The Lawyer’s Rights to Full Fees from Reluctant Client – part II

(ruling 72060 of the Eretz Hemdah-Gazit Rabbinical Courts)


Case: The plaintiff (=pl) is a lawyer (/owner of a law firm) who represented the defendant (=def), a wealthy businessman (/businesses he owned) in many matters, including several multi-million-shekel (attempted) purchases. Def paid pl more than 1.6 million shekels over 4 years, but pl claims that he is still owed more than 2 million shekels.
Issue #2: In several of the cases that pl handled, there was no prior agreement (or pl did not succeed to prove that there was) of the rate of payment due to pl. Pl claims that it should be according pl’s normal per-hour fee. Def objects to the system and the high rate that pl claims is standard.

P'ninat Mishpat (704)

Various Rabbis

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379 - Preventing Unfair Rent Hikes – part II

380 - The Lawyer’s Rights to Full Fees from Reluctant Client – part II

381 - Lawyer’s Rights to Full Fees from Reluctant Client – part IV

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Ruling: Issue #2: The Shulchan Aruch (Choshen Mishpat 331:3) says that if the sides agreed that a worker be paid like local workers, he is paid the average local salary. This seems to contradict the gemara(Bava Metzia 76a) that if there was no agreement on salary, a worker receives according to the lowest accepted salary. The Rif explains that the employer has the cheap price in mind, and if the worker wants more, he must stipulate. The K’tzot Hachoshen (331:1) says that usually one receives the lower salary, but in the former case, the fact that he mentioned local salaries implies that he agreed to an average salary.
Other matters in which there were prior agreements between pland def can be telling regarding cases where there no agreement. The Rama (CM 333:8) says that if someone worked for a year at a certain price and then continued without stipulating a price, we assume it is at the same price. Admittedly, we are discussing new cases and not a continuation, and we see that there were different agreements in different cases. However, we can still use the past to help figure out the range of possible rates, within which we should pick the lowest. Furthermore, in certain fields, including law, it is common for a firm to have standard rates (as pl claims to have), in which case, if the client wants a lower rate, he should negotiate for it. Finally, when determining the range of rates, one has to consider the quality of the firm involved (see parallel idea in Shulchan Aruch, CM 332:1), and def agreed that plis in the top-tier of law firms. Thus, def cannot pay pl like a low or middle-level lawyer.
Since it is not possible to determine in every case what the two sides would have agreed to, the most feasible manner of estimation is by hour. However, it is clear that the rates quoted are pl’s full rates, and there is no question that pl often offered def lower rates based on their ongoing relationship. We also consider that the responsibility for setting the rates was on pl. Therefore, based on peshara hakerova ladin, we determine that when there is no other indication, pl is entitled to 60% of the full rate, according to the hours that they claim (discussed last week).