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Lawyers who do substantial work but fail to meet the Rules of Professional Conduct’s strictures on written fee agreements may be awarded quantum-meruit fees in limited circumstances, the New Jersey Supreme Court ruled on May 9. In Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, A-3-01, Justice James Coleman Jr. said lawyers must satisfy a four-pronged test: The work was performed in good faith, the client accepted the services, there was an expectation of compensation and the value placed on the services was reasonable. He found the tests were met in this case. The plaintiffs’ law firm, Starkey, Kelly, Blaney & White of Toms River, N.J., had sued the inheritors of a substantial estate who declined to pay the firm’s $625,000 contingent fee for real estate work performed for their predecessors. The fee agreement was not set to writing until 33 months after the firm was hired — a violation of RPC 1.5(b)’s requirement that “the basis or rate of the fee shall be communicated in writing to the client before or within a reasonable time after commencing the representation.” Somerset County Superior Court Judge Helen Hoens ruled that the firm was barred from receiving a contingency fee but should be compensated for extensive work it had done, specifically in helping the client extricate themselves from several bad contracts to sell. Hoens awarded the firm $115,712, and the Appellate Division affirmed. Coleman, writing for the unanimous court, warned that lawyers should not assume they can avoid written fee agreements. “[T]he loss of a potentially substantial contingency fee, as well as the possibility of a professional disciplinary action, should provide adequate incentive to lawyers similarly situated to take greater care in complying with the Rules of Professional Conduct,” Coleman wrote. During oral argument in January, the inheritors’ lawyer, Joseph Murray, asked the court to rule that if RPC 1.5(b) is not complied with, the lawyer will not be paid. “There must be a bright-line standard in this industry. The rules must be complied with,” argued Murray, who was away from his Berkeley Heights, N.J., office last week and could not be reached. Scott Kenneally, the Starkey Kelly partner who argued the case, says the ruling “clears up a conflict in the Appellate Division” between two rulings that had come to contrary results on quantum-meruit fee awards. Daniel Waldman, of Red Bank, N.J.’s Waldman & Moriarty, arguing amicus for the State Bar Association, says the ruling “makes clear that a lawyer who, through inadvertence has no written fee agreement in place, can still be paid. It gives lawyers and clients some clarity in this area.”

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