Case Title: Swanson & Lange v. Miner

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1992-10-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 91-544


 Swanson & Lange                              Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 David Miner                                  October Term, 1992



 Frank G. Mahady, J.

 David H. Perrin of Swanson & Lange, Burlington, for plaintiff-appellant

 Thomas A. Little and Samuel H. Press of Portnow, Little & Cicchetti, P.C.,
    Burlington, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      MORSE, J.     Plaintiff, a partnership engaged in the practice of law,
 brought suit to collect fees for services rendered to defendant, a former
 client.  The trial court entered judgment in favor of defendant, holding
 that under the strictures of Vermont's Code of Professional Responsibility,
 an action for recovery of attorney's fees is forbidden as a violation of
 public policy unless suing the client is "necessary to prevent fraud or
 gross imposition by the client."  Administrative Orders, Code of
 Professional Responsibility, Ethical Consideration 2-23 (EC 2-23).  We
 disagree and accordingly reverse.
      In November 1986, defendant consulted with Nell Coogan, a partner with
 the law firm of Coogan, Swanson & Lange, to represent him in a divorce case.
 Coogan agreed to represent defendant at an hourly rate of $60, with payment
 of a $500 retainer.  The fee agreement was not reduced to writing, although
 it was the firm's usual practice to do so.  Defendant has not disputed the
 existence or accuracy of the agreement, and the trial court expressly found
 that the rate charged was a "reasonable and ordinary rate for such
 services."
      In July 1987, Ms. Coogan left the firm on maternity leave.  The case
 was transferred to another partner in the firm, John Swanson.  Defendant
 continued to accept the benefit of legal services from plaintiff for another
 two months, and, as found by the trial court, the services provided by
 Swanson were "reasonable and necessary" and "performed in a competent
 fashion."
      Defendant, however, was unhappy that Ms. Coogan was no longer able to
 represent him, despite the fact that both Coogan and Swanson were members of
 the retained firm.  Defendant stated: "I would not, never have selected him
 [Swanson]. . . . No, I would not have selected him as my attorney."
 Approximately three months before final hearing, defendant engaged a
 different law firm to represent him.
      Defendant paid the retainer and made several payments of fees for
 plaintiff's legal services, but, at the time of transfer of his case, a
 balance of $1,988.11 remained outstanding on his account.  After that time,
 no further payments were made.  Defendant stated that he felt he had "paid
 for what he got" and that "I hired Nell Coogan to do a job, and I got Mr.
 Swanson who couldn't do the job, and I feel that the $1,547 that I paid up
 front in good faith is more than enough than that firm deserves . . . if you
 don't get a service then it's like my business, if someone comes in and has
 a dinner and they don't like it, it's not a good dinner, there's something
 wrong with it, I'm certainly not about to charge them . . . ."
      Plaintiff brought suit to collect the unpaid fees approximately three
 years after its representation of defendant ceased, during which time
 plaintiff tried to negotiate a settlement of its claim.  Although the trial
 court found that the parties had agreed to the fee, the services were
 competently performed, and the amounts necessary and reasonable, the court
 concluded, as a matter of law, that EC 2-23 of the Code of Professional
 Responsibility precludes a lawyer or law firm from initiating a lawsuit to
 collect outstanding fees from a former client, unless the element of "fraud
 or gross imposition" was alleged and could be proved. (FN1)
      Plaintiff claims that this case is governed by general principles of
 contract law and that a showing of "fraud or gross imposition" is not a
 prerequisite to recovery.
      The American Bar Association first adopted an ethical code in 1908,
 when the original Canons of Professional Ethics were adopted by the ABA
 House of Delegates.  These Canons began:
      No code or set of rules can be framed, which will particularize
      all the duties of the lawyer in the varying phases of litigation
      or in all the relations of professional life.  The following
      canons of ethics are adopted by the American Bar Association as a
      general guide . . . .
 Canons of Ethics (American Bar Association 1908).  This "general guide"
 consisted of thirty-two canons.  Canon 14, entitled "Suing a Client for a
 Fee," read:
      Controversies with clients concerning compensation are to be
