In a published decision, the Appellate Division held that a trial court properly granted summary judgment in favor of a law firm and that a retainer agreement, which did not disclose the unit of incremental billing, was lawful and ethical and sufficiently apprised the clients of the express terms of the agreement as required by Rules of Professional Conduct 1.5(b).
Daniel Cohen and his company, Cohen Capital, retained the law firm Arbus, Maybruch & Goode for representation in a negligent construction lawsuit, Sollecito Custom Homes v. Cohen. Arbus Maybruch began its representation of Cohen after discovery had commenced, and became the seventh law firm to represent the defendants in the matter, according to the opinion.
In the three-page retainer and fee agreement, a $25,000 initial retainer was required and an hourly billing rate of $400 for Martin Arbus and Sam Maybruch and $300 for Matthew Goode was specified. It also contained a fee-shifting provision if the firm was required to institute collections proceedings, according to the opinion.
After more than two years of representation, 720 hours had been billed between February 2018 and June 2020. The scope of work included 22 days of depositions, 33 motions, five oral argument appearances, multiple case management conferences, mediation, and an order to show cause, according to the opinion.
A total of $279,660.60 in fees and $14,245.50 in expenses were billed. Cohen paid $191,000 and left a remaining unpaid balance of $102,906.10, according to the opinion.
A second retainer agreement was entered into by the same parties, this time for a separate action in New York filed by Cohen against his former counsel, Weg & Myers, for unpaid legal fees in excess of $200,000. By July 2020, Arbus Maybruch ended legal representation of Cohen with a remaining balance of $102,906.10 in the Sollecito case and an additional balance of $38.911.65 in the Weg & Myers matter, according to the opinion.
Arbus Maybruch filed a complaint which alleged breach of contract on Aug. 24, 2020. Cohen answered and filed affirmative defenses which argued that the agreements did not permit billing on an incremental basis, according to the opinion.
The trial judge ruled that the billable increments used by Arbus Maybruch, which were one-tenth of an hour, were reasonable and that the firm’s legal fees were reasonably presented and assented to by the parties in both retainer agreements, according to the opinion.
“Based upon our review of the relevant rules, commentary thereto, and case law, there is no rule as rigorous as the one defendants urge us to adopt; there is no specific pronouncement requiring a retainer agreement to explicitly set forth the unit of incremental billing to be used,” Judge Maritza Berdote Byrne, on temporary assignment to the Appellate Division, said. “Defendants urge us to require retainer agreements include disclosure of incremental billing units, although unsupported in our current jurisprudence.
“While the request is perhaps an issue for one of our Supreme Court’s practice committees, it cannot provide a basis for reversal of summary judgment in this case,” Berdote Byrne said. “To pronounce otherwise would usurp our Supreme Court’s exclusive rulemaking process.”
The appeals court affirmed that summary judgment was properly granted to Arbus Maybruch and held that the retainer agreement was both lawful and ethical. Over the two years of representation, the conduct of the parties demonstrated assent to those terms, according to the opinion.
Judges Thomas W. Sumners Jr. and Ronald Susswein joined in Berdote Byrne’s opinion.
Maybruch, who represented his firm in the matter, and Jeffrey Lubin of Weisberg Law, counsel to Cohen, did not immediately respond to requests for comment.