NJSBA Family Law Section

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  • 1.  interest rate in retainer agreements

    Posted 05-03-2013 04:49 PM
    Because of the pending case at the Supreme Court on whether attorneys can charge legal fees for time expended in collecting their own fees, I have become aware of NJSA 31:1-1, which provides that the maximum interest rate on a contractual basis is 16% per annum.  There are many exceptions to this rule, including corporations, credit cards, installment loans etc.  I vaguely remember seeing that up to 18% per annum is acceptable for attorney retainer agreements.  Anyone know about this?

    Gabrielle

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    Gabrielle Strich Esq.
    Kingston NJ
    (609)924-2900

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  • 2.  RE:interest rate in retainer agreements

    Posted 05-03-2013 08:21 PM


    I'm almost positive that the max is 12%.  I think there's an Ethics Opinion that says so, but I can't locate it at the moment.  If anyone does, please post it (or a link) here.


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    David Perry Davis, Esq.
    112 West Franklin Avenue
    Pennington, NJ 08534
    Voice: 609-737-2222
    Fax: 609-737-3222
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    Original Message


  • 3.  RE:interest rate in retainer agreements

    Posted 05-05-2013 10:02 AM
    It's definitely 18%

    I actually had a trial vs. a former client in Morris County a year or so ago, and the judge enforced the entire A/R, including interest at 18%, citing authority for doing so.

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    Curtis Romanowski Esq.
    Senior Attorney - Proprietor
    Brielle NJ
    (732)603-8585

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    Original Message


  • 4.  RE:interest rate in retainer agreements

    Posted 05-05-2013 10:46 AM

    On the other hand follow the advice we often give to our own clients - just because you can do something does not mean that you should.  12% interest is reasonable.  If you end up in a charging lien or fee arb situation, you are going to have to explain the interest rate to the court and how/when you chose to impose it. I have done three fee arbs where I had not charged the 12% interest on the balance due and no question was raised about the balance due. I was awarded the full amount requested.  Another point to consider is whether or not you want to invite a malpractice suit.  If you are ultimately owed fees and impose a high interest rate (like 18%) you may very well invite the suit.  The reality is that the interest can simply be used a leverage to collect payments and as evidence of your reasonableness if you have to defend your fees to the court.
    asc
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    Amy Sara Cores, Esq.

    Fellow of the American Academy of Matrimonial Lawyers
    Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney

    Cores & Nachlinger, L.L.C.
    1001 US Highway 9 N
    Suite 205
    Howell, New Jersey 07731

    732 - 414 - 6669 office
    732 - 770 - 2341 cell
    732 - 414 - 6660 fax

    http://www.cnfamilylaw.com

    http://www.facebook.com/cnfamilylaw

    Follow John on twitter @njfamlaw

    Blog: cnfamilylaw.wordpress.com

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  • 5.  RE:interest rate in retainer agreements

    Posted 05-05-2013 12:57 PM
    John Nachlinger (Amy Cores' current partner) and I have used the 18% interest rate for the past seven years. It has never been challenged at fee arbitration; it has never prompted a malpractice action; and, in a relatively recent trail where John Nachlinger and I were suing a former client, the judge awarded every cent, including interest, and deemed, as a matter of law, and with case authority, that the 18% interest rate was just fine. No attorney is a bank. We are not in the business of lending money. If we bill regularly and clients do as they have promised and contracted to, they will not incur the interest. The reason we are allowed to do this is to encourage clients to promptly pay what they owe us. I believe that our profession is owed that much. A/R is an ongoing problem for most family lawyers. With the difficulty of the work we all do, and the tremendous effort we all put in, we should be doing all that we can do in good faith to make sure we get paid. IMO

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    Curtis Romanowski Esq.
    Senior Attorney - Proprietor
    Brielle NJ
    (732)603-8585

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    Original Message