Case ID: so2d_598/html/1293-01.html
Source: Caselaw Access Project
Author: {"author": "JONES, Judge. BARRY, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jevonna K. LAWRENCE, et al. v. Harrison Kelly WYNNE M.D.
    No. 91-CA-1230.
    Court of Appeal of Louisiana, Fourth Circuit.
    April 30, 1992.
    
      Frank M. Buck, Jr., Robert L. Manard, New Orleans, for plaintiff/appellant.
    Russell Stegeman, Stegeman & Associates, Gretna, and Donald Ensenat, Hoffman, Sutterfield, Ensenat & Bankston, New Orleans, for intervenor-appellee.
    Before BARRY, BYRNES, and JONES, JJ.
   JONES, Judge.

Plaintiffs attorney Timothy J. Falcon, “Falcon”, appeals the trial court’s judgment dividing attorney’s fees 75% to Russell Stegeman and 25% to Falcon. We affirm the trial court’s judgment.

Falcon began his law practice as an associate with the law firm Stegeman & Marre-ro. In the agreement between the parties, which became effective on October 11, 1985, the day Falcon was sworn into practice, Falcon would receive 35% of the fee revenue on eases generated by him. This fee would remain the same regardless of whether Falcon was assigned to handle the case or not. On cases generated by the partners, Stegeman and Marrero, which were assigned to Falcon, he was to receive 25% of the fee revenue produced.

The agreement further provided that in the event of a termination between the parties, the agreed division of fees would not change whether or not the client’s case was completed by Stegeman & Marrero or Falcon.

In November 1985, Russell Stegeman was retained by Mr. Daryl Lawrence to represent him in a medical malpractice claim against the defendants named in the captioned matter. However, Mr. Lawrence died in June, 1986, and thereafter, Mrs. Lawrence retained Mr. Stegeman on behalf of herself and her minor child. Falcon was assigned to work on this case under Mr. Stegeman’s supervision and under the provisions of the October 11, 1985 employment contract providing that Falcon would receive 25% of the fee.

On November 12, 1986, Stegeman & Marrero entered into a second employment agreement with Falcon. Falcon was to receive 50% of the legal fees from cases he generated but would still receive 25% on cases assigned to him by the firm. As to cases generated by Falcon or assigned to him prior to October 1, 1986, the division of fees would be governed by the October 11, 1985 agreement. Again the contract provided that the division of fees would not change in the event of termination of the contract.

In December, 1988, Robert Marerro left the practice. He assigned his interest in the instant case to Mr. Stegeman as part of the withdrawal agreement. On April 17, 1989 and effective January 1, 1989, Stege-man and Falcon entered into a general partnership to practice law. It was agreed that files ongoing as of January 1, 1989, including the Lawrence case, would be governed by the provisions of the previous employment agreements, including the distribution of any fees arising therefrom.

In March 1990, the partnership between Stegeman and Falcon was terminated. On March 21, 1990 Stegeman received a letter from Jevonna Lawrence discharging him as her attorney and advising him that the files should be turned over to Falcon. On March 29, 1990, Stegeman filed a petition in intervention in these proceedings.

The case was settled in December 1990 for the amount of $285,000.00. On January 9,1991, Falcon filed a Motion to Assess Attorney’s Fees asking the trial court to divide the fee in this case on quantum meruit and asserting that $7,000 be paid to Stegeman and $107,000.00 be paid to Falcon. A hearing was held on the matter and the trial court rendered judgment on April 16, 1991 ordering that the attorney’s fees “be governed by the contract and therefore be divided 75% to Stegeman and 25% to Falcon.” It is from this judgment that Falcon appeals.

By his first assignment of error, Falcon argues that the termination provisions of the contract are ambiguous and the agreement should have been construed against Stegeman who drafted the contract.

Falcon quotes the language of the termination provision in the 1985 contract at section 14, paragraph (b) which provides that in the event that the contract is terminated and “certain clients should elect to dismiss employer ... the fee revenues derived from such cases shall be divided in the same manner....” The 1986 contract provides that the termination of the contract shall not affect the rights of Stege-man & Falcon as to a division of the fees entered into with certain clients on certain legal cases prior to the termination of this contract.

