Attorneys fees

and
Compensation for
legal services

Problem Areas in Legal Ethics

Arellano University School of Law Arellano Law Foundation
2014-2015

CANON 20 - A LAWYER SHALL CHARGE

ONLY FAIR AND REASONABLE FEES.
Rule 20.01 - A lawyer shall be guided by the following factors in
determining his fees:

(a) the time spent and the extent of the service rendered or
required;
(b) the novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of
acceptance of the proffered case;

Cont

(f) The customary charges for similar services and the schedule of
fees of the IBP chapter to which he belongs;
(g) The amount involved in the controversy and the benefits
resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or
established; and
(j) The professional standing of the lawyer.

Cont

Rule 20.02 - A lawyer shall, in case of referral, with the consent of

the client, be entitled to a division of fees in proportion to the
work performed and responsibility assumed.
Rule 20.03 - A lawyer shall not, without the full knowledge and
consent of the client, accept any fee, reward, costs, commission,
interest, rebate or forwarding allowance or other compensation
whatsoever related to his professional employment from anyone
other than the client.
Rule 20.04 - A lawyer shall avoid controversies with clients
concerning his compensation and shall resort to judicial action
only to prevent imposition, injustice or fraud.

Collection suit should be the last resort

Rule 20.4 of the Code of Professional Responsibility advises

lawyers to avoid controversies with clients concerning their
compensation and to resort to judicial action only to prevent
imposition, injustice or fraud. Suits to collect fees should be
avoided and should be filed only when circumstances force
lawyers to resort to it. - Pineda v. Atty. De Jesus, et. al. G.R. No.
155224 August 23, 2006

Rule 138
Sec. 24. Compensation of attorneys; agreement as to fees. - An
attorney shall be entitled to have and recover from his client no
more than a reasonable compensation for his services, with a
view:
1) to the importance of the subject matter of the controversy,
2) the extent of the services rendered, and
3) the professional standing of the attorney.
No court shall be bound by the opinion of attorneys as expert
witnesses as to the proper compensation, but may disregard
such testimony and base its conclusion on its own professional
knowledge. A written contract for services shall control the
amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.

Cont

Section 25, Rule 138 of the Rules of Court:

SEC. 25. Unlawful retention of clients funds; contempt When

an attorney unjustly retains in his hands money of his client
after it has been demanded he may be punished for contempt as
an officer of the Court who has misbehaved in his official
transactions; but proceedings under this section shall not be a bar
to a criminal prosecution.

Rule on division of legal fees

Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee

for legal services with persons not licensed to practice law,
except:
(a) Where there is a pre-existing agreement with a partner or
associate that, upon the latter's death, money shall be paid over a
reasonable period of time to his estate or to persons specified in the
agreement; or
(b) Where a lawyer undertakes to complete unfinished legal
business of a deceased lawyer; or
(c) Where a lawyer or law firm includes non-lawyer employees in a
retirement plan even if the plan is based in whole or in part, on a
profit sharing agreement.
8

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL

MONEYS AND PROPERTIES OF HIS CLIENT THAT
MAY COME INTO HIS PROFESSION.

Rule 16.01 - A lawyer shall account for all money or property

collected or received for or from the client.
Rule 16.02 - A lawyer shall keep the funds of each client separate
and apart from his own and those of others kept by him.
Rule 16.03 - A lawyer shall deliver the funds and property of his
client when due or upon demand. However, he shall have a lien
over the funds and may apply so much thereof as may be
necessary to satisfy his lawful fees and disbursements, giving
notice promptly thereafter to his client. He shall also have a lien to
the same extent on all judgments and executions he has secured
for his client as provided for in the Rules of Court.

Cont

Rule 16.04 - A lawyer shall not borrow money from his client unless
the client's interest are fully protected by the nature of the case or
by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance
necessary expenses in a legal matter he is handling for the client.

This rule is intended to prevent the lawyer from taking

advantage of his influence over the client. Junio v. Atty.
Grupo, A.C. No. 5020, December 18, 2001

10

Non-payment of loan is a
violation of PCR not
misappropriation or embezzlement

Respondents liability is thus not for misappropriation or

embezzlement but for violation of Rule 16.04 of the Code of
Professional Responsibility which forbids lawyers from borrowing
money from their clients unless the latters interests are protected
by the nature of the case or by independent advice. In this case,
respondents liability is compounded by the fact that not only did he
not give any security for the payment of the amount loaned to
him but that he has also refused to pay the said amount. His
claim that he could not pay the loan because circumstances . . . did
not allow it and that, because of the passage of time, he somehow
forgot about his obligation only underscores his blatant disregard of
his obligation which reflects on his honesty and candor.

11

Whether or not an attorney who was engaged on a

contingent fee basis may, in order to collect his fees,
prosecute an appeal despite his client's refusal to
appeal the decision of the trial court.

A practicing attorney, entered into a written agreement with the

private respondent to appear as her counsel in a petition for
probate of the holographic will. Under the will, a piece of real
property at Sales Street, Quiapo, Manila, was bequeathed to
private respondent. It was agreed that the attorneys contigent fee
would be thirty-five per cent (35%) of the property that private
respondent may receive upon the probate of the will.
The payment of his fees is contingent and dependent upon
the successful probate of the holographic will. Since the
petition for probate was dismissed by the lower court, the
contingency did not occur. Attorney Leviste is not entitled to his
fee. - Leviste v. CA, G.R. No. L-29184 [1989]
12

Is the right of a client to enter into a

compromise agreement without the consent
of his lawyer defeated by a contrary written
contract ?

It appears from the record that on July 31, 1921, the respondents
by means of a written contract, retained the petitioner to represent
them as their lawyer. The contract fixed the petitioner's fee at P200
in advance with an additional contigent fee of P1,300. It was also
provided in the contract that respondent should not compromise
the claim against the defendant in the case without express
consent of his lawyer.

Through the sole effort of respondents the case was dismissed

without notice to their counsel.

13

Right of a client to compromise suit

The client has also an undoubted right to compromise a suit

without the intervention of his lawyer.

Though there is a valid agreement for the payment to the attorney of a

large proportion of the sum recovered in case of success this does
not give the attorney such an interest in the cause of action that
it prevents plaintiff from compromising the suit. Rustia v. The Judge
of First Instance of Batangas, G.R. No. L-19695 November 17, 1922

We have recently held that a client has always the right to settle his
cause of action and stop litigation at any stage of the proceeding,
subject, however, to the right of the attorney to receive
compensation for services rendered. - Aro v. The Hon. Naawa, G.R.
No. L-24163 [1969]

14

Applies only in civil cases

Rule

1.04 - A lawyer shall encourage his clients to avoid, end or settle

a controversy if it will admit of a fair settlement.

15

Limitation of clients right

to compromise suit

While We here reaffirm the rule that "the client has an undoubted right to
compromise a suit without the intervention of his lawyer", We hold that
when such compromise is entered into in fraud of the lawyer, with
intent to deprive him of the fees justly due him, the compromise must
be subject to the said fees, and that when it is evident that the said fraud is
committed in confabulation with the adverse party who had knowledge of
the lawyer's contingent interest or such interest appears of record and
who would benefit under such compromise, the better practice is to
settle the matter of the attorney's fees in the same proceeding, after
hearing all the affected parties and without prejudice to the finality of the
compromise in so far as it does not adversely affect the rights of the
lawyer.
lawyer - Aro v. The Hon. Naawa, G.R. No. L-24163 [1969]

16

Quantum meruit

The principle of quantum meruit (as much as he deserves) may be

a basis for determining the reasonable amount of attorneys fees.
Quantum meruit is a device to prevent undue enrichment based
on the equitable postulate that it is unjust for a person to retain
benefit without paying for it. It is applicable even if there was a
formal written contract for attorneys fees as long as the agreed fee
was found by the court to be unconscionable. - Atty. Orocio v.
Angulan et. al., G.R. No. 179892-93, January 30, 2009

