Opinion ID: 2639067
Heading Depth: 1
Heading Rank: 3

Heading: Attorney Discipline for an Unreasonable Fee

Text: ¶ 9 We must observe that we are not deciding a fee dispute. We express no opinion concerning how a district court should resolve a dispute between a client and attorney over the fee contract. Before us is an attorney discipline matter. The Rules Governing Disciplinary Proceedings require that charges be established by clear and convincing evidence. [2] 5 O.S.2001, ch. 1, app. 1-A, Rule 6.12(c), State ex rel. Oklahoma Bar Ass'n v. Eakin, 1995 OK 106, ¶ 16, 914 P.2d 644, 650. The burden of proof in a contract dispute is preponderance of the evidence. [3] Tibbets & Pleasant v. Martin, 1925 OK 142, ¶ 5, 233 P. 698, 699. ¶ 10 Contingent fee contracts have a long history of acceptance in this country. Such contracts may be the only way some litigants can secure legal services. But the right to contract for a contingent fee has never been thought to be unrestrained. Abel v. Tisdale, 1980 OK 161, ¶ 16, 619 P.2d 608, 611. For example, this Court has held that the trial court may consider factors other than the provisions of a contingent fee contract when it is executed by a parent on behalf of a minor. Sneed v. Sneed, 1984 OK 22, 681 P.2d 754. ¶ 11 The eight factors listed in Rule 1.5(a), are analogous to the factors listed in State ex rel. Burk v. City of Oklahoma City, 1979 OK 115, 598 P.2d 659, where courts were instructed on the method for awarding attorney fees at the conclusion of a case and against an opponent. That case involved setting criteria for a reasonable attorney's fee in the absence of a contract or statute fixing the amount. Oliver's Sports Center, Inc. v. National Standard Ins. Co., 1980 OK 120, ¶ 7, 615 P.2d 291, 294. The Oliver's Sports Center case also involved setting a fee against an opponent. Those cases are not particularly helpful in deciding the reasonableness of a fee contract voluntarily entered into between an attorney and client. ¶ 12 In considering the facts before this Court in this bar matter, we hold that the Complainant has failed to meet its burden of proving by clear and convincing evidence that the Respondent has charged an unreasonable fee pursuant to Rule 1.5(a). The Respondent gave the client a choice between an hourly fee and a contingent fee. No evidence has been presented that shows impropriety involved in the execution of the contract between the Respondent and Hepler. The evidence shows that when the probate took less time and did not involve the anticipated will contest, the client became dissatisfied with the bargain she had made. Whether she has legal grounds to amend the contract in a civil action is not before this Court. We reject the proposed hindsight test of the Bar Association where a lawyer has lawfully contracted for a percentage of a client's recovery, and reject the Complainant's recommendation of discipline for the Respondent. COMPLAINT DISMISSED ON THE MERITS. CONCUR: WATT, C.J., OPALA, V.C.J., LAVENDER, HARGRAVE, WINCHESTER, EDMONDSON, JJ. CONCURS IN PART; DISSENTS IN PART: HODGES, J. DISSENT: KAUGER (joins BOUDREAU, J.), BOUDREAU, JJ. OPALA, V.C.J., concurring. ¶ 1 I concur in the court's pronouncement but write separately to emphasize a line of demarcation between those lawyer-fee disputes that may constitute a breach of professional discipline and those that present no more than a civil contest. Although the Oklahoma Rules of Professional Conduct [1] are designed to generate fairness in lawyer/client relations, a fee dispute is not a ground for imposition of professional discipline absent some proof of at least one element of culpability associated with the fee's exaction. Recognized elements of disciplinary taint include: a facially egregious or unreasonable amount, the fee's extortionate origin, deceit, illegality, concealment, unconscionability and fraud. [2] The provisions of Rule 1.5(a)(1-8), Rules of Professional Conduct, [3] create an elastic standard (with a non-exhaustive list of factors) for assessing the reasonableness of a fee amount. [4] ¶ 2 The contingency fee agreement here in contest, which was entered into upon Mrs. Hepler's informed acquiescence, does not without more present a ground for the Bar's assertion of disciplinary cognizance. At the moment of its formation the agreement was neither invalid nor facially tainted by some element of ethical infirmity. [5] Moreover, the Bar's evidence is utterly devoid of proof showing illegality, deceit, concealment, extortion or fraud practiced to induce the client's entry into an unconscionable obligation. In short, the client's sole avenue of legal relief is afforded her by the civil litigation process. HODGES, J., concurring in part; dissenting in part. ¶ 1 I concur in the refusal to impose discipline on this lawyer. I must dissent, however, to this Court's failure to articulate a coherent rule to guide lawyers concerning contingent fees in probate matters. As both the majority and the dissenting opinions make some excellent points which are not mutually exclusive, I believe that there is middle ground on which to rest the disposition of this matter. ¶ 2 The problem with a contingency fee in this probate proceeding is that there are two things going on. First, the lawyer is to perform tasks for the personal representative. Second, the lawyer may have to defend the will on behalf of the personal representative. The contingency contract in this matter treated both things as one. The rule should be, as the dissent advocates, that the contingency fee agreement may apply only to the contingency of a will contest, not to the probate itself. ¶ 3 I would, however, give this lawyer the benefit of the doubt as to this contract. Southard v. MacDonald, 360 P.2d 940, 944 (Okla.1961), unequivocally rejected the notion that a contingent fee contract was void because it involved a probate proceeding. That action, however, involved the representation of an heir who challenged a will in probate. Thus, I would apply the rule articulated in the dissent prospectively to future Bar disciplinary proceedings in which a lawyer attempts to collect a contingency fee for efforts in merely performing tasks for the personal representative. BOUDREAU, J., with whom KAUGER, J., joins, dissenting. ¶ 1 Respondent structured the contingency fee agreement with his client in a manner that allowed respondent to recover a large fee in