Falcon argues that the trial court did not determined which cases or which clients these provisions were applicable to. Nor does the contract provide a reasonable manner in which a third person could objectively determine when the contract should govern. Therefore, Falcon argues that it was error for the trial court to enforce a division of fees pursuant to the contract. Falcon maintains that existing law mandates that because Stegeman drafted the contract, it should be construed against him. Kenner Industries v. Sewell Plastics, Inc., 451 So.2d 557 (La.1984); Aguillard’s Enterprises, Inc. v. Smith, 439 So.2d 1158 (La.App.4th Cir.1983) writ denied 444 So.2d 1224 (La.1984); Kuhn v. Stan A. Plauche Real Estate Company, 249 La. 85, 185 So.2d 210 (La.1966). Falcon suggests that the matter be remanded to the trial court for a division pursuant to quantum meruit.

Mr. Stegeman responds that the trial court was provided with a detailed accounting of the earnings which Falcon received as an associate under the agreement. In addition, the trial court was presented with an accounting of the manner in which Stegeman and Falcon continued to adjust their capital accounts in accordance with these agreements after the parties agreed to practice as a general partnership in 1989. These documents refer to specific cases that generated fees payable under the terms of the pre-partnership agreements of the parties and show that the parties experienced no difficulty or ambiguity in interpreting or applying their agreements after Falcon ceased being associated with the firm. Based on the record, there is ample evidence for the court to determine that the provisions of the agreements governing the fee division in the instant case is not ambiguous in fact or in law.

We agree. The parties experienced no difficulty in interpreting the termination provision until the instant case. If ambiguity existed, Falcon would have attempted to address it prior to now. In fact, this ambiguity was adopted in two subsequent contracts between the parties.

By his second assignment of error, Falcon argues that Stegeman’s contract results in an effect which is in contravention of the Code of Professional Responsibility. Article 16, Rule 1.5 of the Code of Professional Responsibility, former D.R. 2-107, states that lawyers who are not partners or associates of the same firm are prohibited from dividing fees unless the client consents after full disclosure, the division is made in proportion to the services performed and the responsibilities assumed by each lawyer and the total fee does not exceed reasonable compensation for all legal services. Falcon argues that the rule applies to the facts of this case, regardless of when the contract was signed, because it is the effect of the contract that contravenes Rule 1.5. Falcon contends that the effect of the termination provision is in violation of the law and spirit of the Code of Professional Responsibility. He cites case law which he maintains establishes that the award of attorney’s fees or the division thereof has always been subject to the close scrutiny of the courts. See: Peoples National Bank of New Iberia v. Smith, 360 So.2d 560 (La.App. 4th Cir.1978); Walker v. Investment Properties, Ltd., 507 So.2d 850 (La.App. 5th Cir.1987) writ denied 513 So.2d 293 (La.1987); Scott v. Noel, 506 So.2d 1313 (La.App.2d Cir.1987); In the Matter of P & E Boat Rentals, Inc., etc., 928 F.2d 662 (5th Cir.1991).

Falcon cites In the Matter of P & E, supra as precedent. Therein, the court refused to enforce an oral agreement between two non-associated attorneys to split the fee on a case because it was in contravention of the Code of Professional Responsibility. However, this case is distinguishable not only because the two attorneys disputing the legal fee were never members of the same firm but also because the terms of their agreement were never reduced to writing.

Stegeman emphasizes that at the time the employment contract was signed in 1985, division of legal fees between lawyers was governed by DR 2-107 of the Code of Professional Responsibility (effective through December 31, 1986). Subsection (B) of that provision states: “This Disciplinary Rule does not prohibit payment to a former partner or associate pursuant to a separation or retirement agreement.” Furthermore, Stegeman observes that the trial was originally scheduled for May, 1990, only a few weeks after Mrs. Lawrence dismissed Stegeman. The trial court had adequate grounds to conclude, had it been necessary, that all obligations under the contract had been substantially performed prior to Stegeman’s dismissal and the dissolution of Stegeman and Falcon. Finally, Stegeman maintains that the objectives of DR 2-107 and its successor Rule 1.5 have been met. Stegeman relies on the following language in Roy v. Gravel, 570 So.2d 1175 (La.App. 3d Cir.1990) writ denied 573 So.2d 1118 (La.1991):

This rule is aimed at full disclosure to the client by his attorney that another lawyer has been associated by the lawyer, and will be sharing in the fees.... This rule mandates that the client must agree to the association and further that in such cases the division of the fee must be proportionate to the work performed by each lawyer_ (citations omitted).

Stegeman counters that because Mrs. Lawrence signed a retainer contract with Russell Stegeman d/b/a Stegeman and Marre-ro, she was put on notice that Falcon and Marrero, the other attorneys working at the firm, and staff members would be assisting in the preparation of the case. In doing so she agreed to allow the firm to split the fee however the attorneys saw fit. This assignment of error has no merit.