17

2 purposes of application
Quantum meruit

The recovery of attorneys fees on this basis is permitted, as in this

case, where there is no express agreement for the payment of
attorneys fees. Basically, it is a legal mechanism which prevents
an unscrupulous client from running away with the fruits of
the legal services of counsel without paying for it. In the
same vein, it avoids unjust enrichment on the part of the
lawyer himself. - Pineda v. Atty. De Jesus, et. al. G.R. No. 155224
August 23, 2006

18

When is Quantum meruit authorized

(1) there is no express contract for payment of attorney's fees agreed

upon between the lawyer and the client;
(2) when although there is a formal contract for attorney's fees, the
fees stipulated are found unconscionable or unreasonable by the
court; and
(3) when the contract for attorney's fee's is void due to purely formal
defects of execution;
(4) when the counsel, for justifiable cause, was not able to finish the
case to its conclusion;
(5) when lawyer and client disregard the contract for attorney's fees, Rilloza, et. al. v. Eastern Telecommunications Phils., Inc., G.R. No.
104600 [1999]

19

Factors for application of

quantum meruit

In fixing a reasonable compensation for the services rendered by a

lawyer on the basis of quantum meruit, factors such as the time
spent, and extent of services rendered; novelty and difficulty of the
questions involved; importance of the subject matter; skill
demanded; probability of losing other employment as a result of
acceptance of the proferred case; customary charges for similar
services; amount involved in the controversy and the benefits
resulting to the client; certainty of compensation; character of
employment; and professional standing of the lawyer, may be
considered. (Atty. Orocio v. Angulan et. al., G.R. No. 179892-93,
January 30, 2009)

20

The court shall fix the amount

In fixing a reasonable compensation for the services rendered by a
lawyer on the basis of quantum meruit, the elements to be
considered are generally
(1) the importance of the subject matter in controversy,
(2) the extent of services rendered, and
(3) the professional standing of the lawyer.
A determination of these factors would indispensably require nothing
less than a full-blown trial where private respondents can adduce
evidence to establish the right to lawful attorney's fees and for
petitioner to oppose or refute the same. The trial court has the
principal task of fixing the amount of attorney's fees. Hence, the
necessity of a hearing is beyond cavil. -Rilloza, et. al. v. Eastern
Telecommunications Phils., Inc., G.R. No. 104600 [1999]

21

Champertous contract

"1. On all commission or attorneys fees that we shall receive from our
clients by virtue of the collection that we shall be able to effect on their
accounts, we shall divide fifty-fifty. Likewise you are entitled to
commission, 50/50 from domestic, inheritance and commercial from
our said clients or in any criminal cases where they are involved.

We hold that the said agreement is void because it was tantamount

to malpractice which is "the practice of soliciting cases at law for the
purpose of gain, either personally or through paid agents or brokers"
Sec. 27, Rule 138, Rules of Court). Malpractice ordinarily refers to any
malfeasance or dereliction of duty committed by a lawyer. Section 27
gives a special and technical meaning to the term "malpractice" (Act
No. 2828, amending sec. 21 of Act No. 190). Tan Tek Beng v. David,
A.C. No. 1261. December 29, 1983

22

Agreement to pay all expenses of

proceedings

An agreement whereby an attorney agrees to pay expenses of

proceedings to enforce the client's rights is champertous [JBP
Holding Corp. v. U.S. 166 F. Supp. 324 (1958)]. Such agreements
are against public policy especially where, as in this case, the
attorney has agreed to carry on the action at his own expense in
consideration of some bargain to have part of the thing in dispute
[See Sampliner v. Motion Pictures Patents Co., et al., 255 F. 242
(1918)]. The execution of these contracts violates the fiduciary
relationship between the lawyer and his client, for which the
former must incur administrative sanctions. - Atty. Orocio v.
Angulan et. al., G.R. No. 179892-93, January 30, 2009

23

Funding litigation

[A]s long as litigation and access to the courts remain expensive,

then anyone who has a right that stands in need of vindication
should be able to obtain funding from anyone willing to offer
it and on whatever terms it is offered.
- Neuberger, From Barretry, Maintenance and Champerty to
Litigation Funding, Speech at Grays Inn, May 8, 2013.

