Opinion ID: 2636626
Heading Depth: 5
Heading Rank: 2

Heading: The superior court properly interpreted the phrase further substantial litigation to include more than in-court proceedings and filings.

Text: The clients argue the phrase further substantial litigation means only in-court proceedings and filings, such as appearing in trial before a court or jury, but not preparing for or participating in mediation. The trial court interpreted further substantial litigation as meaning additional considerable efforts in carrying on the legal contest. It reasoned that limiting further substantial litigation to in-court proceedings and filings is unrealistic as litigation and court proceedings are more like an iceberg: 90 percent of the activity involved in litigation is not in court, but in preparing the case for the various court filings and proceedings, including trial. In reaching its conclusion, the court considered dictionary definitions for the disputed terms, defining (1) further as additional, (2) to litigate as to carry on a legal contest by judicial process, (3) litigation as the process of carrying on a lawsuit or a legal proceeding of a civil kind, (4) substantial as considerable in quantity; significantly great, and (5) early as near the beginning of a course [of] process; or occurring in a near future. The court applied these definitions to the modified fee agreement: Putting the definitions together, even construing the contractual language against [BPK], a reasonable person would understand that should the firm succeed in obtaining the policy limits without undergoing additional considerable efforts in carrying on the legal contest, the firm will be paid out of pocket expenses and a flat fee of $250,000. And if efforts of the settlement near the beginning of the process of litigation do not succeed and it becomes necessary to engage in additional considerable efforts in carrying on the legal contest, the parties will revert to the previous written agreement. We agree with the court's interpretation and conclude reasonable persons in the clients' circumstances would not have expected further substantial litigation to mean purely in-court proceedings and filings to the exclusion of work done in preparation for mediation or trial. As the superior court noted, we have not articulated standards for interpreting attorney-fee contracts. The Restatement (Third) of the Law Governing Lawyers provides helpful guidance, and we adopt its general rule: A tribunal should construe a contract between client and lawyer as a reasonable person in the circumstances of the client would have construed it. [19] In addition to this principle, attorney-client contracts are to be construed as any other contract, using general rules of contract interpretation. [20] Typically, in resolving disputes concerning the meaning of an agreement, [we] begin[] by `viewing the contract as a whole and the extrinsic evidence surrounding the disputed terms,' in order to determine if those terms are ambiguous  that is, if they are `reasonably subject to differing interpretation,' [21] and if those differing interpretations are both reasonable. [22] If we conclude an ambiguity exists, we resolve that ambiguity by determining the reasonable expectations of the contracting parties in light of `the language of any disputed provisions, other provisions, relevant extrinsic evidence, and case law interpreting similar provisions.' [23] Ambiguities in attorney-client contracts are construed against the attorney. [24] We begin by determining what reasonable persons in the clients' circumstances would have understood further substantial litigation to mean. To do so, we analyze the language of the contract as a whole, [25] turning to non-legal dictionaries to determine the meaning which the recipient of the communication might reasonably have given the disputed terms. [26] The modified fee agreement we must interpret is: We will try to obtain a policy limits settlement of your claims. Should we succeed without requiring further substantial litigation we will be paid 1) our out-of-pocket costs and 2) $250,000. If our efforts at an early settlement do not succeed and it becomes necessary to litigate the matter in a substantive way, we will revert back to our previous written fee agreement and the percentages written there. The clients do not dispute the court's definitions of further or substantial, but they argue that BPK did not engage in further substantial litigation based on the undisputed facts. Thus, the term at the core of this dispute is litigation, which the modified fee agreement does not define. But the clients and BPK refer us to the same definition: A lawsuit. Legal action, including all proceedings therein. Contest in a court of law for the purpose of enforcing a right or seeking a remedy. A judicial contest, a judicial controversy, a suit of law. The superior court defined to litigate as to carry on a legal contest by judicial process, and litigation as the process of carrying on a lawsuit or a legal proceeding of a civil kind. These definitions construe litigation broadly, as encompassing both the in-court and out-of-court aspects of pursuing a lawsuit and providing legal representation. We conclude that reasonable persons in the clients' circumstances  that is, clients with business acumen [27] would understand that litigation includes not only in-court proceedings and filings, but also the acts necessary to carry out a lawsuit or to pursue legal claims. As the superior court explained, [a] case doesn't arrive at the courthouse on the day of trial without substantial preparations. The clients' interpretation of the term litigation as meaning only in-court appearances and filings is not a reasonable construction of the term. [28] We are not persuaded by the clients' argument that the parties agreed the thirty-three percent contingency fee would not apply if the case settled before trial. This argument focuses on the phrase further substantial litigation, without regard to the surrounding provisions. The superior court properly looked to the surrounding contractual provisions, identifying the other relevant terms as further, substantial, and early settlement, and turning to a non-legal dictionary to define those terms.