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Question III

2018 Bar · Legal Ethics · 5 sub-questions

III. Carina was dismissed by her employer for breach of trust and confidence, and for willful violation of company rules and policies. She filed an action for illegal dismissal claiming that her termination was without legal basis. The Labor Arbiter found that she was illegally dismissed and awarded her the amount of PhP 80 million. On appeal to the National Labor Relations Commission (NLRC), the award was reduced to PhP 40 million as separation pay, plus PhP 5 million for the value of her stock option plans which would have vested if she were not illegally dismissed from her job. Unsatisfied with the NLRC's decision, she appealed to the Court of Appeals (CA) the amount of monetary award granted by the NLRC. She engaged the services of Casal, Casos and Associates to handle her appeal. Her retainer agreement with Casal, Casos and Associates provided for contingent fees equivalent to 10% of her claim for separation pay and 10% of the value of stock options to be awarded to her. The CA decision was not favorable to Carina, so she appealed the same to the Supreme Court (the Court). While the case was pending appeal with the Court, Carina entered into a compromise agreement with her employer to terminate the case upon payment to her of the full amount of PhP 40 million, less the PhP 15 million previously paid to her by her employer. Before the compromise agreement was finalized, Carina terminated the services of Casal, Casos and Associates and asked them to withdraw from the case pending before the Court. The parties negotiated the compromise agreement without the participation of their lawyers since the employer imposed the condition that no lawyers should be involved in the compromise negotiation. She, together with her employer, then filed the Compromise Agreement for approval by the Court, and sought the termination of the case, with prejudice. Casal, Casos and Associates filed a motion to intervene in the case pending with the Court, praying that Carina be ordered to pay them PhP 4 million, representing 10% of the amount received by Carina from her employer in settlement of the case, plus 6% legal interest from the date of filing of the motion for intervention, until fully paid. The intervenors claimed that they were dismissed without justifiable cause prior to the signing of the compromise agreement for the reason that Carina, their client, wanted to evade payment of their legal fees. Carina claimed they were dismissed because Attys. Casal and Casos, who personally handled her case, had resigned from the law firm to join the government, and because of the negligence and failure of her lawyers to attend to her case. In reply, the intervenors said that the engagement was with the law firm and not with individual lawyers. The law firm also presented letters signed by their client commending them for work done well in the case.
(a)(a) May lawyers legally charge their clients based on contingent fees? (2.5%)
(b)(b) Should Casal, Casos and Associates be allowed to intervene in the case pending before the Court in order to collect their fees from Carina? (2.5%)
(c)(c) Can Carina refuse to pay attorneys' fees on the ground that the lawyers who personally handled her case had already resigned from the law firm with which she had contracted? (2.5%)
(d)(d) May Carina's employer, defendant in this case, be held solidarily liable with Carina for the payment of the attorneys' fees of Carina's lawyers? (2.5%)
(e)(e) May the intervenors collect legal interest in addition to their attorneys' fees? (2.5%)

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