Why It’s a Good Idea to Keep Track of Your Time in Contingency Fee Cases

William Balin, Balin & Kotler

Many contingency fee attorneys balk at keeping track of their time on each case.

In fact, there is no rule that requires contingency fee attorneys to track their hours on each case. (Mardirossian & Assoc., Inc. v. Ersoff (2007) 153 Cal.App.4th 257.) One exception is where a successful client will be entitled to court awarded fees if successful. Obviously, the attorney in such a case should keep track of his or her time from the outset. However, other unforeseen circumstances may arise when the attorney may be required to establish the time put into the case in order to obtain a reasonable fee.

For example, when an attorney becomes incapacitated during the pendency of the case and unable to continue representing the client, the lawyer will still be entitled to the reasonable value (quantum meruit) of his or her services. (Cazares v. Saenz (1989) 208 Cal.App.3d 279.) Or, the client may fire the attorney while the case is pending. A fired attorney is entitled to receive quantum meruit if the client obtains a recovery. (Fracasse v. Brent (1972) 6 Cal.3d 784, 791.)

A third circumstance occurs when the client challenges the attorney’s fee and demands fee arbitration under Business and Professions Code sections 6200, et seq. If the client successfully challenges the validity of the contingency fee agreement, the attorney will be relegated to a reasonable fee. (Bus. & Prof. Code §6147, subd. (b).) Additionally, the client may challenge the contingent fee as excessive, given the work the attorney did (or did not do) on the case. Proving the hours spent on a case will help the attorney justify the contingent fee.

In a case where the recovery is not sufficient to cover the quantum meruit claims of the former and current attorneys, the fee must be distributed on a pro rata basis to all the attorneys “in proportion to the time spent on the case by each.” (Spires v. American Bus Lines (1984) 158 Cal.App.3d 211, 216.)

The attorney with the better records may have an advantage over the lawyer who does not.
Quantum meruit determinations start with a calculation of the time the attorney reasonably spent on the case multiplied by an hourly fee that would be charged for such services by other similar attorneys in the community. (Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 1002.) A contingency fee agreement may contain a clause that states the reasonable hourly value of the attorney’s services in case such a circumstance arises.

Where an attorney in a contingency fee case has not kept time and is relegated to a reasonable fee, the attorney may estimate the time spent based on the file and the attorney’s personal knowledge. (Mardirossian & Assoc., Inc. v. Ersoff, supra.) However, trying to recreate a statement of hours worked on a case after months or years of effort invariably results in forgotten chores and events, and the time spent on recreating a bill is more time consuming than keeping contemporaneous records.

About the author:

William M. Balin has been a BASF member since 2000 and an active member of its Legal Ethics Committee since 2002.