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An attorney who failed to adhere to New York’s recently promulgated letter-of-engagement statute may nonetheless collect a portion of his fees, a Brooklyn judge has held. The decision marks the second time in three months that a Brooklyn Civil Court judge has allowed a lawyer who failed to abide by 22 NYCRR 1215.1 to collect under quantum meruit. Previous courts had precluded attorneys from collecting any fee for services performed, according to the opinion. Judge Eileen Nadelson ruled that the payment attorney Morton Grossman had already received from his client Aron Ostreicher for a real estate closing represented the “reasonable value” of the services he provided, the lack of an engagement letter notwithstanding. “There is no question as to the fact that legal services were rendered, and there is no substantiated evidence of hours worked or an hourly rate for the court to calculate a specific dollar amount above the $3,500 that was already paid,” Nadelson wrote in Grossman v. West 26th Corp., 49451/03. In the underlying matter, Grossman represented Ostreicher and his corporation, West 26th Corp., in a closing involving six properties the corporation purchased. Ostreicher brought the relevant documents to Grossman on a Thursday, according to the decision. The closing occurred the following Monday. Grossman, who has practiced law in New York for more than 50 years, had represented Ostreicher in several previous real estate deals. As was his practice, following the closing Grossman sent his client a bill that listed only the services provided and amount due — $8,901.50 — but not the hours worked. Grossman had also never provided his client with a letter of engagement or a retainer agreement. Ostreicher disputed the bill, claiming it was far higher than any bill previously sent to him by Grossman. Unable to reach Grossman, he sent him a check for $3,500, an amount he believed was “more than a fair fee for the work performed,” according to the decision. Grossman then filed suit to recover the remaining $5,401.50. Grossman argued that he satisfied three different exceptions to the engagement-letter statute. He contended it was “impracticable” to provide a letter or retainer agreement because of the time frame of the closing. He also claimed the scope of services could not have been determined at the commencement of the matter. And he argued the rule did not apply because he had previously represented Ostreicher in the same type of work. The court disagreed on all three counts. Five days is ample time to produce a letter, Judge Nadelson held, citing Klein Calderoni & Santucci, LLP v. Bazerjian, 6 Misc 3d 1032A. Grossman also received the papers necessary to evaluate the scope of the representation in sufficient time to produce the letter, she added. Finally, the work was not sufficiently similar to previously rendered work to absolve Grossman from having to comply with the statute. “This argument appears to be specious in light of Plaintiff’s constant assertions that this work was significantly more complicated and complex than the previous real estate work he had performed for the defendant,” Nadelson wrote. Because he failed to meet the requirements of 22 NYCRR �1215.5, Grossman could not collect the fee he billed, the judge added. However, following the reasoning of another recent Brooklyn Civil Court case, Judge Nadelson held that Grossman was entitled to payments already received. In May, Civil Court Judge Arlene P. Bluth allowed an attorney who failed to provide his client with a letter of engagement to keep the $7,500 retainer the client paid up front. That decision, Lewin v. The Law Offices of Godfrey G. Brown, 9456/05, marked the first time a judge allowed a lawyer who failed to comply with the engagement-letter law to collect under quantum meruit (Latin for “as much as he deserves”). “In the Lewin case … the court permitted the attorney to retain the amount he had already received as the reasonable value of his services,” Nadelson wrote. “This court believes a similar recovery would be appropriate in the instant case.” Nadelson also awarded an additional $151.50, to cover Grossman’s expenses. Grossman declined to comment other than to say he intends to appeal. Ostreicher’s attorney, Brooklyn-based real estate specialist Mark Tulip, said, “It is high time that attorneys have letters of engagement or have retainer agreements, especially in instances where they know or should have known the scope of the work was far in excess of the work they performed before.”

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