24

Pay the law firm not the handling

lawyer

When a client employs the services of a law firm, he does not

employ the services of the lawyer who is assigned to personally
handle the case. Rather, he employs the entire law firm. In the
event that the counsel appearing for the client resigns, the firm is
bound to provide a replacement.
- Rilloza, et. al. v. Eastern Telecommunications Phils., Inc., G.R. No.
104600 [1999]

25

Retaining lien

Rule 138 Sec. 37. Attorney's liens. An attorney shall have a lien upon the
funds, documents and papers of his client, which have lawfully come
into his possession and may retain the same until his lawful fees and
disbursements have been paid, and may apply such funds to the
satisfaction thereof. He shall also have a lien to the same extent upon all
judgments for the payment of money, and executions issued in pursuance
of such judgments, which he has secured in a litigation of his client, from
and after the time when he shall have caused a statement of his claim of
such lien to be entered upon the records of the court rendering such
judgment, or issuing such execution, and shall have caused written notice
thereof to be delivered to his client and to the adverse party; and he shall
have the same right and power over such judgments and executions as his
client would have to enforce his lien and secure the payment of his just fees
and disbursements."

26

Charging lien

Rule 138 Section 37. xxx He shall also have a lien to the same extent
upon all judgments for the payment of money, and
executions issued in pursuance of such judgments, which he
has secured in a litigation of his client, from and after the time
when he shall have caused a statement of his claim of such lien to
be entered upon the records of the court rendering such judgment,
or issuing such execution, and shall have caused written notice
thereof to be delivered to his client and to the adverse party; and
he shall have the same right and power over such judgments and
executions as his client would have to enforce his lien and secure
the payment of his just fees and disbursements."

27

There must be a favorable judgment

A charging lien to be enforceable as security for the payment of

attorney's fees requires as a condition sine qua non a judgment for
money and execution in pursuance of such judgment secured in
the main action by the attorney in favor of his client. A charging
lien presupposes that the attorney has secured a favorable
money judgment for his client. - Rilloza, et. al. v. Eastern
Telecommunications Phils., Inc., G.R. No. 104600 [1999]

28

The following are the circumstances to be

considered in determining the compensation
of an attorney
1. the amount and character of the services rendered;
2. the labor, time, and trouble involved;
3. the nature and importance of the litigation or business in which the
services were rendered; the responsibility imposed;
4. the amount of money or the value of the property affected by the
controversy, or involved in the employment,
5. the skill and experience called for in the performance of the
services;

29

6. the professional character and social standing of the attorney;

7. the results secured; and
8. whether or not the fee is absolute or contingent, it being a
recognized rule that an attorney may properly charge a much a
larger fee when it is to be contingent that when it is not.
9. The financial ability of the defendant may also be considered not to
enhance the amount above a reasonable compensation, but to
determine whether or not he is able to pay a fair and just
compensation for the services rendered, or as incident in
ascertaining the importance and gravity of the interests involved in
the litigation.

