
    Stanley Wojcik, Respondent, v. Miller Bakeries Corp. et al., Defendants. Emmanuel M. GeWertz, Appellant.
    Argued January 9, 1957;
    decided April 12, 1957.
    
      
      Emanuel M. GeWertz, in person, Otho S. Bowling and Robert F. Bowling for Emanuel M. GeWertz, appellant.
    
      
      Harold L. Strauss for Queens County Bar Association, amicus curiae, in support of appellant’s position.
    
      Emil Z. Berman for Metropolitan Trial Lawyers Association, amicus curiae, in support of appellant’s position.
    
      
      Charles R. Leivis for respondent.
   Froessel, J.

Respondent, Stanley Wojcik, was seriously injured in an automobile accident on June 4, 1952. First his wife, and then he, retained Emanuel M. GeWertz as his attorney, executing an agreement that provided for GeWertz’s retaining 50% of all sums received or recovered by Wojcik through suit, settlement or otherwise by reason of his claim. GeWertz sought out and interviewed various witnesses, prepared the summons and complaint, commenced an action promptly, caused the case to be placed on the calendar, prepared and served a bill of particulars, frequently accompanied Wojcik to his physician, was present at the physical examination of Wojcik by defendant’s doctor, conferred with Wojcik personally and over the telephone frequently, and prepared and served a notice of examination before trial.

Subsequently, Wojcik desired to retain other counsel, either because he was dissatisfied with GeWertz, according to his substituted attorney, Mathew Yener, or because it would aid Wojcik in obtaining re-employment if he engaged a lawyer who was a friend of his employer, according to GeWertz. Yener communicated with GeWertz and discussed his substitution as attorney for Wojcik. The two attorneys then entered into a stipulation of substitution which GeWertz had prepared, and to which Yener obtained the signature and acknowledgment of Wojcik.

The stipulation of substitution, dated September 9, 1953, provided:

“It is further stipulated, agreed and consented that the said Emanuel M. GeWertz, Esq. is to receive for his legal services an attorney’s retaining lien of twenty (20%) per cent of the gross recovery obtained either by way of settlement or other compromise, judgment, verdict, for [sic] decision, plus the return to him of his disbursements in the sum of $67.15, and the said fee shall be paid to Emanuel M. GeWertz, by the substituted attorney, Matliew Yener, Esq.

“It is understood that there shall not be deducted before the payment of the said twenty (20%) per cent to the said Emanuel M. GeWertz, Esq. any disbursements, whatever, incurred or to be incurred by the plaintiff or his new attorney, including reimbursement to the compensation insurance carrier, doctors, witness fees, etc.”

After the execution of this agreement, GeWertz performed no further services for Wojcik since, as he stated, he “ was out of the case for all intents and purposes ”, excepting that at Yener’s request he went to the insurance company in an attempt to settle the case.

The action appeared on the ready calendar for trial on January 12, 1956, at which time, at the suggestion of the attorneys involved, it was marked for conference; there the Justice presiding recommended that the case be settled for $75,000. During that conference, the Judge stated he felt that payment of attorney’s fees on the compensation carrier’s lien was improper under all the circumstances, and Yener agreed to waive all fees that might be due him on this sum. Yener then called GeWertz and told him that the court desired him to be present at another settlement conference on January 20,1956. GeWertz declined to attend on the ground that he was out of the case, had no control over its settlement, and that his compensation was fixed by the stipulation of substitution.

At the second conference before the same Justice, a stipulation of settlement was entered into, Yener — but not GeWertz-— and the attorneys for the defendants being present, which stipulation provided that Maryland Casualty Co. should pay the full amount of its policy, namely, $50,000, less the amount of the compensation carrier’s lien, and that defendant Miller Bakeries Corp. should pay the sum of $25,000 in monthly notes of $1,000 with 4% interest. The Judge thereupon stated:

5 ‘ It is understood that the fees of attorneys shall not attach to the sum repaid to the Bakers Mutual Company, the compensation carrier, for any payment of its lien. * * * ■

The court views the original retainer which provided for payment of fees on the recovery of the compensation lien as overreaching and unconscionable and unenforeible, and this stipulation which cancels said payment has been by suggestion of the Court and consented to by Mr. Vener.”

In accordance with the terms of the above stipulation of settlement, Maryland Casualty Co. issued a draft in the sum of $40,784.77 payable to the order of Wojcik and both of his attorneys. Upon receipt of the draft, Vener wrote to GeWertz asking him to endorse it with the understanding that GeWertz was to receive 20% thereof and of each of the monthly notes as they were paid, plus his disbursements. GeWertz replied that he would not endorse the draft unless he was to receive from it the amount due him under the stipulation of substitution of September 9, 1953.

