Legal fees are often set up in an initial agreement or contract between the client and lawyer. This includes the lawyer’s hour rate and how payments will be made. Because legal fees are a necessary part of bringing a lawsuit with representation, they may also factor into the court’s decision making. Not all lawsuits are the same. For example, in a partition action, attorney’s fees may be divided in an unconventional manner.

How do legal fees work?

In order to have an enforceable fee agreement with a client the lawyer must be licensed with the State Bar of California, meaning they are able to practice law in the state. (Birbrower, Montalbano, Condon & Frank, P.C. v. Sup.Ct. (ESQ Business Services, Inc.) (1998) 17 Cal.4th 119, 137-140.) There are limits to what a lawyer can charge, however. (Matter of Silverton (Rev.Dept. 2001) 4 Cal.State Bar Ct.Rptr. 252, 257.) 

A lawyer cannot make an agreement with a client for an illegal or unconscionable fee or even attempt to charge for such a fee. (Dixon v. State Bar (1985) 39 Cal.3d 335, 339-340.) There are even limits on how much a lawyer can collect for specific claims like workers’ comp. (Workmen's Comp. Appeals Bd. v. Small Claims Court of Alameda County (1973) 35 Cal.App.3d 643, 646.) In some instances, the court must approve the collection of attorney’s fees. For example, in probate and bankruptcy proceedings the court must approve the fees before they can be collected. (Matter of Phillips (Rev.Dept. 2001) 4 Cal. State Bar Ct.Rptr. 315, 323.)

Because legal fees are for legal services, meaning the practice of law, there are rules about how these funds are received by lawyers and law firms. If there are multiple lawyers working on the same case, they may enter into a fee-sharing agreement. Where an out of state attorney is providing assistance in prosecuting a California action his fees for services are permissible. (Winterrowd v. American Gen. Annuity Ins. Co. (9th Cir. 2009) 556 F.3d 815, 820-826.) However, a fee-sharing agreement cannot exist between a licensed attorney and non-attorney. (McIntosh v. Mills (2004) 121 Cal.App.4th 333, 343-346.) In this same vein, a nonlawyer may not contract with a paralegal to have them perform legal services. (Bus. & Prof. Code § 6450(b)(6).)

What if you are awarded legal fees in court?

As part of monetary remedies, a party can get in court, the court may under certain circumstances award attorney’s fees which are the legal fees owed by the client for the lawyer’s services. This is usually when the prevailing party is awarded a reasonable attorney’s fee. (Antoninetti v. Chipotle Mexican Grill, Inc. (9th Cir. 2010) 643 F.3d 1165, 1176.)

Attorney’s fees may be allowed as costs if they are provided for by contract, statute or in an equitable action where there was a common fund or benefit. (C.C.P. § 1033.5(a)(10).) If they are provided for by a statute or contract it must be done so through explicit language not just “costs.” (Royster Const. Co. v. Urban West Communities (1995) 40 Cal.App.4th 1158, 1170.) Attorney’s fees may be provided for under the common benefit, in circumstances like a partition action.

How do legal fees work in a partition action?

Under California law, the partition statutes allow a party to have the costs of partition paid for by the other side which includes reasonable attorney’s fees incurred for the common benefit (C.C.P. § 873.820, 874.010.) 

These costs of partition, including legal fees, may be apportioned between the parties in proportion to their interests or as equity dictates following the final judgement. (C.C.P. § 874.040; Broome v. Broome (1919) 179 Cal. 638, 645.) These fees for the common benefit are meant to return to the parties with an interest in the property as it benefits them. (Orien v. Lutz (2017) 16 Cal.App.5th 957, 968.) 

This means the parties who share in the benefits from the results of the proceeding can divide the cost of those legal services. (Stewart v. Abernathy (1944) 62 Cal.App.2d 429, 433.) For example, where a party refuses to simply resolve the issue where the other party was willing to sell, then a court has the authority to order a different amount of fees than disclosed by title. (Forrest v. Elam (1979) 88 Cal.App.3d 164, 174.)

This means if a party is uncooperative with the court, they may be required to bear their own attorney’s fees even when fees for the common benefit are available. (Lin v. Jeng (2012) 203 Cal.App.4th 1008, 1025.) Where other costs arise, like clean up fees to make a property sellable, the court has discretion to combine that sum with the attorney’s fees for the common benefit. (Demartini v. Demartini (E.D. Cal., Apr. 14, 2016, No. 214CV2722JAMCKDPS) 2016 WL 1461812, at *4.)

What are some examples of what legal fees might look like in a partition action?

For example, Julie and Shawn own a home as tenants in common. They disagree on who owns what and what to do with the property, so they have begun a partition action.

In this action they may pay for their own attorney’s fees. However, because it is a partition action which is in equity, the court has discretion to award attorney’s fees.

The court determines Julie and Shawn have 50% interests in the property. This means if attorney’s fees were awarded for the common benefit, they would be divided 50/50 so according to Julie and Shawn’s interests in the property. These fees would need to be traceable to specific services provided by the attorney or attorneys. To be for the common benefit the benefit would need to trace back to Shawn and Julie or their interests in the property.

If the property needed to be renovated and remodeled in order to be sold, those costs could be absorbed into the common benefit as part of costs as it allows both Shawn and Julie to benefit from having their interests in the property sold.

If Julie and her counsel began filing a bunch of motions to delay the partition process and make things more difficult, she would likely need to bear her own attorney’s fees even if there were fees “for the common benefit.”

Conclusion

A necessary part of pursuing a claim in court is paying legal fees. This may be more nuanced depending on if you have an action like partition. If you have questions about pursuing a partition action, at Underwood Law, our attorneys can help you navigate your partition action efficiently and with care. We are here to help.