30

Forum does not qualify payment of

compensation

We have noted in the beginning that the services here were rendered in a
case of an administrative nature. But that does not alter the
application of the proper rule:

Professional services, to prepare and advocate just claims for

compensation, are as legitimate as services rendered in court in
arguing a cause to convince a court or jury that the claim presented or
the defense set up against a claim presented by the other party ought to
be allowed or rejected. Parties in such cases require advocates; and the
legal profession must have a right to accept such employment and
to receive compensation for their services. De Guzman v. Visayan
Rapid Transport Co. Inc. G.R. No. 46396
September 30, 1939

31

Written contract is not required to

prove lawyer-client relationship

The absence of a written contract will not preclude the finding that
there was a professional relationship which merits attorney's fees
for professional services rendered. Documentary formalism is not
an essential element in the employment of an attorney; the
contract may be express or implied. To establish the relation, it is
sufficient that the advice and assistance of an attorney is
sought and received in any matter pertinent to his
profession. An acceptance of the relation is implied on the part of
the attorney from his acting on behalf of his client in pursuance of
a request from the latter. - Dee vs. Court of Appeals, G.R. No.
77439, August 24, 1989

32

Options to enforce right to professional

fees

A lawyer may enforce his right to his fees by filing the necessary
petition as an incident of the main action in which his services
were rendered or in an independent suit against his client. The
former is preferable to avoid multiplicity of suits. - Pineda v. Atty.
De Jesus, et. al. G.R. No. 155224 August 23, 2006

33

Only reason to file suit

Rule 20.4 of the Code of Professional Responsibility advises

lawyers to avoid controversies with clients concerning their
compensation and to resort to judicial action only to prevent
imposition, injustice or fraud. Suits to collect fees should be
avoided and should be filed only when circumstances force
lawyers to resort to it. - Pineda v. Atty. De Jesus, et. al. G.R. No.
155224 August 23, 2006

34

Two commonly accepted concepts of

attorneys fees

In its ordinary concept, an attorneys fee is the reasonable compensation

paid to a lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment by
and his agreement with the client.
In its extraordinary concept, an attorneys fee is an indemnity for
damages ordered by the court to be paid by the losing party in a litigation.
The basis of this is any of the cases provided by law where such award can
be made, such as those authorized in Article 2208, Civil Code, and is
payable not to the lawyer but to the client, unless they have agreed that
the award shall pertain to the lawyer as additional compensation or as part
thereof. - Traders Royal Bank Employees Union-Independent v. NLRC
G.R. No. 120592. March 14, 1997

35

Award of (extraordinary) attorneys fee

is discretionary

The power of this Court to reduce or even delete the award of

attorneys fees cannot be denied. Lawyers are officers of the
Court and they participate in the fundamental function of
administering justice. When they took their oath, they submitted
themselves to the authority of the Court and subjected their
professional fees to judicial control. Pineda v. Atty. De Jesus, et.
al. G.R. No. 155224 August 23, 2006

36

Contingent fee agreement does not violate

Article 1491(5) of the NCC

The contract of services did not violate said provision of law. Article 1491 of the Civil
Code, specifically paragraph 5 thereof, prohibits lawyers from acquiring by
purchase even at a public or judicial auction, properties and rights which are the
objects of litigation in which they may take part by virtue of their profession. The
said prohibition, however, applies only if the sale or assignment of the property
takes place during the pendency of the litigation involving the client's property.
Hence, a contract between a lawyer and his client stipulating a contingent fee is
not covered by said prohibition under Article 1491 (5) of the Civil Code
because the payment of said fee is not made during the pendency of the litigation
but only after judgment has been rendered in the case handled by the lawyer. In
fact, under the 1988 Code of Professional Responsibility, a lawyer may have a lien
over funds and property of his client and may apply so much thereof as may be
necessary to satisfy his lawful fees and disbursements. - Fabillo and Tana v. IAC
G.R. No. L-68838 [1991]

37

Mere demand for delivery of the

litigated property is not unethical

In the instant case, there was no actual acquisition of the property

in litigation since the respondent only made a written demand for
its delivery which the complainant refused to comply. Mere
demand for delivery of the litigated property does not cause
the transfer of ownership, hence, not a prohibited transaction
within the contemplation of Article 1491. - Ramos v. Atty. Ngaseo,
A.C. No. 6210 [2004]

38

Commission/referral fees prohibited

By openly admitting he divided the Php70,000.00 to other

individuals as commission/referral fees respondent violated Rule
9.02, Canon 9 of the Code of Professional Responsibility which
provides that a lawyer shall not divide or stipulate to divide a fee
for legal services with persons not licensed to practice law. Lijauco v. Atty. Terrado, A.C. No. 6317 [2006]

39

CANON 9 - A LAWYER SHALL NOT, DIRECTLY OR

INDIRECTLY, ASSIST IN THE UNAUTHORIZED
PRACTICE OF LAW.

Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee for
legal services with persons not licensed to practice law, except:
(a) Where there is a pre-existing agreement with a partner or
associate that, upon the latter's death, money shall be paid over a
reasonable period of time to his estate or to persons specified in
the agreement; or
(b) Where a lawyer undertakes to complete unfinished legal
business of a deceased lawyer; or
(c) Where a lawyer or law firm includes non-lawyer employees in a
retirement plan even if the plan is based in whole or in part, on a
profit sharing agreement.

40

Quality of legal service should not vary

if rendered for free

It is true that he is a court-appointed counsel. But we do say that as

such counsel de oficio, he has as high a duty to the accused as
one employed and paid by defendant himself. Because, as in
the case of the latter, he must exercise his best efforts and
professional ability in behalf of the person assigned to his care. His
is to render effective assistance. The accused defendant expects of
him due diligence, not mere perfunctory representation. We do
not accept the paradox that responsibility is less where the
defended party is poor. - In Re: Atty. Adriano, G.R. No. L-26868
[1969]

41

Rule 14.04 - A lawyer who accepts the cause of a person unable to

pay his professional fees shall observe the same standard of
conduct governing his relations with paying clients.

42

Case law

Mr. Culpepper sent Mr. Cole a letter in which he confirmed that he

would accept the representation on a contingent fee basis of onethird "of whatever additional property or money we can get for you.
After negotiation between Mr. Culpepper and counsel for the estate of
Mr. Cole's mother, Mr. Cole was offered property worth $21,600.03
over and above what he would have received under the terms of the
decedent's will. Mr. Culpepper thought the compromise was
reasonable and recommended to Mr. Cole that he accept the offer.
However, Mr. Cole refused to settle his claim for that amount,
believing he was entitled to a larger share of his mother's
succession as a forced heir. When Mr. Culpepper refused to file suit
in the matter, Mr. Cole terminated his representation.

43

Pursuant to the parties' agreement, Mr. Culpepper is entitled to

one-third "of whatever additional property or money" he obtained
on behalf of Mr. Cole. It is undisputed that Mr. Cole recovered
no additional property or money as a result of the litigation
against his mother's estate. Because Mr. Cole obtained no recovery,
it follows that Mr. Culpepper is not entitled to any contingent fee.
Nonetheless, Mr. Culpepper urges us to find that his contingency
should attach to the settlement offer he obtained on behalf of his
client, even though his client refused to accept that offer. According
to Mr. Culpepper, he did the work for which Mr. Cole retained
him, and he is therefore entitled to one-third of the amount offered
in settlement, notwithstanding Mr. Cole's rejection of the
settlement offer.

44

Decision

To allow Mr. Culpepper to recover a contingent fee under these

circumstances would penalize Mr. Cole for exercising his right
to reject the settlement. We find no statutory or jurisprudential
support for such a proposition. Indeed, this court has rejected any
interpretation of the Rules of Professional Conduct which would
place restrictions on the client's fundamental right to control
the case.
In summary, we find that Mr. Culpepper did not obtain any
recovery on behalf of Mr. Cole. In the absence of a recovery, it
follows that Mr. Culpepper cannot collect a contingent fee for his
services. - Culpepper v. Cole 929 So.2d 1224 [2006]

