Title: Wainger v. Glasser & Glasser
Citation: N/A
Docket Number: 941615
State: Virginia
Issuer: Virginia Supreme Court
Date: September 15, 1995

Present:  Carrico, C.J., Compton, Stephenson, Whiting,
1 Lacy, and 
Keenan, JJ., and Poff, Senior Justice 
 
STEPHEN WAINGER 
 
OPINION BY JUSTICE ROSCOE B. STEPHENSON, JR. 
                                    September 15, 1995 
 
v.  Record No. 941615 
 
GLASSER & GLASSER 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK 
 
John E. Clarkson, Judge 
 
 
In this litigation between a law firm and one of its former 
partners, we determine when contingent legal fees have been 
"fully earned" within the meaning of the firm's partnership 
agreement. 
 
On June 24, 1992, Stephen Wainger filed a declaratory 
judgment proceeding against Glasser & Glasser, a law firm in the 
City of Norfolk, seeking an accounting to establish the balances 
of his capital account and undivided profits account and a 
judgment for any amounts due him as a result of his withdrawal 
from the firm.  Wainger also sought a construction of the 
partnership agreement declaring that he is entitled to a 6/91 
share of the undivided profits from final, nonappealable consent 
judgments and final settlements obtained against The Manville 
Corporation Asbestos Disease Compensation Fund (the Manville 
Trust) prior to his withdrawal (the Manville Trust fees).  In 
addition, Wainger claims a right to a 10% bonus for those cases 
against the Manville Trust that he handled personally. 
                     
     
1Justice Whiting participated in the hearing and decision of 
this case prior to the effective date of his retirement on August 
12, 1995. 
 
 
 
 
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On the same date, Glasser & Glasser filed a declaratory 
judgment proceeding against Wainger, asking the trial court to 
determine that Wainger was not entitled to the Manville Trust 
fees or to any other fees not fully earned prior to his 
withdrawal from the firm.  Glasser & Glasser also sought a 
judgment against Wainger in the amount of $188,580.10, claiming 
that Wainger had been paid in excess of his agreed annual maximum 
draw. 
 
The trial court consolidated the two actions, and, because 
no material facts were genuinely in dispute, each party moved for 
partial summary judgment.  The trial court entered summary 
judgment in favor of Glasser & Glasser, holding that Wainger was 
not entitled to share in the Manville Trust fees because the fees 
had not been "fully earned" at the time of his withdrawal.  
Additionally, the trial court ruled, in the alternative, that 
Wainger was barred from collecting any such fees, even if fully 
earned, by the provision in the partnership agreement that 
limited his share of the firm's profits.  Wainger appeals. 
 
The relevant facts are undisputed.  In May 1987, Wainger was 
employed by Glasser & Glasser as an associate attorney, and, on 
January 1, 1990, he became a partner in the firm, subject to the 
written partnership agreement. 
 
Wainger voluntarily withdrew from the firm, effective 
January 21, 1992.  Pursuant to Article IX of the partnership 
agreement, a withdrawing partner was to be paid for his interest 
 
 
 
 
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in the partnership on the following basis: 
 
 
Item A.  Any unpaid monthly draw, and additional 
compensation (as described in Paragraph 3 of Section B, 
Article IV). 
 
 
Item B.  His Capital Account. 
 
 
Item C.  His Undivided Profits Account, plus his 
share, if any, of any undivided profits of the firm 
with respect to uncollected fees which were fully 
earned by the firm prior to the . . . effective date of 
his . . . withdrawal . . . , but which fees are 
received by the firm subsequent to such date. 
 
(Emphasis in original.) 
 
 
Since 1976, Glasser & Glasser has represented clients with 
claims against various asbestos manufacturers, including The 
Manville Corporation.  All these clients employed Glasser & 
Glasser on a contingent fee basis, evidenced by written 
agreements.  Generally, these agreements provided that Glasser & 
Glasser would receive a fee of one-third of the gross amount 
recovered for the client.  The agreements further provided the 
following: 
 
 
It is understood and agreed that this employment 
is upon a contingent fee basis, and, if no recovery is 
made, [the client] will not be indebted to [Glasser & 
Glasser] for any sums whatsoever as attorney fees, 
although [the client] will be indebted to [Glasser & 
Glasser] for all unpaid costs incurred. 
 
 
In 1982, The Manville Corporation filed a voluntary petition 
for reorganization pursuant to the United States Bankruptcy Code. 
 This filing led, in 1988, to the creation of the Manville Trust, 
 which was funded to pay all uncompensated asbestos claimants on 
behalf of The Manville Corporation. 
 