Vener thereupon moved by order to show cause for an order directing GeWertz “ to abide by the terms of the stipulation of settlement ” and “ to endorse drafts and notes issued in accordance with the terms of said stipulation ’ ’. In an affidavit read in opposition to the motion, GeWertz requested that his “ lien ” on the draft be fixed ” in accordance with the stipulation.

The proceedings came on before the same Justice, who directed that GeWertz be produced. He appeared the following day, whereupon the Judge took over the direct examination. He inquired how GeWertz obtained this case, which the latter thoroughly and satisfactorily explained; whether he had a retainer agreement with Wojcik, which GeWertz produced; whether it was filed in the Appellate Division, to which he responded in the affirmative. Inquiry was also made as to the services rendered Wojcik by GeWertz, to which he testified. Vener was then asked by the court if he desired to testify as to the services that he rendered to Wojcik, or if he wished “ to rely upon the good judgment of the court ’ ’. He chose to ‘ ‘ rely on the judgment of the court ” to fix the amount of his lien.

Nothing was elicited in this testimony concerning the circumstances surrounding the execution of the stipulation of substitution, except that it was drawn by GeWertz, who then gave it to Vexier who obtained the signature and acknowledgment of Wojcik. GeWertz stated that he never talked to Wojcik about the stipulation.

An oral decision was then and there rendered by the Judge, in which he stated that the original retainer agreement between GeWertz and Wojcik (which they themselves had cancelled) was under the circumstances ‘ ‘ unreasonable, unconscionable, oppressive, and is void as contrary to public policy and wholly unenforcible as a matter of equity and a matter of law ’ ’. He further stated as to GeWertz that to evaluate his services on quantum meruit would be to give him but a minimum payment, bearing in mind the contingent features of the matter and that payment to him had to depend upon the recovery ”. He concluded that ‘ ‘ under all the circumstances in this case, total fees of thirty-three and one third per cent represent a maximum fair and reasonable return to all counsel in this case, based upon the net recovery, after credit for the lien of the compensation insurance carrier. * * * The lien of the substituted counsel will be fixed at one third of the amount of the gross fee, the balance to be paid to substituting counsel ” (emphasis supplied). No such relief had been asked for by the client, by Mr. Vener, or in the order to show cause. He thereupon directed GeWertz to endorse the settlement checks. The Appellate Division affirmed.

The single question presented here is simply whether, on the evidence before him and under the law, the court could fix the lien of GeWertz at an amount other than that set forth in the stipulation of substitution of September 9, 1953. There can be no doubt that GeWertz’s original retainer agreement with Wojcik, which called for a 50% contingent fee, was terminated by the discharge of GeWertz by Wojcik in September, 1953 (Lurie v. New Amsterdam Cas. Co., 270 N. Y. 379, 381; Matter of Tillman, 259 N. Y. 133; Matter of Krooks, 257 N. Y. 329; Martin v. Camp, 219 N. Y. 170). Therefore, whether or not that agreement was unconscionable as was found below is not relevant in this case.

However much we may agree with the lower courts as to the practice of attorneys arbitrarily charging their clients 50% of any recovery, regardless of trial, appeal, or settlement, or the nature and amount of services rendered (Ruiz v. Sistman, 1 A D 2d 806; Buckley v. Surface Transp. Co., 277 App. Div. 224, 226; see Ward v. Orsini, 243 N. Y. 123, 127; Ransom v. Cutting, 188 N. Y. 447, 450; Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520, 526; Matter of Fitzsimons, 174 N. Y. 15, 23), that issue is not now before us. Nor is there before us any issue as to the compensation due Vener for his services, since he abandoned any agreement that he had with Wojcik and allowed the court to fix the total fee.

We turn now to the stipulation of substitution and the agreement embodied therein which is the only one with which we have to deal. When Wojcik desired to change attorneys, and Vener indicated that he was the attorney who was to be substituted for GeWertz, it was clear that some provision would have to be made for GeWertz’s compensation. The parties could have moved for a formal order of substitution, in which case the compensation due GeWertz would have been determined therein. In that situation, it has been held that the compensation to the outgoing attorney could have been computed on a contingent basis, if so desired (Mosberg v. Belmont Park Plumbing & Heating Supply Corp., 1 A D 2d 779; Podbielski v. Conrad, 286 App. Div. 1040; Taylor v. Hentschel Bros., 273 App. Div. 972), but not if objected to (Martucci v. Brooklyn Children's Aid Soc., 284 N. Y. 408). In any event, this was not done. Instead, after some “ wrangling ”, and pursuant to rule 56 of the Rules of Civil Practice, a stipulation of substitution was entered into. The rule provides: The making and filing of such a stipulation shall have the same effect as an order of substitution ”.

