Attorney Fees
Jury Rules Lawyer Must Return Half of $200K Bonus Paid by Client
Posted May 15, 2008 5:55 AM CST
By Debra Cassens Weiss
A Philadelphia jury has ruled a lawyer who helped a client negotiate a $4.9 million post-nuptial settlement must repay half of a $200,000 bonus she paid him.
The jury ruled lawyer Charles Shainberg breached his contract with the client, Junko Schubert, when he sought payment of the bonus, the Legal Intelligencer reports. The jury found for Shainberg on a separate breach of fiduciary duty claim and found for his law firm, Shainberg & Viola, on both claims.
The bonus was never mentioned in the original fee agreement, according to testimony by the plaintiff’s expert, Temple University law professor Louis Natali Jr. He said the $200,000 bonus was excessive, an assertion disputed by the defense expert, University of Pennsylvania law professor Geoffrey Hazard Jr., the story says.
Schubert and Shainberg had differed over the circumstances surrounding the bonus payment, according to the story’s description of their legal positions filed in court papers.
Schubert had claimed Shainberg had called her to his office after he negotiated the agreement, where he presented her with a letter indicating the firm believed a bonus was appropriate. She said Shainberg urged her to fill in a blank line for the bonus, saying he had promised a $200,000 bonus to the people working for him. She also claimed he told her she could not receive a $1.05 million distribution under the agreement without signing the bonus letter. Schubert filled in $200,000 as the amount.
Shainberg had said in court filings that the letter was sent in the mail and no pressure was exerted on Schubert to pay a bonus.
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Comments
JR
May 16, 2008 7:44 AM CST
I cannot understand how anyone could defend the bonus. Whether or not the lawyer pressured the client or threatened to withhold payment of a larger sum, it appears from this article that the original fee agreement contained nothing about a bonus. Neither does the article mention any change in circumstances to warrant a higher fee. The divorce lawyer should have kept to his original bargain. Tactics such as this give the profession a bad name.
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bg
May 16, 2008 8:47 AM CST
Since when are our clients required to tip us for our services? We are not the underpaid wait staff at Dennys or Applebees who require tips to make a decent hourly wage. If he wanted to pay a bonus, it should have been calculated into his hourly rate from the start. I am sure he was already well compensated. But to tell your client that you expect to receive a sizable reward for doing your job, when you are already being compensated, and suggest that the deal you have made for your client will disappear if it is not paid, is extortion. Might as well put up a sign in the lobby - “All matters involving the services of one or more partners, associates, secretaries, or other staff and the equipment of this firm, including, but not limited to, computer space, photocopiers, and voicemail, will have an 25% gratuity added to their bills. This amount may be increased, without notice, at our option depending upon how good we feel about ourselves, whether we ‘need’ something, the size of your bank account, or whimsy. You agree that this payment is a ‘bonus’ for satisfactory services and is paid voluntarily. All monies received will be applied first towards the gratuity and are nonrefundable.”
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Pollyanna
May 16, 2008 9:35 AM CST
As as out of state lawyer, we once had a case handled in PA by Philadelhhia counsel. Once th case was over and settled the attorney tried to shake us down for a similar bonus to the attorney that referred us to him. Said it was standard practice in PA. Told him to go hang w/ his “stadnard practice”
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bb
May 16, 2008 9:48 AM CST
Actually, “success bonuses” are not uncommon, and not prohibited by the ethics rules. Clients try to negotiate a fee down or get time cut, sometimes successfully, when a case goes poorly. When a lawyer achieves a surprisingly good result, it is appropriate to give a success bonus. It happened in my (AmLaw 100) law firm several times. But a client should not be pressured to do so.
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Fred O'Donald
May 18, 2008 6:06 PM CST
Rule 1. Never stand between a greedy woman and Money. She will always fight to get every dime.
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Theodore A. Schwartz, Esq
May 19, 2008 12:28 PM CST
The synopsis of the case as set forth in this article is woefully incomplete. Mrs Schubert had abandoned her husband and children, and only returned after Mr Schubert became terminally ill. Mrs Schubert was engaging in a meritricious relationship in New York, which would have disqualified her to receive any benefits in her husband’s estate, pursuant to Pa. Statutes. Faced with this issue, Mr Shainberg negotiated a settlement for his client, which was 2.8 million dollars more than she would have gotten had the abandonment defense been successful. I was proud to represent Chuck Shainberg, and equally not proud to be a member of a profession where I have to read ridiculous comments like I read in this section from alleged professionals who express an opinion without any grasp of the true facts in this case. His bonus request was absolutely warranted. Ask Albert Momjian and Geoffrey Hazard, his experts.
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T.L.
May 21, 2008 3:32 PM CST
The bonus might have been a nice gesture by a grateful client exuberant about collecting gobs more money than she knew she should have collected, but the bonus was not a contractual obligation, and thus, Shainberg’s conduct is tantamount to that of the classic annoying bell hop who, after delivering your bags to your room, stands there, immovable, with his hand out, uttering a hushed “ahem.” Nothing short of rude. In any event, the “true facts” are irrelevant: whether he tapped danced to entice the court’s decision, argued obscure law or won the judgment purely on the merits, the only relevant fact is that the bonus was “negotiated” (read: arm twisting) after the fee agreement was signed. Ergo, the jury’s breach of contract decision.
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