Contract w/ Oil/Gas Lawyer has Section I Question

I have taken everyone's advice and contacted an oil/gas attorney to negotiate a lease w/ the oil company because the lease offered was not what I felt was fair.
My question is the contract w/ the attorney that I received to represent me has some sections that concerns me. When I spoke w/ the attorney I was told I could chose one of two payment methods. 1: An hourly rate. 2: 40% of the signing bonus I received. I chose the 2nd because the signing bonus initially offered was so low.
My question: In the attorney contract it states that I would pay 40% of upfront signing bonus. Then it says the client will pay any out of pocket expenses of litigation incurred int the prosecution of the claim regardless of outcome. It goes on o list these costs such as expert witnesses, steno, consulting reports, travel and lodging expenses.
I know I cannot expect these things for free, but as I read each item I kept seeing $$$.
Are theses normal requests? I know someone will say, "You cannot get the work done for free." I thought they were included in the 40% payment. Has anyone used a lawyer to negotiate a lease and if so did you experience large expenses?
Thanks. - Denver

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Permalink Reply by ralph monico on March 13, 2013 at 11:50pm

Denver,

I am a lawyer (in practice 20 years).  I want to preface my comments by noting that I am responding as an interested member of this blog. I am not soliciting your business. 

40% seems to be extremely high for a fee (regardless of the amount of the bonus).  Having made that general statement, I do know that lease negotiations can be time consuming.  An experienced oil/gas lawyer should be able to estimate a range of the number of hours needed to negotiate a deal.  With that information in hand you will be able to compare prospective fees - both hourly and based on the percentage and determine which approach you are most comfortable with. 

 

The language regarding litigation expenses shouldn't be in a representation agreement for lease negotiations as no litigation is contemplated (and none should be required.  if it is, a separate attorney/client agreement needs to be agreed upon).  Additionally, none of the fees/costs listed are typical in a lease negotiation representation.  The inclusion of this clause is probably an oversight.  Ask the attorney to remove the clause. 

 

My contracts address this issue by advising the prospective client/client of their responsibility for litigation related expenses.  Additionally, the agreement requires me to advise them and obtain their approval  before incurring costs greater than $ 100. 

Once final comment.  Attorneys (like any professional) can be overbearing.  Remember you are the client and therefore the boss.  Don't be afraid to ask questions, articulate concerns or ask that the action be pursued a particular way.  Most attorneys respect clients who invest themselves in the representation as it makes communication easier and reduces the possibility of confusion/misunderstandings. 

 

good luck!

Permalink Reply by gkahle on March 14, 2013 at 10:31am

I feel forced to chime in here too.  I too am a lawyer, and I in no way am trying to solicit any business.  I have negotiated several oil and gas leases for several clients in the Northern Panhandle of West Virginia.  I have handled these on both an hourly rate basis and contingency fee basis.

When charging on a contingency fee basis I charge 5% of the signing bonus, and 0% of royalties.  I know of several lawyers charging 6% of signing bonus.  Until reading your post I have never heard of a 40% contingency fee for negotiating a gas lease.  This is robbery pure and simple.

Permalink Reply by Kathleen on March 14, 2013 at 12:02pm
Wow I agree. I paid 2.5% of my bonus and no royalty
Permalink Reply by Jed Clampett on March 14, 2013 at 12:52pm

I talked with an attorney once about a Gas Lease offer.  He was a bankruptcy lawyer who now fancies himself an Oil and Gas Lease Attorney.  Anyway, I traded a free consultation with him for a copy of my lease and offer.  His fee was 10% of the bonus INCREASE he would get for me.  Much better than 40% of all the bonus, but still too high for what he could do for me.

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