Tuesday, May 04, 2010

TURNABOUT [FLORIDA]

Florida attorneys often help their clients use Florida’s homestead protection to protect assets from claims of creditors pursuant to Article X, Section 4 of the Florida Constitution. In a recent case, the client used the homestead protection to stiff his law firm in regard to their fee.

In the case, a law firm took on a matter to collect homeowners’ insurance proceeds from an insurer on the client’s homestead that related to hurricane damage. The law firm was successful and was due a contingent fee from the client. The client terminated the contingent fee arrangement without payment, so the law firm asserted a charging lien against the insurance proceeds for its fee.

Under Florida law, if a homestead is damaged through fire, wind or flood, the proceeds of any insurance recovery are also treated as homestead property. Since the client could not, through an unsecured agreement, enter into an enforceable contract to divest himself of his constitutional homestead protections, the trial court held, and the appellate court affirmed, that the law firm could not claim a lien in the insurance proceeds.

This does not mean that the law firm cannot seek to collect its fee from other assets of the client. But if there are no other assets, the law firm  lost out on its fee even though the client gets to enjoy the fruits of its labor.

Interestingly, the client was represented by an attorney on this fee dispute. I hope the attorney got his fee paid in advance or received a sufficient retainer to cover his fees!

Quiroga v. Citizens Property Insurance Corporation, 3rd DCA, Case No. 3D0-2942

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