89 N.J.L.J. 248
April 21, 1966
Legal Fees Charged by Municipality
An attorney has inquired (1) whether a municipality may set,
demand and receive legal fees from a purchaser of its property, and
(2) whether it is proper for a municipal attorney to allow the
municipality to set, demand and receive legal fees for legal
services he has rendered. The inquiry indicates that the
municipality pays its attorney a flat annual salary for performing
all the legal work of the municipality. Included in the duties of
the attorney are the preparation of resolutions for the sale of
municipal property and the preparation of deeds, notices for
advertisements, etc. The advertisements state that the purchaser
shall pay the purchase price, cost of advertising, and "legal fees"
in the case of private sales and "legal expenses" in the case of
public sales, and the charge is always a flat sum of $125. In all
cases the money is paid directly to the municipality and deposited
in the municipal treasury.
It is not within the province of this Committee to determine the legal propriety of acts of laymen or corporations - public or private. It is appropriate, however, to consider the questions presented here to the extent the participation of an attorney is involved.
As we understand the facts presented, it is clear that the only legal services being rendered are those to the municipality. This is not the type of case where a corporate seller is soliciting
or attempting to dictate what lawyer shall represent a purchaser.
First, a preliminary issue is presented as to whether an attorney may ever properly act where his principal - the seller - is to his knowledge requiring the purchaser to pay the seller a sum to cover legal fees of the attorney for services rendered to the seller. As we have previously stated, such practice is entirely proper where the services are actually rendered and where the attorney has fixed the amount of his fee in a manner consistent with Canons of Professional Ethics, Canon 12; N.J. Advisory Committee on Professional Ethics, Opinion 27, 87 N.J.L.J. 97 (1964).
On the facts presented here, however, it does not appear that the $125 charge represents a fee fixed by the attorney based on services actually rendered, or that it is to reimburse the municipality for a fee so incurred. In such circumstances, the charge for "legal expenses" or "legal fees" is improper and an attorney cannot ethically participate in such an arrangement. We see no valid basis for an exception predicated on the ground that the client involved is a municipality. The lawyer's duty and obligation is the same regardless of whether his client is an individual or a public or private corporation.
The basic rule is well stated in Drinker, Legal Ethics 182 (1953) as follows: