Eugenio E. Cortez engaged the services of Atty. Cortes as his counsel in an illegal dismissal case against Philippine Explosives Corporation (PEC). He further alleged that he and Atty. Cortes had a handshake agreement on a 12% contingency fee as and by way of attorney’s fees.
The case was decided in favor of complainant. PEC was ordered to pay complainant the total amount of One million One Hundred Thousand Pesos (₱1, 100,000) in three staggered payments. PEC then issued checks all payable in the name of complainant, as payment.
Atty. Cortes however, claimed that 50% of the total awarded claims belongs to him as attorney’s fees.
Complainant then offered to pay ₱200,000, and when Atty. Cortes rejected it, he offered the third check amounting to ₱275,000, but Atty. Cortes still insisted on the 50% of the total award.
A complaint was filed by Eugenio against respondent Atty. Cortes for grave misconduct, and violation of the Lawyer’s Oath and the Code for Professional Responsibility.
The IBP Commission on Bar Discipline recommended the six-month suspension of Atty. Cortes.
Whether or not the acts complained of constitute misconduct on the part of Atty. Cortes, which would subject him to disciplinary action.
We rule in the affirmative.
We have held that a contingent fee arrangement is valid in this jurisdiction. It is generally recognized as valid and binding, but must be laid down in, an express contract.
The case of Rayos v. Atty. Hernandez discussed the same succinctly, thus:
A contingent fee arrangement is valid in this jurisdiction and is generally recognized as valid and binding but must be laid down in an express contract. The amount of contingent fee agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers.
In this case, We note that the parties did not have an express contract as regards the payment of fees. Complainant alleges that the contingency fee was fixed at 12% via a handshake agreement, while Atty. Cortes counters that the agreement was 50%.
The IBP Commission on Discipline pointed out that since what respondent handled was merely a labor case, his attorney’s foes should not exceed 10%, the rate allowed under Article 111 of the Labor Code.
Although we agree that the 50% contingency fee was excessive, We do not agree that the 10% limitation as provided in Article 111 is automatically applicable.
Generally, the amount of attorney’s fees due is that stipulated in the retainer Agreement which is conclusive as to the amount of the lawyers compensation.
In the absence thereof, the amount of attorney’s fees is fixed on the basis of quantum meruit, i.e., the reasonable worth of the attorney’s services. Courts may ascertain also if the attorney’s fees are found to be excessive, what is reasonable under the circumstances.
In no case, however, must a lawyer be allowed to recover more than what is reasonable, pursuant to Section 24, Rule 138 of the Rules of Court.
Canon 20 of the Code of Professional Responsibility states that “A lawyer shall charge only fair and reasonable fees.” Rule 20.01 of the same canon enumerates the following factors which should guide a lawyer in determining his fees:
(a) The time spent and the extent of the services 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;
(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.
We believe and so hold that the contingent fee here claimed by Atty. Cortes was, under the facts obtaining in this case, grossly excessive and unconscionable.
Respondent Atty. Hernando P. Cortes is found GUILTY of violation of Canon 20 of the Code of Professional Responsibility and is hereby SUSPENDED from the practice of law for three (3) months, (considering that Atty. Cortes is nearing ninety years old and that there was no question that Atty. Cortes was able to get a favorable outcome) and is ordered to return to complainant Eugenio E. Cortez the amount he received in excess of the 12% allowable attorney’s fees.