Richard J. Hughes Justice Complex, seat of the New Jersey Supreme Court. (Courtesy photo)

The New Jersey Supreme Court has agreed to take up a dispute over a ruling requiring lawyers in some fee-shifting cases to inform the client about other counsel who can provide representation on more favorable terms.

On March 8, the Supreme Court agreed to hear an appeal of a ruling voiding a lawyer's retainer agreement in a fee-shifting case. The appeals courts said the retainer was void because attorney Brian Cige, a Somerville solo, failed to explain to the client that he would be charging hourly fees. The justices said they would consider the appeals court's invalidation of the retainer and its imposition of a new rule on lawyers who charge hourly fees for working on discrimination or other fee-shifting cases.

The appeals court, in a published opinion in August 2018, said lawyers who wish to charge hourly fees for such cases must inform their clients that other competent counsel are willing to accept such cases on a pure contingency basis and are willing to advance any litigation costs.

Besides defendant Cige, the New Jersey State Bar Association urged the Supreme Court to grant certification in the case.

Cige agreed in 2012 to represent Lisa Balducci and her minor son in a suit brought under the New Jersey Law Against Discrimination, which provides fee-shifting for a plaintiff who prevails. After Balducci terminated Cige's representation and hired another lawyer, he presented her with a bill for $286,746 in fees and expenses.

In 2016, Balducci filed a declaratory judgment action seeking to have the retainer agreement declared void. The trial judge, Yolanda Ciccone of Superior Court in Somerset County, said the agreement was unenforceable. The appeals court panel—Judges William Nugent, Carmen Alvarez and Richard Geiger—agreed.

The panel said that a lawyer whose fee for undertaking a LAD case includes an hourly rate component is obligated to explain to the client “both the consequences on a recovery and the ability of other competent counsel likely willing to undertake the same representation based on a fee without an hourly component,” Nugent wrote for the panel. “There is no dearth of competent, civic-minded attorneys willing to litigate LAD and other statutory fee-shifting cases under fee agreements that do not include an hourly component. The number of such cases litigated in our courts and reported in the case law evidence this, as does—at least to number—advertising on television and radio, in telephone books and newspapers, and on billboards and other media.”

The State Bar Association, which is amicus curiae in the Supreme Court case, said the Appellate Division ruling “went far further than needed to decide the case” and then “engaged in improper rule making” by creating a statewide precedent with binding effect on the state's attorneys. The Appellate Division's decision “will have a substantial impact on lawyers who practice in solo and small firms, as they are often on the front line of advocating for clients in fee-shifting cases, including discrimination matters, consumer fraud and many others,” the State Bar Association's brief said. Attorneys William Denver, Thomas Prol and Edward Zohn wrote the brief.

The State Bar Association brief said the Appellate Division imposes unreasonable requirements on lawyers to conduct research on other lawyers' fee arrangements in fee-shifting cases. The ruling assumes that lawyers will freely share their own fee arrangements with competitors, but most fee arrangements are “unique to the facts of each case, the needs of the client, and the business and legal judgement of each firm.” What's more, attorneys are prohibited by R.P.C. 1.6 from sharing confidential information about their cases. “As such, there is no accurate way to compare the facts and legal issues currently being litigated by competitor firms with those presented by a new client,” the bar association brief said.

Cige said he “is glad the New Jersey Supreme Court is granting certification and allowing the New Jersey State Bar Association to be heard as an amicus on its concerns about the overreaching Appellate Division decision, which made worse the erroneous trial court decision by Judge Ciccone.”

Balducci's present lawyer, Jay Rice of Nagel Rice in Roseland, said he thinks the Supreme Court is taking the case out of an interest in “the sweep of the Appellate Division decision” rather than its “affirmance of the trial judge's decision regarding the validity of this specific agreement,” a decision that Rice says he thinks the justices will affirm.