Rock v. Ballou , 22 N.C. App. 51 ( 1974 )

205 S.E.2d 540 (1974) 22 N.C. App. 51

Sherman T. ROCK and Harvey Hamilton, Jr.
v.
G. Ward BALLOU and Ralph G. Styron.

No. 743SC233.

Court of Appeals of North Carolina.

June 5, 1974. Certiorari Allowed August 30, 1974.

Wheatley & Mason, P. A., by L. Patten Mason, Beaufort, for plaintiff appellees.

D. S. Henderson and B. H. Baxter, Jr., New Bern, for defendant appellants.

Certiorari Allowed by Supreme Court August 30, 1974.

VAUGHN, Judge.

It has been held that a contract between an attorney and his client fixing the attorney's compensation for his services, if made while the relationship of attorney and client is in existence, is void as a matter of law and the attorney can recover no more than he would have the right to demand if no contract had been made. Stern v. Hyman, 182 N.C. 422, 109 S.E. 79. There, as here, the contract was for a contingent fee. The rule, as stated in Stern, appears to be both unfair and unrealistic.

A better rule would appear to be the generally accepted view as stated by Justice Lake in Randolph v. Schuyler, 284 N.C. 496, 201 S.E.2d 833.

"The generally accepted view appears to be that a contract made between an attorney and his client, during the existence of the relationship, concerning the fee to be charged for the attorney's services, will be upheld if, but only if, it is shown to be reasonable and to have been fairly and freely made, with full knowledge by the client of its effect and of all the material circumstances relating to the reasonableness of the fee. The burden of proof is upon the attorney to show the reasonableness and the fairness of the contract, not upon the client to show the contrary. (Citations omitted.) Contracts for contingent fees, especially, are closely scrutinized by the courts where there is any question as to their reasonableness, irrespective of whether made prior to the commencement of or during the attorney-client relationship."

There is evidence in the record which would permit but not require the court to find that plaintiffs had carried the burden required by the generally accepted view, but no findings as to those matters were made. The judgment is reversed, and the cause is remanded for a new trial where the court will, among other things, make findings as to whether the contract is reasonable and was fairly and freely made, with full knowledge by the defendants of its effect and of all the material circumstances relating to the reasonableness of the fee.

New trial.

CAMPBELL and MORRIS, JJ., concur.