We thus have here an agreement signed by both of the attorneys and the client, after GeWertz’s discharge. It specifies the compensation which shall be due to GeWertz. There is no basis for a finding of fraud, undue influence, overreaching, domination or any abuse of the attorney-client relationship with respect to that agreement (see Ward v. Orsini, supra; Morehouse v. Brooklyn Heights R. R. Co., supra, reaffd. after new hearing 123 App. Div. 680, affd. 195 N. Y. 537; Ransom v. Cutting, 188 N. Y. 447, supra; Matter of Fitzsimons, supra; Matter of Peters [Bachmann], 271 App. Div. 518, mod. on other grounds 296 N. Y. 974), and there was no such finding. GeWertz was no longer the attorney. He did not deal directly with the client, but with the client’s new lawyer. The new agreement they made had not been rescinded. Indeed, it had not even been questioned, except as to the application of the percentage arrangement on the compensation carrier’s lien. Under those circumstances, and in view of the further fact that, except for an uncompleted examination before trial, the case was on the calendar ready for trial before GeWertz was discharged, there is simply no basis for disregarding the agreement. Special Term did not hold that that agreement was “ unreasonable, unconscionable, oppressive ” and void ” and “ wholly unenforcible as * # * a matter of law”. Yet, on an application which did not even seek such relief, the court completely invalidated GeWertz’s agreement with Yener and his former client.

Respondent urges here that since both attorneys submitted the question of the amount of their fees, the court below had the power to make an order fixing the total, as well as the division between them. Although Yener consented to the court’s determination of the amount of the attorneys’ fees, GeWertz never did so, but, as a respondent to the application, relied upon the agreement, and merely asked that it be observed. In such a situation the court was not free to disregard the contract as to GeWertz (Murray v. Waring Hat Mfg. Co., 142 App. Div. 514, 517; cf. Matter of Friedman, 136 App. Div. 750, affd. 199 N. Y. 537).

The client was not unfavorably affected. GeWertz’s original retainer had been cancelled; Yener surrendered his own. By the latter’s express consent, the gross fee was reduced to 33%% of the total recovery, less the compensation carrier’s lien. Instead of having the court fix GeWertz’s lien at the time of substitution, Yener and the client voluntarily agreed that GeWertz’s fee be 20%. This agreement the court could not, on this record, disturb. It follows that Yener, who did not try the case — the Trial Justice recommended and procured the settlement — would thus receive the balance, which would amount to about one third of the total fee, whereas the original attorney, GeWertz, would receive about two thirds. The client would pay precisely what the Trial Justice, with Yener’s consent, ordered, and no more.

Indeed, respondent Wojcik appropriately describes himself in his brief as a “ nominal respondent ”, adding: “ The dispute is between the discharged attorney and the new attorney ’ ’. The very language of the agreement requiring the substituted attorney to make the payments to GeWertz indicates that the issue here is essentially a dispute between two attorneys, as in Sciolaro v. Asch (137 App. Div. 667), rather than between an attorney and his client. Rules designed to prevent an attorney from taking undue advantage of his confidential relation with a client have no place in dealing with an agreement not even discussed by the outgoing attorney with his former client, made after their relationship ended, and where the stipulation, and its execution and acknowledgment by the client, were procured by another attorney then retained by the client.

The order of the Appellate Division and that of Special Term should be reversed, without costs, and the matter remitted to Special Term for further proceedings not inconsistent with this opinion.

Dye, J.

(dissenting). I dissent and vote to affirm. No one disputes that an attorney’s compensation for services rendered a litigant is governed by agreement (express or implied) — the amount of which is not restricted, except in certain situations not pertinent here (Judiciary Law, §§ 474-475). Nonetheless, when such compensation is made contingent on the amount of any recovery it “ should be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness ”. (Canons of Professional Ethics, 12,13; Audley v. Jester, 148 App. Div. 94, affd. 212 N. Y. 573.)

While this controversy concerns fees allegedly due under a stipulation of substitution between Mathew Vener, Esq., and the appellant, it nonetheless may be scrutinized by the court as having been made in respect and in place of a contingent fee retainer.

Under the original contingent retainer appellant was to get 50% “ of all sums received or recovered by me by suit, settlement or otherwise ”, By the stipulation the appellant’s contingent retainer was reduced from 50% to 20% of the gross recovery, plus disbursements amounting to $67.15. In due time the case was set down for a settlement conference before Mr. Justice Benjamin, prior notice of which was given to the appellant which he chose to disregard in reliance on his stipulation retainer agreement. At that conference the case was settled, by and with the approval of the court, for $75,000 which included disability compensation payments voluntarily made by the workmen’s compensation carrier amounting to $9,215.23. As part of the settlement arrangement the learned court fixed the amount payable to both attorneys at one third of the amount to be paid in settlement, with the proviso that such percentage should not attach to the sums repaid to the insurance carrier for its advances. Mr. Vener consented to the allowance to him but the appellant, not being present, did not. When the settlement checks and notes were presented to appellant for his signature, he refused to endorse them and demanded that he be paid the share specified in the stipulation of substitution. Mr. Vener then moved before Justice Benjamin for an order compelling the appellant to sign and the appellant moved to have his attorney’s lien established. Mr. Justice Benjamin then held a hearing for the purpose of ascertaining the extent, nature and character of the services performed by appellant. At the hearing the appellant appeared and testified that he had not kept any record of his time or services, but estimated that he had spent about one hour getting the retainer signed; another 10 minutes inspecting the police blotter; about “three or four hours ” going to Bichmond Hill to interview a witness; that about an hour had been spent trying to get a statement out of another witness who refused to sign; about three hours outlining and dictating the complaint; about five hours on a bill of particulars — an estimate he was not sure of — for, to quote: “I don’t remember exactly. I didn’t mark down the time. I didn’t contemplate this.” He was equally uncertain and vague as to the number of telephone calls made, the time spent on interviews because, as he said, “It’s very difficult. * * * I didn’t keep a record.” His alleged services rendered in connection with the examination before trial disappeared when it developed that such examination had, in fact, been conducted by the substituted attorney, Mr. Vener. At the conclusion of the hearing, the learned court rendered an oral decision in which he noted that the original retainer had called for 50% of the whole amount recovered and reiterated his view previously expressed that to include compensation payments under the circumstances “involving these grievous injuries, is unreasonable, unconscionable, oppressive and is void as contrary to public policy and wholly unenforcible as a matter of equity and a matter of law ”. He summed up the amount of services rendered, noting the short period of time spent in hours and the character of the work performed which, in his estimate would justify “ but a minimum of payment ”. He then ruled that, under all the circumstances, the total attorneys’ fees, of one third of the net recovery would be “ fair and reasonable ”, which he directed be apportioned one third to appellant and the balance to Mr. Vener. The appellant, as an officer of the court, would have us hold that unless his contingent contract is tainted with fraud and overreaching, the courts are without power to do other than see that it is upheld and enforced in accordance with the settled rules of contract law. The appellant does not complain that the amount allowed by the court is in any way unreasonable, inadequate or disproportionate to the value of the services actually rendered, but rests his case solely on legalistic grounds. The Appellate Division’s unanimous affirmance of Mr. Justice Benjamin’s ruling placed its seal of approval thereon as being within the scope and reach of his inherent judicial power to scrutinize contingent fee contracts made in connection with personal injury cases, including contracts substituted therefor, and that such power had been properly and reasonably exercised.

Under all the circumstances of this case we cannot say, as matter of law, that the courts below lacked jurisdiction or power to deal with the controversy presented and that in dealing with it as they did that they acted contrary to law or in an abuse of discretion. I concur with Judges Fuld and Van Voorhis.

The order appealed from should be affirmed, with costs.

Van Voorhis, J.

(dissenting). The law underlying the opinion by Judge Dye, in which I concur, and the unanimous decision by the Appellate Division affirming the Special Term, appears to me to be clear and well established. In the language of this court, Notwithstanding the fact that the employment of an attorney by a client is governed by the contract which the parties make, the peculiar relation of trust and confidence that such a relationship implies injects into the contract certain special and unique features ” (Martin v. Camp, 219 N. Y. 170, 173).

In Matter of Dunn (205 N. Y. 398, 401-402), this court said: “ That the relationship between attorney and client is one of an unusual character has been so often affirmed that a statement of the proposition is commonplace. There lie at its foundation the elements of trust and confidence on the part of the client and of undivided loyalty and devotion on the part of the attorney which render the relationship a personal and confidential one and make its obligations on the part of the attorney of the most exacting kind.”

In Ransom v. Ransom (147 App. Div. 835, 845), the First Department said at page 848:

* ‘ It is not claimed that the agreement in question is restrained by any provisions of the statute law, but that the interest assigned being disproportionate to the services rendered which formed the consideration for its execution, the court has power to modify or annul it. The relation of attorney and client is one which creates a degree of trust and confidence upon the part of the latter in the former which is only natural and necessary, and of which no attorney should be permitted to avail himself to his profit and to the client’s loss.

‘ ‘ The attorney is an officer of the court * * *. Hence it cannot be said, even in view of the plain phraseology of the Code section, that the court is without power to inquire into the good faith of an agreement between attorney and client, even if reduced to writing.”

In the Ransom case, the language of Justice Nathan L. Miller, as he then was, is quoted from McCoy v. Gas Engine & Power Co. (135 App. Div. 771, 772-773): “ The word ‘ unconscionable ’ has frequently been applied to contracts made by lawyers for what were deemed exorbitant contingent fees. But by that nothing more has been meant than that the amount of the fee, standing alone and unexplained, may be sufficient to show that an unfair advantage was taken of the client or, in other words, that a legal fraud was perpetrated upon him. (Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520.) ’ ’ (Italics supplied.)

Matter of Friedman (136 App. Div. 750, affd. 199 N. Y. 537) was likewise cited in Ransom v. Ransom (supra), where a contract for 50% of a recovery in an accident case was held to be not fraudulent per se in all instances, but the court added (136 App. Div. 751-752): “ But the recovery may be such that what was in the first instance a fair contract becomes unfair in its enforcement. * * * The expert lawyer who wins his case without error and without repeated appeals, and makes return to his client with the greater promptness, should not be mulcted in his compensation because he has not exposed his client to harassing and protracted litigation. And so much the more, if his policy and capacity insures swift payment without litigation, should he be approved for merit rather than penalized for his facility. Nevertheless the recovery may he such that the lawyer’s retention of it would he unjustified and toould expose him to the reproach of oppression and overreaching. He is an officer of the court and is judged as such, and technical contractual rights must yield to his duty as such officer. O’Neill recognized his relation by refusing final settlement without the court’s approval, and the court, entertaining the application, has fixed the sum which appears to it suitable. The court was not bound by the stipulated further advance of $550. Its duty was not perfunctory. It has allowed one-quarter of the recovery and some disbursements, and as the appellant invoked its interposition he cannot object to its fixing some amount.” (Italics supplied.)

The Appellate Division made clear in the Friedman case, affirmed in this court, that it had the power notwithstanding the existence of an agreement between attorney and client, and although it made a conciliatory gesture in the lawyer’s direction by noting that he saw the handwriting on the wall by refusing final settlement without the court’s approval, nevertheless it was made plain that this was not necessary to the jurisdiction. The power of the court was recognized to apply the principle, where the recovery is so large, “ that what was in the first instance a fair contract becomes unfair in its enforcement.” Politeness in the exercise of judicial power is not equivalent to its renunciation.

One of the more recent expressions of this court upon this subject is the opinion by Judge Pound in Ward v. Orsini (243 N. Y. 123). There Mr. Hamilton Ward presented to this court for approval his contingent fee agreement in a case where he claimed the modest fee of $300, due to the settlement of an action by a client against the New York Central Railroad Company without his knowledge or consent. The reasonable value of the legal services of Mr. Ward, then one of the most eminent negligence trial lawyers in western New York, was easily $300. The opinion mentions (p. 129) that “ The defendant does not question the reasonableness of the fee.” In writing for a unanimous court, except that Judge Lehman did not sit, Judge Pound was careful to avoid setting a precedent for a case like the present. The opinion says (p. 128): “It may well be that in a supposed case the amount received by the client would be so completely out of proportion to the value of the attorney’s services that it would be unconscionable as matter of law to permit him to enforce his contract.” (Italics supplied.) That is this case.

Here, to be sure, it is not necessary to an affirmance to hold that the charge of $15,000 claimed by Ge Wertz is unconscionable as matter of law, although I believe it to be so; Special Term found GeWertz’ fee to be unconscionable in fact, as well as in law, in this special proceeding brought pursuant to section 475 of the Judiciary Law. This finding of fact has been unanimously affirmed by the Appellate Division.

