of judicial discretion to
increase or decrease a lodestar calculation. The purpose of such adjustment is to fix a fee at the fair
market value for the particular action. – Concepcion, et. al. v. AMSCAN Holdings, Inc.,168 Cal. Rptr. 3d
40 (2014)
Thank you for your attention!!

34