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Real party in interest tax attorney brought an action to recover fees under service contracts

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Procedural Posture

Real party in interest tax attorney brought an action to recover fees under service contracts with petitioner clients. Respondent, the Superior Court of Los Angeles County, California, denied the clients' motion for summary adjudication. The clients sought a writ directing the trial court to vacate the denial of summary adjudication and to enter a new order granting the motion.

 

 

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Overview

The court of appeal held that the contracts, which contemplated payment for savings from tax-related services, were voidable under Bus. & Prof. Code, § 6147, subd. (b), because they did not state, as required by § 6147, subd. (a)(4), that the success fees were not set by law but were negotiable between attorney and client. In view of amendments replacing several occurrences of the term "plaintiff" in § 6147 with "client," § 6147 encompassed contingent fee arrangements regarding both litigation and transactional matters, not litigation matters only, as the trial court found based on case law under the prior version of the statute. The court also held that § 6147, subd. (b), encompassed agreements whose sole deficiency was the absence of the fee negotiability statement. Further, the requirements on contingency fee contracts under § 6147 applied to contingency fee contracts that entitled the attorney to a relatively small percentage of the client's potential recovery and also to hybrid agreements like the ones in the current case combining fixed monthly payments with a variable success fee.

 

Outcome

The court of appeal granted a petition for writ of mandate directing that the trial court vacate its order denying the clients' motion for summary adjudication and enter a new order granting summary adjudication on their claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief.


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