The opinion in Ward v. Orsini (supra, p. 127) cites Morehouse v. Brooklyn Heights R. R. Co. (185 N. Y. 520, 525-526), where it was stated in the words of the Ward opinion “that the question was one of fact depending upon the character of the claim and the amount of services to be rendered in prosecuting it to judgment, and that the mere fact that the attorney under the agreement was to receive one-half does not render the agreement unconscionable, ‘ unless it appears from the evidence that it was induced by fraud, or, in view of the nature of the claim, that the compensation provided for was excessive so as to evince a purpose on the part of the attorney to obtain an improper or undue advantage over his client.’ ”

That is what has been found in the instant case; and it was in this context that Judge Pound’s opinion added that situations might arise where the abuse would be so flagrant that such an agreement should be held to be unconscionable as matter of law. In this case we need not consider that aspect as a question of law, inasmuch as it has already been decided as a question of fact beyond our power to review.

The opinion in the Morehouse case is prescient. It seems to have been written with a segment of the negligence Bar. of today in mind: “ Of late years the subject of attorneys’ fees and their manner of procuring contracts of retainer, especially in negligence cases, have attracted the attention of both the public and the courts. The charges made in some cases have been exorbitant, if not scandalous, and have tended in a measure to bring the profession into disrepute. It is contended that a claimant who is poor and unable to pay his attorney in cash ought to be permitted to contract to pay a portion of his claim to his attorney, in order to procure his services. The validity of such contracts is not questioned. It is only where the attorney has taken advantage of the claimant, by reason of his poverty or the surrounding circumstances, to extort an unreasonable and unconscionable proportion of such claim that it is condemned. The Federal courts have recently, in two instances, characterized a contract of retainer giving to the attorney fifty per cent of the recovery as unconscionable. (Herman v. Met. St. Ry. Co., 121 Fed. Rep. 184; Muller v. Kelly, 125 Fed. Rep. 213.) The Appellate Division in the first department has also denounced such contracts. The question, however, as to whether such a contract is unconscionable is one of fact depending upon the character of the claim and the amount of services to be rendered in prosecuting it to judgment. An agreement to pay an attorney one-half of the recovery where the action was to recover a penalty of fifty dollars would not by any person be considered to be improper, but if it was for fifty thousand dollars it might be considered quite improper.” (185 N. Y. 520, 525-526.)

In the present case the amount paid in discharge of the claim was $75,000. It seems to me clear that this question is involved on this appeal. It is true, of course, that the 50% contingent fee agreement procured by GeWertz from the injured plaintiff’s wife while he was unconscious was (due to no concession by GeWertz) terminated by Wojcik who discharged him later. Although GeWertz’ claim was thereby reduced to a quantum meruit basis, nevertheless this court has said in other cases where this has occurred that “ the terms of the retainer contract, now at an end, may be taken into consideration in fixing the value of the lawyer’s services. (Matter of Tillman, 259 N. Y. 133; Matter of Montgomery, 272 N. Y. 523.) ” (Martucci v. Brooklyn Children’s Aid Soc., 284 N. Y. 408, 409.) So the original 50% agreement, although abrogated by the discharge of this attorney, was still in the offing when the substitution of attorneys took place. It is contrary to experience to assume that the parties were dealing at arms’ length when the agreement of substitution was made, even though the client (still unable to attend to business on account of his injuries) handled the matter through his new attorney Mathew Vener. Before anything further could be done with the lawsuit, they had to get rid of GeWertz, who occupied the strategic position of being attorney of record for the injured plaintiff with a signed 50% retainer agreement. He finally reduced his claim to 20% of the gross recovery as the price of his withdrawal, to recompense him for the few hours of actual labor on the case before plaintiff discharged him. The discrepancy between the real value of the legal services rendered by GeWertz and the $15,000 which he claims as his contingent fee is sufficiently great to sustain a determination that it is “ unconscionable ” within the definition phrased by Judge Miller, i.e.: “ sufficient to show that an unfair advantage was taken of the client or, in other words, that a legal fraud was perpetrated upon him.”

