Recently, the Tribunal had the first impression that a hybrid pricing agreement is an “unforeseen pricing agreement” that is subject to all legal requirements. (Arnall v. Superior Court (2010) 190 Cal.App.4th 360, 369.) In Arnall, the court noted above that the term “Contingency Fee Contract” is generally understood to include any agreement linking legal fees to a successful benefit, including those that involve a non-conditional tax on the basis of the rate of payment. (ID. to 370.) The Court found that the legal requirements for stolen money contracts under Labour Code 6147 apply to hybrid contracts. If the requirements are not met, the royalty contract is not valid. (Ibid.) It is very important that a lawyer`s right to pledge against the future recovery of a client in order to guarantee hourly legal fees should be considered a “pledge right”. The fees, which confer on the lawyer an “interest in property, property, security or other financial interest detrimental to the client,” must comply with The California Rules of Conduct`s 3-300 rules. In these circumstances, a royalty fee is considered an “adverse interest” that requires compliance with this rule.
This rule requires “fair and reasonable” terms, full written disclosure, written advice to consult with an independent consultant (and a reasonable opportunity for the client to do so) and written consent of the client. A violation of this rule makes the right to pledge unfeasible. However, it does not invalidate the underlying fee agreement or prevent counsel from otherwise recovering agreed contractual costs. (See Shopoff – Cabvallo, LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1522-25.) A hybrid is a conditional royalty agreement with all requirements As long as the hybrid agreement does not constitute a “double fee,” it should be allowed. Therefore, it is recommended that the pricing agreement specifically set the lawyer`s “normal hourly rate” for cases of similar complexity and that this rate be reduced in favour of an eventuality. Given that many disputes are contracts that pay fees and legal fees to the party in power, it is essential that the treatment of these sentences be clearly defined in the pricing agreement. If the contract for processing lawyer`s fees is not silent, the award will likely be given directly to the client and would not be considered a “recovery” that the lawyer thought would receive a percentage. “In the absence of a contract expressly providing that he (lawyer) can collect these fees in addition to his contractual compensation; These fees must be credited to the amount of the contract. (Mahoney v. Sharff (1961) 191 CA 2d 191, 195, (emphasized in the original; Added Parentheses) The hybrid has several advantages. It is inexpensive for the client and offers the lawyer a steady cash flow to track the case. As with any contingency agreement, counsel is encouraged not only to pursue the case, but also to complete the case for the highest possible amount, either through judicial proceedings or by comparing.
In addition, many commercial disputes are blocked because court-time legal fees escalate beyond the client`s creditworthiness. A hybrid expands the customer`s resources. The same goes for evaluation. The Construction Act provides only a right of assessment with respect to the construction company, which leads to the same confusion and potential litigation in the context of hybrid contracts. Therefore, if the parties wish, a decision right should be explicitly included in a hybrid contract. In summary, it is possible to enter into a mutually beneficial agreement if the lawyer closely follows the applicable rules of professional conduct with respect to the collection of pawn and contingency fees.