      avoided by the lawyer so far as shall be compatible with his self-
      respect and with his right to receive reasonable recompense for
      his services; and lawsuits with clients should be resorted to only
      to prevent injustice, imposition or fraud.
      Unremarkably, the delegates contemplated that lawyers would bring
 lawsuits to collect fees, and, in a 1943 opinion, the ABA Committee on
 Professional Ethics and Grievances addressed the issue of fee collection,
 stating: "Ours is a learned profession, not a mere money-getting trade. . .
 .  Suits to collect fees should be avoided.  Only where the circumstances
 imperatively require, should resort be had to a suit to compel payment."
 ABA Comm. on Professional Ethics and Grievances, Formal Op. 250 (1943).
      In 1964, the House of Delegates created a committee to examine the
 Canons and to make recommendations for changes.  The result of the
 committee's work was the "Model Code of Professional Responsibility" (Code)
 adopted by the House of Delegates in 1969.  The Code became effective for
 ABA members on January 1, 1970, and was adopted by the Vermont Supreme Court
 in 1971.  Administrative Orders, Code of Professional Responsibility;  see
 generally Model Code of Professional Responsibility and Code of Judicial
 Conduct (American Bar Association, 1980).
      The Code's format was changed from that of its predecessor.  Rather
 than being divided solely into Canons, it was divided into three parts:
 Canons, Ethical Considerations, and Disciplinary Rules.  The Canons are
 "general terms" which "embody the general concepts from which the Ethical
 Considerations and the Disciplinary Rules are derived."  Model Code of
 Professional Responsibility, Preliminary Statement.  The Canons have
 corresponding Ethical Considerations, which "are aspirational in character
 and represent the objectives toward which every member of the profession
 should strive.  They constitute a body of principles upon which the lawyer
 can rely for guidance in many specific situations."  Id.  Last, there are
 Disciplinary Rules, which, "unlike the Ethical Considerations, are mandatory
 in character."  Id.  It is the Disciplinary Rules, therefore, not the
 Ethical Considerations, that provide the compulsory minimum standard which
 attorneys must observe.
      The Canon pertinent to the present case, Canon 2, states: "A Lawyer
 Should Assist the Legal Profession in Fulfilling its Duty to Make Legal
 Counsel Available," and is followed by a series of corresponding Ethical
 Considerations.  One of these, EC 2-23, is the principal basis for the trial
 court's decision.
      We find little in the way of precedent to deny recovery based on
 violation of EC 2-23.  There is no Disciplinary Rule that includes any
 general prohibition on actions by attorneys to recover legal fees, except
 Disciplinary Rule 2-106(A) (DR 2-106(A)), which states: "A lawyer shall not
 enter into an agreement for, charge, or collect an illegal or clearly
 excessive fee."  (Emphasis added.)  Because DR 2-106(A) contemplates that
 legal and reasonable fees may be collected, the question is raised -- does
 EC 2-23 turn an otherwise reasonable fee into an illegal fee merely because
 a lawyer must sue to collect it?  We think the question answers itself.  The
 trial court expressly found that the fees due in this case were "necessary
 and reasonable" and stated, "The court does not intend to imply in any way
 that the plaintiff acted in an improper manner in any respect."
      The court also found no evidence of fraud by the client, and we agree
 with the commentator who observed: "It is highly unlikely that an attorney
 could prove that a client acted in a fraudulent manner for not paying a
 fee."  J. Smith, The Pitfalls of Suing Clients for Fees, 69 A.B.A.J. 776,
 778 (1983).  Moreover, whatever the term "gross imposition" may mean, it is
 too amorphous a standard to be an element of the contract cause of action
 against a client.  Id.  As the same commentator has pointed out, if EC 2-23
 has any teeth at all, it may be that an attorney's suit to recover fees
 provides "some evidence . . . that the standard of care was breached" should
 the client bring a malpractice counterclaim.  Id.
      Further, we find no indication from the trial court's findings, nor was
 there any evidence at trial, that plaintiff brought suit in bad faith or
 for the purpose of harassing defendant, rather than simply to adjudicate a
 valid dispute between them.  Although the filing of a suit to recover fees
 may not violate any Disciplinary Rule, if a lawyer fails to make even
 minimal attempts to resolve disputes prior to filing suit and resorts
 frequently to court action to collect fees, a "serious violation" of the
 standard set forth in EC 2-23 may be found.  Matter of Wetzel,