No Need for Attorney Retainer Agreements to State Expressly That Billing Will be in Tenths of an Hour or Other Increments

Arbus, Maybruch & Goode, LLC v. Cohen, ___ N.J. Super. ___ (App. Div. 2023). In this suit by a law firm to collect its fee from a client (actually, an individual his company), the Law Division granted summary judgment to the plaintiff law firm. The defendant clients appealed, but today the Appellate Division, applying de novo review, affirmed in an opinion by Judge Berdote Byrne.

Plaintiff had represented defendants in two matters for over two years pursuant to written retainer agreements. Plaintiff’s practice was to bill hourly matters in one-tenth of an hour increments, but its retainer letters did not spell out that fact.

During that representation, plaintiff rendered monthly invoices, which defendants never questioned. Once defendants stopped paying plaintiff’s fees, plaintiff sued and eventually moved for summary judgment.

In their Answer, and in opposition to summary judgment, defendants asserted (as summarized by Judge Berdote Byrne) that “a retainer agreement must explain which increment of time–for example, one-tenth of an hour–the law firm will be utilizing despite hourly rates and initial deposits being otherwise clearly defined. The trial court noted a dearth of case law, statutes, and comments to the rule addressing this issue,” but held that plaintiff was entitled to summary judgment for breach of contract. The absence from the retainer letters of any indication that plaintiff was billing in one-tenth of an hour increments did not preclude that.

The Appellate Division agreed. “Our jurisprudence has interpreted sufficient writings to require, in addition to a sum certain for an initial retainer fee, a disclosure of the out-of-pocket costs of representation, such as photocopying and secretarial overtime. A sufficient writing may include a scope of work to be performed, especially if a lawyer has not regularly represented that client.” Plaintiff’s retainer agreements with defendants did those things.

Furthermore, Judge Berdote Byrne said, “based upon the parties’ course of dealing, where defendants availed themselves of AMG’s legal services for more than two years without objecting to any invoices or raising the incremental billing issue, defendants’ claim suggests an improper motive. Defendants’ assertion they were unaware billing was occurring in increments of one-tenth of an hour is not supported by the record.”

Finally, the panel refused to find in any existing legal authority a rule that a law firm must specify in its retainer agreements the incremental billing units (one-tenth of an hour or otherwise) in which it will bill. “[T]here is no rule as rigorous as the one defendants urge us to adopt; there is no specific pronouncement requiring a retainer agreement to explicitly set forth the unit of incremental billing to be used. Defendants urge us to require retainer agreements include disclosure of incremental billing units, although unsupported in our current jurisprudence. While the request is perhaps an issue for one of our Supreme Court’s practice committees, it cannot provide a basis for reversal of summary judgment in this case. To pronounce otherwise would usurp our Supreme Court’s exclusive rulemaking process.”

Attorneys can include in retainer agreements the incremental units pursuant to which they will bill. But today’s ruling says that attorneys are not required to do that.