By his third assignment of error, Falcon argues that the contract is unenforceable as an adhesion contract. He claims that at the time the October, 1985 contract was executed the parties were not of equal bargaining power. Falcon was newly admitted to the bar. The contract was drafted by the firm and the terms were forced upon him. Falcon cites Golz v. Children’s Bureau of New Orleans, Inc., 326 So.2d 865 (La.1976) appeal dismissed 426 U.S. 901, 96 S.Ct. 2220, 48 L.Ed.2d 827 (1976) in arguing that in this case of obviously superior bargaining power, drafted by the party of superior position, the contract is one of adhesion and should not be enforced by the courts.

In Golz, 326 So.2d at 869, the Supreme court defined an adhesion contract as follows:

Broadly defined, a contract of adhesion is a standard contract, usually in printed form, prepared by a party of superior bargaining power for adherence or rejection of the weaker party. Often in small print, these contracts sometimes raise a question as to whether or not the weaker party actually consented to the terms, (citations omitted).

In Golz the parties alleging that 'the contract was an adhesion contract were unsuccessful in proving it primarily because they were fully aware of the content and effect of the instrument before they signed it. Falcon has indicated that he was aware of the content and effect of the agreement he executed in the instant case.

There is no evidence that Stegeman drafted some sort of “boilerplate” form contract. There is no evidence of any “small print” provisions that raise a question as to whether Falcon gave informed consent to the terms. Furthermore, Falcon continued to work pursuant to the contract for another four years and did not attempt to alter this allegedly egregious language despite the fact that two subsequent contracts were signed. We find no error with the trial court’s judgment.

For the foregoing reasons, the trial court’s judgment is affirmed.

AFFIRMED.

BARRY, J., dissents with reasons.

BARRY, Judge,

dissents with reasons.

The contracts are clearly ambiguous and violate our Code of Professional Responsibility.

At issue in this medical malpractice case is the division of attorneys’ fees between appellant, Timothy J. Falcon, and appellee, Russell S. Stegeman, attorneys for plaintiff. The district court ordered that the fee be governed by two contracts between Falcon and Stegeman. Falcon’s appeal claims the contracts are invalid and should be based on quantum meruit.

FACTS

On October 11,1985 Stegeman’s law firm signed an employment contract with Falcon wherein Falcon was to receive 25 percent of fees from cases assigned by the firm. The contract contained a provision for fees upon termination.

In June, 1986 Mrs. Lawrence retained the firm to represent her in a medical malpractice action and a contingency fee contract was executed in accordance with La. R.S. 37:218. Falcon was assigned to handle the case in association with Stegeman.

On November 12, 1986 Stegeman’s firm entered into a second contract with Falcon which provided that as to “certain legal cases for certain clients” which commenced prior to October 1, 1986 the fees would be governed by the agreement dated October 11, 1985. The second contract also stated that fees would not be affected by its termination as to “certain clients on certain legal cases.”

On April 17, 1989 a partnership agreement was signed by Stegeman and Falcon which specified that the fee distribution for files opened prior to October 1, 1988 would remain as per the pre-partnership agreements.

Falcon left the partnership on March 12, 1990. On March 21, 1990 Stegeman received a letter (dated March .16, 1990) from Mrs. Lawrence which discharged the firm and instructed him to send her file to Falcon’s law office. Falcon settled Mrs. Lawrence’s suit for $285,000.

Falcon claims that the contracts he executed are ambiguous and cannot dictate division of the fee. The district court ruled that both contracts between Falcon and Stegeman governed division of the fee, thus, Stegeman was to receive 75% and Falcon 25% of the fee.

APPLICABLE LAW AND ANALYSIS

Falcon argues that the contracts are ambiguous because the termination provisions do not specify which cases and clients’ fees must be apportioned.

Any ambiguity in a contract is to be strictly construed against the party who prepared it. La.C.C. arts. 2053, 2056, 2057. Kenner Industries v. Sewell Plastics, Inc., 451 So.2d 557 (La.1984); Chrisman v. Chrisman, 487 So.2d 140 (La.App. 4th Cir.1986). Because this Court concludes that the contracts are ambiguous, they shall be construed against Stegeman who drafted them.