45

Acceptance fee is not necessary to

establish lawyer-client relationship

A lawyer-client relationship was established from the very first

moment complainant asked respondent for legal advice
regarding the formers business. To constitute professional
employment, it is not essential that the client employed the
attorney professionally on any previous occasion. It is not
necessary that any retainer be paid, promised, or charged;
neither is it material that the attorney consulted did not
afterward handle the case for which his service had been sought.
- Burbe v. Atty. Magulta AC No. 99-634. June 10, 2002

46

 Money down first policy

is unethical

The impropriety lies in the fact that she suggested that

complainant borrow money from Domingo Natavio for the
payment thereof. This act impresses upon the Court that
respondent would do nothing to the cause of complainants
mother-in-law unless payment of the acceptance fee is made .
Her duty to render legal services to her client with competence
and diligence should not depend on the payment of
acceptance fee. Ceniza v. Atty. Rubia, A.C. No. 6166, October 2,
2009

I, do solemnly swear that xxx I will delay no man for money xxx.

47

Establishment of lawyer-client
relationship not influenced by personal
affiliation

Respondent takes further refuge in the intimate and close

relationship existing between himself and the complainants
family on the basis of which his legal services were purely gratuitous or
simply an act of a friend for a friend with no consideration
involved. Unfortunately, his efforts to redeem the foreclosed property,
as already stated, did not produce the desired result because the
mortgagee would not budge anymore and would not accept the sum
offered.
Thus, the respondent concluded that there was, strictly speaking, no
attorney-client [relationship] existing between them. Rather, right from
the start[,] everything was sort of personal, he added. xxx This
contention has no merit. - Junio v. Atty. Grupo, A.C. No. 5020.
December 18, 2001

48

Right to a lien versus duty to account

Lawyers who convert the funds entrusted to them are in gross

violation of professional ethics and are guilty of betrayal of public
confidence in the legal profession. It may be true that they have a
lien upon the clients funds, documents and other papers that have
lawfully come into their possession; that they may retain them until
their lawful fees and disbursements have been paid; and that they may
apply such funds to the satisfaction of such fees and disbursements.
However, these considerations do not relieve them of their duty
to promptly account for the moneys they received. Their failure
to do so constitutes professional misconduct. In any event, they must
still exert all effort to protect their clients interest within the bounds
of law. Burbe v. Atty. Magulta AC No. 99-634. June 10, 2002

49

Duty of accounting

When a lawyer receives money from a client for a particular

purpose involving the client-attorney relationship, he is bound to
render an accounting to the client showing that the money was
spent for that particular purpose. If the lawyer does not use the
money for the intended purpose, he must immediately return the
money to his client. - Navarro & Presbitero, A.C. No. 9872, January
28, 2014

50

Change of attorney

Section 26 of Rule 138 of the Revised Rules of Court provides:

"Sec. 26. Change of attorneys -- An attorney may retire at any time
from any action or special proceeding, by the written consent of
his client filed in court. He may also retire at any time from an
action or special proceeding, without the consent of his client,
should the court, on notice to the client and attorney, and on
hearing, determine that he ought to be allowed to retire. In case of
substitution, the name of the attorney newly employed shall be
entered on the docket of the court in place of the former one, and
written notice of the change shall be given to the adverse party.

51

Withdrawal of counsel

A lawyer may retire at any time from any action or special

proceeding with the written consent of his client filed in court
and copy thereof served upon the adverse party. Should the client
refuse to give his consent, the lawyer must file an application
with the court. The court, on notice to the client and adverse
party, shall determine whether he ought to be allowed to retire.
The application for withdrawal must be based on a good
cause. - Orcino v. Atty. Gaspar, A.C. No. 3773. September 24, 1997

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Grounds for withdrawal

Respondent's withdrawal was made on the ground that "there no

longer exist[ed] the xxx confidence" between them and that there
had been "serious diffferences between them relating to the
manner of private prosecution. - Orcino v. Atty. Gaspar, A.C. No.
3773. September 24, 1997

