Law firm may be double-dipping on homeowner association fees - latimes.com
"Question: My homeowners association has contracted with the same attorney firm on retainer for more than 25 years. The attorney also receives 40% of any money collected from dues and fines, and the association is demanding more in settlements to recoup its attorney expenses. In response to questions of this practice at a board meeting, the president said that "we have no choice in this economy due to the high number of delinquencies but to use the attorney's services, and all HOAs are doing this now." Many of my longtime neighbors are walking away from their homes because they can't meet these higher re-payment demands by the board. The association should be negotiating with owners, without the added expense of the attorney's fees. Is my association being ripped off, and are the attorneys double-dipping?"
Donie Vanitzian responds to this question in her Los Angeles Times column. Donie points out some serious questions about what looks like an attorney taking a 40% contingency fee from amounts recovered from delinquent owners, but the amounts recovered would seem to already include attorney fees related to the recovery. Add to that the fact that the attorney is already on retainer. The question is whether the attorney is taking 40% of an amount recovered from the delinquent owner that actually includes attorney fees, presumably calculated on an hourly basis (and maybe even including his retainer). The question says, "My homeowners association has contracted with the same attorney firm on retainer for more than 25 years. The attorney also receives 40% of any money collected from dues and fines…" But the retainer is probably for all the work the attorney does for them, not just collections. And the contract probably says something like, "the association pays the attorney $x per month, and in addition the attorney gets paid 40% of what he recovers from delinquent owners." But how does the attorney include his fees in the claim agains the owner, which he would certainly do, because those are recoverable under the statute? First, how does he include a retainer fee? Second, how does he include attorney fees related to the recovery, such as writing letters, etc.? Because only the recovery costs are chargeable to the owner. And if he then takes 40% of the assessments, late fees, AND attorney fees, that certainly looks like double-dipping. As Donie says, "Law firms engaged in a collections practice may take a percentage of the amount collected, forgoing any claim to attorney's fees, or they collect under situations allowing them to recover their fees. The latter generally pertains to associations collecting delinquent assessments."
Thanks to Fred Pilot for the link.