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Attorneys fees and

Compensation for
legal services
Problem Areas in Legal Ethics
Arellano University School of Law Arellano Law Foundation
2015-2016

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.

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

Professional fee is subject to


courts regulatory power
Upon taking his attorneys 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

Reasons why lawyers compensation


is subject to the supervision of the
court
It follows that a lawyers 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 profession to which he
belongs. Rayos v. Atty. Hernandez, G.R. No. 169079, February 12,
2007

Collection suit should be the last


resort
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

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 clients 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.

10

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.

11

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL


MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY
COME INTO HIS PROFESSION.
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.

12

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

13

Non-payment of loan is a
violation of PCR not
misappropriation or embezzlement
Respondents liability is thus not for misappropriation or
embezzlement but for violation of Rule 16.04 of the Code of
Professional Responsibility which forbids lawyers from
borrowing money from their clients unless the latters interests
are protected by the nature of the case or by independent
advice. In this case, respondents liability is compounded by the
fact that not only did he not give any security for the
payment of the amount loaned to him but that he has also
refused to pay the said amount. His claim that he could not
pay the loan because circumstances . . . did not allow it and
that, because of the passage of time, he somehow forgot about
his obligation only underscores his blatant disregard of his
obligation which reflects on his honesty and candor.

14

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 attorneys 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]

15

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.

16

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

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.

Naawa, G.R. No. L-24163 [1969]

17

Applies only in civil 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.

18

Limitation of clients 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. Naawa, G.R. No. L-24163 [1969]

19

Quantum meruit
The principle of quantum meruit (as much as he deserves) may
be a basis for determining the reasonable amount of attorneys
fees.
Quantum meruit is a device to prevent undue enrichment based
on the equitable postulate that it is unjust for a person to retain
benefit without paying for it. It is applicable even if there was a
formal written contract for attorneys fees as long as the agreed
fee was found by the court to be unconscionable. - Atty. Orocio

v. Angulan et. al., G.R. No. 179892-93, January 30, 2009

20

2 purposes of application

Quantum meruit

The recovery of attorneys fees on this basis is permitted, as in


this case, where there is no express agreement for the payment
of attorneys 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

21

When is Quantum meruit authorized


(1) there is no express contract for payment of attorney's fees
agreed upon between the lawyer and the client;
(2) when although there is a formal contract for attorney's fees,
the fees stipulated are found unconscionable or unreasonable
by the court; and
(3) when the contract for attorney's fee's is void due to purely
formal defects of execution;
(4) when the counsel, for justifiable cause, was not able to finish
the case to its conclusion;
(5) when lawyer and client disregard the contract for attorney's
fees, - Rilloza, et. al. v. Eastern Telecommunications Phils., Inc.,

G.R. No. 104600 [1999]

22

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)

23

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]

24

Champertous contract
"1. On all commission or attorneys 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

25

Agreement to pay all expenses of


proceedings
An agreement whereby an attorney agrees to pay expenses of
proceedings to enforce the client's rights is champertous [JBP
Holding Corp. v. U.S. 166 F. Supp. 324 (1958)]. 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 [See Sampliner v. Motion Pictures Patents Co., et al., 255
F. 242 (1918)]. 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

26

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 Grays Inn, May 8, 2013.

27

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]

28

Retaining lien
Rule 138 Sec. 37. Attorney's liens. An attorney shall have a lien upon
the funds, documents and papers of his client, which have lawfully
come into his possession and may retain the same until his lawful
fees and disbursements have been paid, and may apply such funds
to the satisfaction thereof. 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."

29

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."

30

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]

31

The following are the circumstances to be


considered in determining the compensation
of an attorney
1. the amount and character of the services rendered;
2. the labor, time, and trouble involved;
3. the nature and importance of the litigation or business in which
the services were rendered; the responsibility imposed;
4. the amount of money or the value of the property affected by the
controversy, or involved in the employment,
5. the skill and experience called for in the performance of the
services;

32

6. the professional character and social standing of the attorney;


7. the results secured; and
8. whether or not the fee is absolute or contingent, it being a
recognized rule that an attorney may properly charge a much a
larger fee when it is to be contingent that when it is not.
9. The financial ability of the defendant may also be considered
not to enhance the amount above a reasonable compensation,
but to determine whether or not he is able to pay a fair and just
compensation for the services rendered, or as incident in
ascertaining the importance and gravity of the interests involved
in the litigation.

33

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

34

Written contract is not required to


prove lawyer-client relationship
The absence of a written contract will not preclude the finding
that there was a professional relationship which merits
attorney's fees for professional services rendered. Documentary
formalism is not an essential element in the employment of an
attorney; the contract may be express or implied. To establish
the relation, it is sufficient that the advice and assistance of
an attorney is sought and received in any matter pertinent to
his profession. An acceptance of the relation is implied on the
part of the attorney from his acting on behalf of his client in
pursuance of a request from the latter. - Dee vs. Court of

Appeals, G.R. No. 77439, August 24, 1989

35

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

36

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

37

Two commonly accepted concepts of


attorneys fees
In its ordinary concept, an attorneys fee is the reasonable
compensation paid to a lawyer by his client for the legal services he
has rendered to the latter. The basis of this compensation is the fact of
his employment by and his agreement with the client.
In its extraordinary concept, an attorneys fee is an indemnity for
damages ordered by the court to be paid by the losing party in a
litigation. The basis of this is any of the cases provided by law where
such award can be made, such as those authorized in Article 2208,
Civil Code, and is payable not to the lawyer but to the client, unless
they have agreed that the award shall pertain to the lawyer as
additional compensation or as part thereof. - Traders Royal Bank