In the summer of 1990, while Wainger was a partner in the 
 
 
 
 
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firm, Glasser & Glasser obtained in favor of its asbestos clients 
final, nonappealable consent judgments against the Manville 
Trust.  The Manville Trust, however, did not agree to pay the 
judgments; to the contrary, it was understood that the Manville 
Trust would resist payment of any judgment or any attempt by the 
judgment creditors to execute on the Manville Trust's assets.  
Consequently, protracted litigation and negotiations ensued in an 
effort to collect on the consent judgments, and Glasser & Glasser 
did not recover for its asbestos clients any money from the 
Manville Trust until January 1994, approximately two years after 
Wainger's withdrawal from the firm.
2
 
Wainger contends that the Manville Trust fees were fully 
earned when the firm obtained the final, nonappealable consent 
judgments.  Wainger, relying upon DR 2-105(C) of the Virginia 
Code of Professional Responsibility,
3 asserts that the claims 
 
     
2In July 1990, Glasser & Glasser was enjoined by a federal 
district court in New York from executing on the consent 
judgments.  Then, in November 1990, the Manville Trust filed a 
class action, together with a proposed settlement, in federal 
district court in New York, seeking to restructure its assets and 
claim resolution procedures, and, in the summer of 1991, the 
proposed settlement was approved.  In December 1992, however, the 
federal appellate court held that the settlement must be set 
aside, and the federal district court again restrained execution 
on the judgments.   
 
In June 1993, Glasser & Glasser, counsel for the Manville 
Trust, and others negotiated a lump sum payment of the consent 
judgments, discounted for present value.  In July 1993, the 
federal district court ordered payment by the Manville Trust of 
the discounted judgments, and, on January 11, 1994, the federal 
appellate court upheld the order to pay such sums.  Later in 
January 1994, the Manville Trust paid the discounted judgments. 
     
3Disciplinary Rule 2-105(C) provides, in pertinent part, as 
follows: 
 
 
 
 
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upon which the contingent fees were based were liquidated by 
entry of the consent judgments and, therefore, that there accrued 
to Glasser & Glasser, at that time, the right to its full 
contingent fee. 
 
Glasser & Glasser contends, on the other hand, that a 
contingent fee is not "fully earned" until the firm has effected 
a recovery, i.e., payment in the event of settlement, trial, or 
appeal.  We agree with Glasser & Glasser. 
 
We reject Wainger's contention that DR 2-105(C) determines 
when a contingent fee is "fully earned."  The purpose of the Rule 
is to ensure that a contingent fee agreement states clearly how 
the amount of the attorney's fee is to be calculated.  The Rule 
does not deal with the conditions precedent to which an attorney 
and a client may agree regarding when a fee is earned.   
 
We also reject Wainger's contention that the Manville Trust 
fees accrued upon the entry of the consent judgments.  
Traditionally, in personal injury cases, a client employs an 
attorney on a contingent fee basis.  Under such an arrangement, a 
percentage of the amount of money actually recovered is paid to 
the attorney as compensation for services rendered.  If nothing 
(..continued) 
 
 
A contingent fee agreement shall state the method by 
which the fee is to be determined, including the 
percentage or percentages that shall accrue to the 
lawyer in the event of settlement, trial, or appeal, 
expenses to be deducted from the recovery, and whether 
expenses are to be deducted before or after the 
contingent fee is calculated. 
 
 
 
 
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is recovered, however, the attorney receives no fee.  This is 
precisely the arrangement to which Glasser & Glasser and its 
asbestos clients agreed in the present case.  As previously 
noted, the employment contracts provided that, "if no recovery is 
made, [the client] will not be indebted to [Glasser & Glasser] 
for any sums whatsoever as attorney fees."  Thus, the fee is 
contingent upon a recovery of money, and is not, as Wainger 
contends, contingent merely upon a settlement or judgment. 
 
In the present case, Glasser & Glasser had not recovered any 
money for its asbestos clients from the Manville Trust prior to 
Wainger's withdrawal from the firm.  The record shows that 
Glasser & Glasser expended considerable time and effort during 
the two years subsequent to Wainger's withdrawal before effecting 
a recovery.  Consequently, we conclude that the trial court 
properly ruled that the Manville Trust fees and the bonus had not 
been "fully earned" prior to the time of Wainger's withdrawal.
4
 
Accordingly, we will affirm the trial court's judgment. 
 
Affirmed. 
                     
     
4Given our decision that the Manville Trust fees were not 
"fully earned," we need not consider the provision in the 
partnership agreement that limited Wainger's share of the firm's 
profits.