Landlord’s Prohibited From Billing Tenants More Than Actual Cost of Consulting Lawyer

By Fredrick P. Niemann, Esq., a NJ Consumer Fraud Attorney

 
New Jersey Law dictates that attorney’s fees may not be shared with non-attorneys. This simple rule typically comes into play with referral services. Most lawyers are seeking more and more clients and would love to be able to have someone refer clients to them. While the law states it is ok for one attorney to refer a client to another attorney and receive a percentage of the fee for doing so, non-lawyers are prohibited from a receiving this same percentage for their referral. This law often comes up in the landlord/tenant relationship, as some landlords include a provision in their contract with the tenant that calls for the tenant to reimburse all attorney’s fees the landlord may face when handling legal issues related to the tenant’s lease.

A recent NJ case involved this exact situation. A landlord was charging a flat legal fee of $400 every time the landlord had to consult his attorney regarding lease enforcement. Many times, this $400 cost ended up being greater than the actual amount the attorney would charge the landlord, leaving the landlord with a profit in these cases. The tenants filed a class-action suit against the landlord alleging violations of the Consumer Fraud Act and negligent misrepresentation. After the NJ Trial Court dismissed the claim, the NJ Appellate Court reversed the dismissal, finding that this clearly flat rate clearly ran afoul of the law that an attorney’s fee may not be shared with a non-attorney. In this case, the profit that the landlord was keeping was considered splitting the attorney’s fee and therefore prohibited.

Contact me personally to discuss your NJ Landlord or Tenant matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or email me at fniemann@hnlawfirm.com/.

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