Employees Union-Independent v. NLRC G.R. No. 120592. March 14,


1997

38

Award of (extraordinary) attorneys 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

39

Contingent fee agreement does not violate


Article 1491(5) of the NCC
The contract of services did not violate said provision of law. Article 1491 of the
Civil Code, specifically paragraph 5 thereof, prohibits lawyers from acquiring by
purchase even at a public or judicial auction, properties and rights which are the
objects of litigation in which they may take part by virtue of their profession.
The said prohibition, however, applies only if the sale or assignment of the
property takes place during the pendency of the litigation involving the
client's property.
Hence, a contract between a lawyer and his client stipulating a contingent fee
is not covered by said prohibition under Article 1491 (5) of the Civil Code
because the payment of said fee is not made during the pendency of the
litigation but only after judgment has been rendered in the case handled by the
lawyer. In fact, under the 1988 Code of Professional Responsibility, a lawyer may
have a lien over funds and property of his client and may apply so much
thereof as may be necessary to satisfy his lawful fees and disbursements. -

Fabillo and Tana v. IAC G.R. No. L-68838 [1991]

40

Mere demand for delivery of the


litigated property is not unethical
In the instant case, there was no actual acquisition of the
property in litigation since the respondent only made a written
demand for its delivery which the complainant refused to
comply. Mere demand for delivery of the litigated property
does not cause the transfer of ownership, hence, not a
prohibited transaction within the contemplation of Article 1491.
- Ramos v. Atty. Ngaseo, A.C. No. 6210 [2004]

41

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]

42

CANON 9 - A LAWYER SHALL NOT, DIRECTLY OR


INDIRECTLY, ASSIST IN THE UNAUTHORIZED PRACTICE
OF LAW.
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.

43

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 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]

44

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.

45

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.

46

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.

47

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]

48

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 formers 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

49

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 complainants
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.

50

Establishment of lawyer-client relationship


not influenced by personal affiliation
Respondent takes further refuge in the intimate and close
relationship existing between himself and the complainants
family on the basis of which his legal services were purely
gratuitous or simply an act of a friend for a friend with no
consideration involved. Unfortunately, his efforts to redeem
the foreclosed property, as already stated, did not produce the
desired result because the mortgagee would not budge
anymore and would not accept the sum offered.
Thus, the respondent concluded that there was, strictly
speaking, no attorney-client [relationship] existing between
them. Rather, right from the start[,] everything was sort of
personal, he added. xxx This contention has no merit. - Junio v.

Atty. Grupo, A.C. No. 5020. December 18, 2001

51

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 clients 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 clients interest within the
bounds of law. Burbe v. Atty. Magulta AC No. 99-634. June 10,

2002

52

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

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Change of attorney
Section 26 of Rule 138 of the Revised Rules of Court provides:
"Sec. 26. Change of attorneys -- An attorney may retire at any
time from any action or special proceeding, by the written
consent of his client filed in court. He may also retire at any
time from an action or special proceeding, without the consent
of his client, should the court, on notice to the client and
attorney, and on hearing, determine that he ought to be
allowed to retire. In case of substitution, the name of the
attorney newly employed shall be entered on the docket of the
court in place of the former one, and written notice of the
change shall be given to the adverse party.

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Withdrawal of counsel
A lawyer may retire at any time from any action or special
proceeding with the written consent of his client filed in court
and copy thereof served upon the adverse party. Should the
client refuse to give his consent, the lawyer must file an
application with the court. The court, on notice to the client
and adverse party, shall determine whether he ought to be
allowed to retire. The application for withdrawal must be
based on a good cause. - Orcino v. Atty. Gaspar, A.C. No. 3773.

September 24, 1997

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Grounds for withdrawal


Respondent's withdrawal was made on the ground that "there
no longer exist[ed] the xxx confidence" between them and that
there had been "serious diffferences between them relating to
the manner of private prosecution. - Orcino v. Atty. Gaspar, A.C.

No. 3773. September 24, 1997

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Court approval required before


counsel can withdraw
Assuming, nevertheless, that respondent was justified in
terminating his services, he, however, cannot just do so and
leave complainant in the cold unprotected. The lawyer has no
right to presume that his petition for withdrawal will be granted
by the court. Until his withdrawal shall have been approved, the
lawyer remains counsel of record who is expected by his client
as well as by the court to do what the interests of his client
require. He must still appear on the date of hearing for the
attorney-client relation does not terminate formally until there is
a withdrawal of record. Orcino v. Atty. Gaspar, A.C. No. 3773.

September 24, 1997

57

What is a contingency contract


The client and his lawyer may enter into a written contract whereby
the latter would be paid attorneys fees only if the suit or
litigation ends favorably to the client. This is called a
contingency fee contract. The amount of attorneys fees in this
contract may be on a percentage basis, and a much higher
compensation is allowed in consideration of the risk that the
lawyer may get nothing if the suit fails.
In the case at bar, the non-EPIRA separated members and
petitioner voluntarily entered into a contingency fee contract
whereby petitioner did not receive any acceptance fee or
appearance/meeting fee. - Atty. Orocio v. Angulan et. al., G.R. No.

179892-93 [2009]

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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]

59

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

60

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]

61

Contingent fee 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 nonexpert 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)

62

Written contract of legal fees is


ordinarily controlling
A stipulation on a lawyers 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 attorneys fees
is excessive, the contract may be disregarded even if the
client expressed their conformity thereto. Attorneys fees are
unconscionable if they affront ones 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 attorneys 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]

63

When is an attorneys fees


unconscionable?
Attorneys fees are unconscionable if they affront ones 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 attorneys 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]

64

Lawyers 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 lawyers 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 profession to which he belongs. Upon taking his
attorneys 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]

65

Thank you for your attention!!

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