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Court approval required before

counsel can withdraw

Assuming, nevertheless, that respondent was justified in

terminating his services, he, however, cannot just do so and leave
complainant in the cold unprotected. The lawyer has no right to
presume that his petition for withdrawal will be granted by the
court. Until his withdrawal shall have been approved, the lawyer
remains counsel of record who is expected by his client as well as
by the court to do what the interests of his client require. He must
still appear on the date of hearing for the attorney-client relation
does not terminate formally until there is a withdrawal of record.
Orcino v. Atty. Gaspar, A.C. No. 3773. September 24, 1997

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What is a contingency contract

The client and his lawyer may enter into a written contract
whereby the latter would be paid attorneys fees only if the suit
or litigation ends favorably to the client. This is called a
contingency fee contract. The amount of attorneys fees in this
contract may be on a percentage basis, and a much higher
compensation is allowed in consideration of the risk that the
lawyer may get nothing if the suit fails.
In the case at bar, the non-EPIRA separated members and
petitioner voluntarily entered into a contingency fee contract
whereby petitioner did not receive any acceptance fee or
appearance/meeting fee. - Atty. Orocio v. Angulan et. al., G.R. No.
179892-93 [2009]

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Why contingency fee is allowed

Contingent fee contracts are permitted in this jurisdiction because

they redound to the benefit of the poor client and the lawyer
especially in cases where the client has meritorious cause of
action, but no means with which to pay for legal services
unless he can, with the sanction of law, make a contract for a
contingent fee to be paid out of the proceeds of litigation.
Oftentimes, the contingent fee arrangement is the only means by
which the poor clients can have their rights vindicated and
upheld.- Atty. Orocio v. Angulan et. al., G.R. No. 179892-93 [2009]

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Limitations of a contingency agreement

However, in cases where contingent fees are sanctioned by law, the

same should be reasonable under all the circumstances of
the case, and should always be subject to the supervision of a
court, as to its reasonableness, such that under Canon 20 of the
Code of Professional Responsibility, a lawyer is tasked to charge
only fair and reasonable fees. - Atty. Orocio v. Angulan et. al., G.R.
No. 179892-93 [2009]

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Written contract of legal fees is

ordinarily controlling

A stipulation on a lawyers compensation in a written contract for

professional services ordinarily controls the amount of fees that
the contracting lawyer may be allowed, unless the court finds such
stipulated amount to be unreasonable or unconscionable. If the
stipulated amount for attorneys fees is excessive, the contract
may be disregarded even if the client expressed their conformity
thereto. Attorneys fees are unconscionable if they affront ones sense
of justice, decency or reasonableness, or if they are so
disproportionate to the value of the services rendered. In such a case,
courts are empowered to reduce the attorneys fee or fix a reasonable
amount thereof taking into consideration the surrounding
circumstances and the established parameters. - Atty. Orocio v.
Angulan et. al., G.R. No. 179892-93 [2009]
58

When is an attorneys fees

unconscionable?

Attorneys fees are unconscionable if they affront ones sense of

justice, decency or reasonableness, or if they are so
disproportionate to the value of the services rendered. In such a
case, courts are empowered to reduce the attorneys fee or fix a
reasonable amount thereof taking into consideration the
surrounding circumstances and the established parameters. - Atty.
Orocio v. Angulan et. al., G.R. No. 179892-93 [2009]

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Lawyers compensation for professional

services rendered is subject to the
supervision of the court

Under Section 24, Rule 138 of the Rules of Court, a written contract
for services shall control the amount to be paid therefor unless
found by the court to be unconscionable or unreasonable.
. It follows that a lawyers compensation for professional services
rendered is subject to the supervision of the court, not just to
guarantee that the fees he charges and receives remain
reasonable and commensurate with the services rendered, but also
to maintain the dignity and integrity of the legal profession to
which he belongs. Upon taking his attorneys oath as an officer of
the court, a lawyer submits himself to the authority of the
courts to regulate his right to charge professional fees . - Atty.
Orocio v. Angulan et. al., G.R. No. 179892-93 [2009]

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Thank you for your

attention!!

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