It is incorrect, I think, to hold that this was not at issue due to the circumstance that the settlement approved at Special Term by Mr. Justice Benjamin provided that the fee of GeWertz was to be paid out of the one third of the net recovery ($75,000 minus $9,215.23 to reimburse the workmen’s compensation insurance carrier) which Justice Benjamin deemed to be adequate compensation for both lawyers. The figure resulting from this computation is $21,928. Justice Benjamin awarded GeWertz one third of this $21,928 and he awarded to Vener (who accomplished the settlement) two thirds of this sum of $21,928. Thus it appears that the Special Term Justice fixed Vener’s fee in the sum of $14,618.67 and fixed GeWertz’ fee at $7,309.33, which GeWertz refuses to accept. If it were to be held that GeWertz has the legal right to $15,000 under his contract with the injured plaintiff, it would not reduce the reasonable value of Vener’s services and Vener would still be entitled to receive $14,618.67, if that be the reasonable value of his services. On the findings which have been made, reversal would thus cost Wojcik $7,690.67 more than he is obligated to pay under the existing order. If Wojcik bartered away his recovery to GeWertz without relation to the value of GeWertz’ legal services, it does not follow that Vener should or is committed to work for nothing or for less than his professional services were reasonably worth. The consequences of a reversal would have to be, as I view it, to expunge altogether what Justice Benjamin did in Ms rulings on counsel fees, and to subject Wojcik (the injured plaintiff) to liability for additional counsel fees by payment to Vener for Ms services on quantum meruit. There is no agreement here or principle of law according to which Vener is to be paid less than the value of his services if Wojcik contracted to pay GeWertz more than his services were worth. No such stipulation as that was made by Vener in the text of the agreement of substitution of attorneys. The statement in this agreement that GeWertz is to be paid 20% of the gross recovery by the substituted attorney, Mathew Vener, Esq., does not signify that it is to be deducted from Vener’s own fee, the amount of which is not prescribed, but merely that Vener is to deduct 20% from the gross recovery and pay it directly to GeWertz without its passing through Wojcik’s hands. GeWertz drew this stipulation, and he evidently inserted this clause to protect himself. He was not restricting Vener’s fee. In other words, if GeWertz is not subject to supervision as an officer of the court by reason of section 474 of the Judiciary Law, and Wojcik is held to have contracted to pay more to GeWertz than he would otherwise have been entitled to receive, there is no principle of law nor any agreement in the record which would thereby make Vener the loser. It seems to me that Wojcik’s interest is directly involved upon this appeal and that the controversy is not merely between two attorneys. Victory by GeWertz would probably be followed by a new application by Vener, nor is there anything in the record which would prevent Vener from successfully prosecuting such an application. Point I of plaintiff’s brief would not preclude Vener from compelling plaintiff to pay to him the reasonable value of Vener’s services in addition to whatever may be payable to GeWertz. This point in the plaintiff’s brief is not a stipulation by Vener that he agrees to be compensated at less than the reasonable value of his services. If the entire fee arrangement approved by Justice Benjamin is set aside, as it would have to be if the order appealed from is reversed, the record contains no basis for an assumption that Vener is obliged to acquiesce in being paid $7,690.67 less than he is authorized to be paid by the order of Special Term affirmed by the Appellate Division. It is no answer to this reasoning to say that Vener is not objecting on this appeal. There is no reason for him to object inasmuch as he is not a party aggrieved. He is satisfied to receive the amount payable to Mm by tbe order under review. It does not follow tbat be will be satisfied or will be obliged to be satisfied if tbat order is reversed.

Tbe decision wbicb is being made, as I understand it, is to leave in effect tbat part of Justice Benjamin’s order wbicb determines tbat tbe reasonable value of tbe services of botb lawyers is $21,928, but to bold as matter of law tbat Vener assumed a personal liability to pay GeWertz $15,000 out of whatever sum might be fixed as tbe reasonable value of tbe professional work performed by botb of them. Tbe record, as I read it, is barren of any evidence of such an agreement by Vener. At most, a question of fact would be presented concerning whether such an agreement as tbat was made, and whatever questions of fact are presented have been resolved against appellant by Special Term and tbe Appellate Division.

Tbe object of section 475 of tbe Judiciary Law is to supply a swift and expeditious mode of trying disputes of this nature, botb for tbe protection of tbe lawyer and of bis client. Tbe purpose of tbe proceeding is to determine tbe amount of tbe attorney’s lien (in this case upon tbe insurance company’s draft) (Matter of Peters [Bachmann], 271 App. Div. 518, mod. on other grounds 296 N. Y. 974). If tbe amount of tbe lien is or may be affected by a contract with tbe lawyer, tbat issue has to be tried in tbe same proceeding in order to determine tbe amount of tbe lien. Tbe power of the court is equitable in nature in such a proceeding (Matter of Pieris, 82 App. Div. 466, affd. 176 N. Y. 566). Tbe petition wbicb institutes tbe proceeding may be filed by tbe client or tbe attorney. TMs is recognized as a separate special proceeding (Peri v. New York Central & H. R. R. R. Co., 152 N. Y. 521, 526; Matter of Regan, 167 N. Y. 338; Matter of King, 168 N. Y. 53, 60; Matter of Fitzsimons, 174 N. Y. 15, 16, 20).

