Contingent Fee Does Not Include Cut of Reinstated Client’s Future Wages and Benefits

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This one would be funny if it weren’t so sad.

The Missouri Court of Appeals ruled against a St. Louis lawyer on her contingent fee claim for 35% of her client’s future salary and benefits.

The Court’s brief opinion makes for an interesting read:

This dispute has had, in the understated observation of the trial judge, “a torturous history.” He calculated the weight of the trial-court file at forty-eight pounds. Now with an appeal and cross-appeal, that weight may have increased but, since appellate judges travel in packs, there is at least help with the heavy lifting. However, at day’s end, and we fervently hope dusk is drawing nigh, there is but a single question that need be answered: Is [the attorney] entitled to additional legal fees from her former client . . .? We hold that she is not.

In remembrance of all the trees that have sacrificed life and limb in [the attorney]’s marathon pursuit of legal fees, we shall recount only the essential facts. In 1992, [the client], having been laid off from her thirty-year secretarial position with McDonnell Douglas, engaged [the attorney] to represent her in a potential employment-discrimination suit against her former employer. The contingent-fee agreement provided, in pertinent part, as follows:

• “[The attorney] will represent the undersigned in the above matter upon payment of $600.00 non-refundable fee retainer, plus the sum of 35% of all funds received (or the fair market value of non-monetary items) prior to the date the trial or other hearing is to begin; 40% of all amounts (or the fair market value of non-monetary items) received after the trial hearing date; and 45% of all amounts (or the fair market value of non-monetary items) received after the trial or hearing has ended, whether or not counsel undertakes to handle the appeal.”

[The attorney] filed suit against McDonnell Douglas in 1992, but before any depositions were taken, the parties settled. The former employer paid $27,500 in settlement and [the client] was back at McDonnell Douglas, earning the same wages and receiving benefits. [The attorney] retained $9,625 of the settlement as her fee.

Later, [the attorney] made an additional demand that [the client] forward 35% of her salary and benefits, including her pension, that were to be earned in the future in satisfaction of [the attorney]’s claimed contingent fee. In 1998, [the attorney] sued her former client and, after six years of litigation, was denied further recovery on her contract, but was awarded $33,700 in quantum meruit.

The judgment in quantum meruit cannot stand because there was an express contract between the parties that completely governed liability for legal fees for indivisibly rendered legal services. Where an express contingent-fee agreement exists between attorney and client, the attorney’s recovery of fees must lie on the contract. . .

Nor can [the attorney] recover further fees on her carelessly worded contract. The trial court held that whether the parenthetical clause relied on by [the attorney] “or the fair market value of non-monetary items” should allow for an assessment based on future earnings was unclear.

We agree. An agreement between an attorney and client is construed by the same rules as apply to any other contract. . . Any ambiguity is construed against the attorney who drew the agreement. . . Construing the ambiguous clause against the drafter here, the contract did not allow for a contingent fee based on future earnings. Or, more simply put, if it was [the attorney]’s intent to have her client surrender 35 to 45% of all future earnings until the welcome hand of death freed her from this servitude, the contract needed to say as much.(FN2)

The judgment in quantum meruit is reversed; in all other respects, the judgment is affirmed. [the attorney] shall recover no further attorney’s fees and shall bear the costs of this appeal.

FN2. Despite the obvious temptation, we do not reach the issue of unconscionability.

Bear in mind, underlying the outrageous facts here is the everyday occurrence of a contingent fee attorney getting a big piece of a smallish settlement after (probably) doing extremely little work. The clue to this is that no depositions were even taken before settlement.

I know, one could say: (1) it takes skill to settle so early; (2) the fee is a fair reward for risk taking; and (3) otherwise nobody would have taken this case.

To which I would say: (1) the real skill would be to get a much more sizeable settlement early; (2) too many plaintiffs’ attorneys make their living from volume, taking lots of marginal cases that are likely to be settled fast and cheap by bottom-line oriented big corporate legal departments with bigger fish to fry; and (3) maybe nobody should have taken this case because it was no good.

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