I am a lawyer involved in commercial confession of judgments. I noted that often confession of judgments have added a 15 percent legal fee in addition to the judgment. But, I also noted that sometimes the law firm doesn’t get that 15 percent legal fee. Instead the client pays either an hourly or reduced rate and the client keeps the balance of the 15 percent fee. Is that unethical?
The answer is yes, it is unethical for two reasons, if it occurs. Obviously, the facts as stated by the question are disturbing at the very least. What is disturbing is that, first, a law firm would mislead a court to suggest it was getting a 15 percent fee when, in fact, it was not or were only billing at an hourly rate. The second disturbing point is that would mean the law firm was, in essence, sharing fees with a nonlawyer, (i.e., its client). For instance, if there was a confession of judgment for $100,000, plus 15 percent for legal fees for $15,000 and the law firm’s bill was only for $7,000, it would be unethical if the client retained the balance of $8,000. In this example, that would be a very serious problem of splitting fees with nonlawyers.
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