There is no basis for contending tbat GeWertz did not know what tbe issue was wbicb be bad to meet, or tbat it was not tried in this special proceeding instituted on plaintiff’s behalf and in wbicb GeWertz Mmself asked to have bis fee adjudicated. Tbe proceeding was instituted in plaintiff’s behalf by order to show cause. Tbe final paragraph in GeWertz’ opposing affidavit reads as follows: “ I pray therefore, tbat, pursuant to section 475 of tbe Judiciary Law, my lien upon tbe check wbicb is mentioned in tbe moving affidavit, be fixed in tbe sum of $10,067.15 and at 20% of any further sums which may he paid out of the settlement, when and as paid.”

This was after GeWertz had refused to he present at the hearing before Mr. Justice Benjamin on January 20, 1956 at which the settlement was approved, and at which he had been informed in writing that the amount of his fee would be drawn in question. It was after GeWertz had been informed that the settlement had been approved by the court which had disapproved his original 50% contingent fee agreement. The moving papers further informed GeWertz that his claim of 20% on the gross proceeds of the settlement was being contested. In the face of that, GeWertz’ own formal application in his opposing affidavit to have the amount of his lien adjudicated, brought him squarely before the Special Term on that issue. He extended and amplified upon the record all the details of what he did for Wojcik, but, even so, the maximum reasonable value which could be placed upon such services in the judgment of Special Term and of the Appellate Division fell so far short of $15,000 that the finding was made and affirmed which has been mentioned. It developed that GeWertz had not kept any record of his time or services, but estimated with hesitance and uncertainty that he had spent about one hour getting the retainer signed; another 10 minutes inspecting the police blotter; about “ three or four hours ” going to Richmond Hill to interview a witness; that about an hour had been spent by someone trying to get a statement out of another witness who refused to sign; that he spent about three hours outlining and dictating the complaint; about five hours on a bill of particulars — an estimate he was not sure of — for, to quote: “I don’t remember exactly. I didn’t mark down the time. I didn’t contemplate this.” He was equally uncertain and vague as to the number of telephone calls made, the time spent on interviews because, as he said, “ It’s very difficult. * * * I didn’t keep a record.” Alleged services rendered in connection with the examination before trial vanished to nothing when it developed that such examination had, in fact, been conducted by the substituted attorney Vener. At the conclusion of the hearing, Mr. Justice Benjamin rendered an oral decision in which he pointed out his displeasure with GeWertz’ attempt to frustrate the settlement by his refusal to appear and his insistence on receiving 20% of the whole amount recovered, including the compensation payments which had been voluntarily made by the carrier without the intervention of either attorney. In this connection, the learned Justice noted that the original retainer had called for 50% of the whole amount recovered and reiterated his view previously expressed that to include compensation payments under the circumstances “ involving these grievous injuries, is unreasonable, unconscionable, oppressive and is void as contrary to public policy and wholly unenforcible as a matter of equity and a matter of law ”. He summed up the amount of services rendered, noting the short period of time spent in hours and the character of the work performed which, in his estimate would justify “ but a minimum payment ”. He then ruled that, under all the circumstances, the total attorneys’ fees of one third of the net recovery would be “ fair and reasonable ”, which he directed to be apportioned one third to Gre Wertz and the balance to Vener.

Nothing in this opinion condemns contingent fees in themselves. It is the abuse of the system to which our attention has been directed. The rule has always been, before and after enactment of section 474 of the Judiciary Law and its predecessor statutes, that if the amount of the lawyer’s contingent fee became so great as to be out of all relation to the value of the work performed, the courts would strike it down. Unless the statements in the opinions of the courts about the fiduciary obligation of the lawyer to his client and his status as an officer of the court are to be treated as pious platitudes, to be honored in the breach rather than in the observance, it is the duty of the courts pursuant to law to take account of the facts as they are and to treat fees such as this as unconscionable and oppressive.

The order appealed from should be affirmed, with costs.

Conway, Ch. J., Desmond and Burke, JJ., concur with' Froessel, J.; Dye and Van Voorhis, JJ., dissent in separate opinions in which Fuld, J., concurs.

Order reversed and matter remitted to Special Term for further proceedings not inconsistent with the opinion herein. 
      
      . This is not just a contest between two attorneys; the outcome affects the amount which the client will have to pay, as is shown (infra). .
      
     
      
      . Although the existence of the power in the court in any event is recognized in Friedman, it should be noted that in the instance case GeWertz himself formally applied to the court in his answering affidavit to have his fee fixed under section 475 of the Judiciary Law in this special proceeding.
     