May a municipal attorney let the municipality bill a buyer of municipal property a flat 'legal fee' for legal work the attorney performed only for the municipality?

Plain-English summary

The inquiry described a municipality that paid its attorney a flat annual salary for all municipal legal work, including preparing resolutions, deeds, and advertisements for the sale of municipal property. The sale advertisements told buyers they would pay the purchase price, advertising cost, and "legal fees" (private sales) or "legal expenses" (public sales), always a flat $125 paid directly into the municipal treasury. The attorney asked whether a municipality could set, demand, and receive such fees, and whether the municipal attorney could allow it.

The Committee noted it could not pass on the legal propriety of the acts of laymen or corporations, public or private, but could consider the questions to the extent a lawyer's participation was involved. It observed that the only legal services actually being rendered were to the municipality, and that this was not a case of a corporate seller dictating which lawyer would represent the buyer.

The Committee said a lawyer may properly act where the seller requires the buyer to pay a sum covering the attorney's fee for services rendered to the seller, but only where those services are actually rendered and the fee is fixed in a manner consistent with Canon 12 (citing its Opinion 27). On these facts, the $125 charge did not appear to be a fee fixed by the attorney for services actually rendered, nor a reimbursement of such a fee. In those circumstances the charge for "legal fees" or "legal expenses" was improper and the attorney could not ethically participate. The Committee saw no valid basis for an exception because the client was a municipality, stating that a lawyer's duty is the same whether the client is an individual or a public or private corporation.

Currency note

This opinion was issued in April 1966, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and well before the 1984 Rules of Professional Conduct and all later revisions. It applied Canon 12 of the Canons of Professional Ethics on fixing fees. That subject is now treated under RPC 1.5. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could a municipality bill a property buyer a flat "legal fee" for work the attorney did only for the town?

A: Not on these facts. The Committee held that because the flat $125 charge did not represent a fee the attorney had fixed for services actually rendered, charging it to the buyer as a "legal fee" was improper and the attorney could not participate.

Q: Did it matter that the client was a municipality rather than a private seller?

A: No. The Committee said it saw no valid basis for an exception based on the client being a municipality, because a lawyer's duty and obligation is the same whether the client is an individual or a public or private corporation.

Q: When can a seller's lawyer's fee properly be passed to the buyer?

A: The Committee said that practice is proper where the services are actually rendered and the attorney has fixed the fee in a manner consistent with Canon 12, citing its Opinion 27.

Background and rules framework

The opinion applied Canon 12 of the Canons of Professional Ethics, which governed the fixing of a lawyer's fee, together with the Committee's Opinion 27. The concern was a flat charge billed to a buyer as a "legal fee" that did not reflect a fee the attorney had actually fixed for services rendered. In current New Jersey terms, the reasonableness and fixing of fees is addressed by RPC 1.5.

Citations and references

Other authorities:

• Canons of Professional Ethics, Canon 12 (fixing the amount of the fee)
• Drinker, Legal Ethics 182 (1953)

Other opinions cited:

• NJ ACPE Opinion 27, 87 N.J.L.J. 97 (1964): a seller's legal fee may be passed to a buyer where services are actually rendered and the fee is fixed consistent with Canon 12

See also

• NJ ACPE Op. 119: A Borrower's Payment of Fees Charged by the Lender
• NJ ACPE Op. 120: Disbursing Closing Fees to a Title Company
• NJ ACPE Op. 456: A Developer Setting Legal Fees Passed to a Lot Purchaser

Source

• Landing page: https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp93-1.html

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

89 N.J.L.J. 248
April 21, 1966

OPINION 93

Legal Fees Charged by Municipality

An attorney has inquired (1) whether a municipality may set, demand and receive legal fees from a purchaser of its property, and (2) whether it is proper for a municipal attorney to allow the municipality to set, demand and receive legal fees for legal services he has rendered. The inquiry indicates that the municipality pays its attorney a flat annual salary for performing all the legal work of the municipality. Included in the duties of the attorney are the preparation of resolutions for the sale of municipal property and the preparation of deeds, notices for advertisements, etc. The advertisements state that the purchaser shall pay the purchase price, cost of advertising, and "legal fees" in the case of private sales and "legal expenses" in the case of public sales, and the charge is always a flat sum of $125. In all cases the money is paid directly to the municipality and deposited in the municipal treasury.

It is not within the province of this Committee to determine the legal propriety of acts of laymen or corporations - public or private. It is appropriate, however, to consider the questions presented here to the extent the participation of an attorney is involved.

As we understand the facts presented, it is clear that the only legal services being rendered are those to the municipality. This is not the type of case where a corporate seller is soliciting or attempting to dictate what lawyer shall represent a purchaser.

First, a preliminary issue is presented as to whether an attorney may ever properly act where his principal - the seller - is to his knowledge requiring the purchaser to pay the seller a sum to cover legal fees of the attorney for services rendered to the seller. As we have previously stated, such practice is entirely proper where the services are actually rendered and where the attorney has fixed the amount of his fee in a manner consistent with Canons of Professional Ethics, Canon 12; N.J. Advisory Committee on Professional Ethics, Opinion 27, 87 N.J.L.J. 97 (1964).

On the facts presented here, however, it does not appear that the $125 charge represents a fee fixed by the attorney based on services actually rendered, or that it is to reimburse the municipality for a fee so incurred. In such circumstances, the charge for "legal expenses" or "legal fees" is improper and an attorney cannot ethically participate in such an arrangement. We see no valid basis for an exception predicated on the ground that the client involved is a municipality. The lawyer's duty and obligation is the same regardless of whether his client is an individual or a public or private corporation.