The termination provision in the 1985 contract is:

In the event that, after the termination of the contract, certain clients should elect to dismiss employer and retain employee to represent them, employee agrees that the fee revenues derived from such cases shall be divided in the same manner and at the same percentage rates as those agreed upon during the time when this contract was in effect payable when received by employee.

That language fails to specify the “certain clients.” If Stegeman intended that provision to apply to all clients the contract would have been worded accordingly.

The termination provision in the 1986 contract is also ambiguous:

Neither death, disability, nor the expiration or termination of this contract shall affect the rights of Party of the First Part and Parties of the Second Part to the division of fees set forth herein on engagements entered into with certain clients on certain legal cases prior to any such death, disability or expiration or termination of this contract.

If the parties had intended that provision to apply to every client, it would have been worded accordingly.

Falcon also argues that because the provisions were intended to take effect when he and Stegeman were no longer members of the same firm, the provisions contravene the Code of Professional Responsibility.

Disciplinary Rule 2-107 (“D.R. 2-107”) of the Bar Association’s Code of Professional Responsibility was in effect prior to January 1, 1987 when this case originated. The rule governs the division of fees among lawyers who are not members of the same firm. Subsequent to January 1, 1987, the rule was modified and became Rule 1.5(e), Rules of Professional Conduct, Louisiana State Bar Association.

D.R. 2-107 reads as follows:

DR 2-107 Division of Fees Among Lawyers
(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his law firm or law office, unless:
(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.
(2) The division is made in proportion to the services performed and responsibility assumed by each.
(3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client.
(B) This Disciplinary Rule does not prohibit payment to a former partner or associate pursuant to a separation or retirement agreement.

Stegeman asserts that this case involves a contract for the division of fees with an associate (and later partner) of the same firm and does not involve a division of fees between attorneys in different firms. However, Stegeman overlooks that the contract specifies a fixed division of fees when the attorneys are no longer members of the same firm, a violation of DR 2-107.

D.R. 2-107(A)(l) is violated because the client did not consent to Stegeman’s employment. She discharged Stegeman by letter dated March 16, 1990. D.R., 2-107(A)(2) is violated because the contract sets forth a fixed fee of 75% to Stegeman and 25% to Falcon, regardless of the services and responsibility by each attorney.

Although payment to a former partner or associate pursuant to a separation or retirement agreement is not prohibited by D.R. 2-107(B), such an agreement is not involved here. The agreement here was an employment agreement which contained termination provisions. If the draftors of D.R. 2-107(B) intended to include an employment agreement, that provision would have stated so explicitly, as it did in the case of separation and retirement agreements.

The Code of Professional Responsibility has the effect of substantive law. Succession of Wallace, 574 So.2d 348, 350 (La.1991); Succession of Cloud, 530 So.2d 1146 (La.1988). Although, generally, a contract is the law between the parties, it will not be so considered if it is contrary to the law or public morals. La.C.C. arts. 1966, 2029, 2030. See also, Wynne v. New Orleans Clerks and Checkers Union, 550 So.2d 1352 (La.App. 4th Cir.1989).

The contracts here violate D.R. 2-107 and are invalid. See, In the Matter of P & E Boat Rentals, Inc. v. Martzell, Thomas & Bickford, 928 F.2d 662 (5th Cir.1991).

Where a party to a contingency fee agreement discharges his attorney before the fee is earned, the attorney’s mandate is revoked and the contract is dissolved. Quantum meruit provides the basis for recovery. Keys v. Mercy Hospital of New Orleans, 537 So.2d 1223 (La.App. 4th Cir.1989), citing Saucier v. Hayes Dairy Products, Inc., 373 So.2d 102 (La.1978). After being discharged, an attorney cannot recover the full fee provided for in a contingency contract without providing all or substantially all of the legal services contemplated by the contract. Gamm, Greenberg & Kaplan v. Butt, 508 So.2d 633, 636 (La.App. 2d Cir.1987), citing Saucier v. Hayes Dairy Products, Inc., 373 So.2d at 102.

Accordingly, since Stegeman was discharged before the fee was earned and before he provided all or substantially all of the legal services provided for in the contract, quantum meruit is the basis for recovery.

I would pretermit discussion of Falcon’s argument that the original contract is an adhesion contract and therefore invalid. I note, however, that Falcon is an attorney and was not forced to sign the agreement.

The October 11, 1985 and November 12, 1986 contracts are ambiguous and violate the Disciplinary Rules of Professional Conduct. Quantum meruit is the basis for recovery.

The judgment should be reversed and the matter remanded.