The Second District holds that modifications to a contingency fee agreement must meet the same statutory standards as the original agreement.
James Stroud prepared a contingency fee agreement that complied with all of the requirements of Business & Professions Code §6147 in connection with his representation of Dominick Tunzi. Subsequently, Tunzi signed two separate written modifications to the agreement, significantly increasing the fee. Neither of the written modifications complied with §6147, because they failed to include a signature by a member of the firm, the contingency fee rate, a statement of how costs affect the fees and the recovery, and a statement that the fees are negotiable and not set by law.
Tunzi settled but refused to pay Stroud more than the amount promised under the original fee agreement. Although Tunzi did not dispute that he signed the modifications, he disputed their validity and their legal consequence. When Stroud refused to release the disputed funds from the client trust account, Tunzi filed suit.
The trial court denied Stroud’s motion for summary judgment. Stroud argued that only the original agreement needed to comply with § 6147, not the modifications. Alternatively Stroud argued that the modifications replaced the original agreement, invalidating the original agreement. Therefore, Stroud was entitled to fees under quantum meruit.
The Court of Appeal upheld the decision of the trial court finding that the requirements of § 6147 applied to “every contract,” including modifications. The Court also noted that refusal to apply the standards of § 6147 would too easily allow an attorney to frustrate the statute’s purpose.
Comment: Stroud is the most recent in a line of cases that insist on strict adherence to both Rules of Professional Conduct and statutes in relationships between attorneys and their clients. Attorneys should pay careful attention to these requirements so that they preserve their right to compensation for services rendered.