connection with an inheritance which passed by law and without a will contest. In my view, the agreement, which allowed respondent to recover a contingency fee in a probate proceeding absent an actual challenge to the will, violated Rule 1.5(a) of the Oklahoma Rules of Professional Conduct (ORPC), 5 O.S.2001, Ch. 1, App. 3-A, which mandates that a lawyer's fee be reasonable. The fee agreement was unreasonable on its face because it allowed respondent to collect a large fee for efforts not related to the defense of his client's testate share of the estate's assets but rather for routine probate services. ¶ 2 Peggy Hepler employed respondent to represent her as both the personal representative of the estate of Dewey Lawrence Hughes and as the beneficiary of that estate. Respondent and Hepler initially believed a will contest was probable. Respondent and Hepler entered into a contingency fee agreement in which Hepler agreed to pay respondent one third of the gross estate upon the finalization of the probate of the will. The agreement also provided that Hepler would pay respondent forty percent of the gross estate in the event of a challenge to her testate share of the estate's assets. No challenge materialized and Hepler received her inheritance, without incident, under the will. Hepler paid Respondent $108,199.85, a third of the value of the liquid assets she inherited and respondent currently maintains an attorney lien claim against the unliquidated real property inherited by Hepler. If respondent is successful in maintaining his attorney lien claim to the real property, he will receive approximately $150,000 for his services to Hepler. ¶ 3 It is clear that contingency fee contracts may be utilized in probate proceedings. See Southard v. MacDonald, 1961 OK 72, 360 P.2d 940, 944 (while the statute appears to limit contingency fees to two types of cases, those arising ex contractu and ex delicto, the court refused to find such a contract void because it involved a probate proceeding). Nevertheless, contracts for contingent fees, generally having a greater potential for overreaching of clients than hourly fees, must be closely scrutinized by the court in furtherance of its duty to safeguard the interests of the public and maintain the integrity of the legal profession. See Committee on Legal Ethics v. Tatterson, 177 W.Va. 356, 352 S.E.2d 107, 114 (1986). Our duty to scrutinize contingency fee contracts applies to their use in probate cases. ¶ 4 An analysis of a contingency fee agreement between an attorney and his client must begin with the general rule that an attorney's fee be reasonable. Rule 1.5(a), ORPC. It has been long established that contingency fee agreements are subject to this reasonableness standard. Amount of Fee, ABA/BNA Lawyers' Manual on Professional Conduct, 41:901 (1994 Supp.). ¶ 5 A contingent fee is to be collected only if an attorney successfully champions the legal rights and claims of his client, with the result that the client is compensated through a settlement with, or judgment against, those who denied his claims. In re Gerard, 132 Ill.2d 507, 139 Ill.Dec. 495, 548 N.E.2d 1051, 1056 (1989). See also Pocius v. Halvorsen, 30 Ill.2d 73, 195 N.E.2d 137, 139 (1963)(an attorney's collection of a contingent fee depends upon the success or failure to enforce a supposed right). In this case, respondent did not successfully champion or enforce the legal rights of his client. It is undisputed that Hepler, as the beneficiary under the will, was entitled to the inheritance by operation of law. Respondent contributed nothing to establish or augment Hepler's recovery. His efforts, if any, were unrelated to the decision of the relatives not to contest the will. [1] He sat back, waited and stressed over an expected claim, hoping that the will contest would never arise. ¶ 6 This contingency fee agreement which allowed respondent to recover in excess of a $150,000 for routine probate services, which the court valued at $13,000, is not a reasonable one. It is not unreasonable simply because it allowed respondent to receive a lot of money for a little work. The mere fact that a case involved less difficulty in work than was believed necessary at the outset will not render the fee unreasonable or unfair. See Fletcher v. Fletcher, 227 Ill.App.3d 194, 169 Ill.Dec. 211, 591 N.E.2d 91, 95 (1992). It is unreasonable because respondent's one third percentage was not conditioned upon an actual challenge to the will and accordingly allowed respondent to collect a large fee for efforts not related to the defense of his client's testate share of the estate's assets but rather for routine probate services. ¶ 7 In my view, respondent certainly could have structured the contingency fee agreement to comply with Rule 1.5(a)'s requirement of reasonableness. The agreement simply needed to provide that his client was obligated to pay him the percentage fee in the event he successfully defended an actual challenge to the will pressed by one of the heirs at law. The agreement should have stated that if the client was merely provided with her already vested testate share of the assets without a challenge, the client should have been obligated to pay an hourly rate. [2] By setting an actual challenge to the will as a condition precedent to the effectiveness of the contingency fee agreement, respondent would have eliminated the possibility that he would recover a substantial fee without doing anything to establish or augment his client's recovery. ¶ 8 In summary, when a client retains an attorney to both represent the client as personal representative and to protect the client's testate or intestate share of the estate's assets, a contingency fee agreement should be allowed only when there is an actual challenge to the client's share of the estate's assets. Without a challenge, the attorney's services amount to nothing more than representing the client in the administration of the estate. In my view, a contingency fee agreement, such as this one, which allows an attorney to recover a substantial share of the estate's assets without an actual challenge violates Rule 1.5(a) on its face. By sanctioning such an agreement, this Court invites attorneys to enter into contingency fee agreements which allow them the possibility of recovering a significant portion of their client's estate assets without providing the client with services that establish or augment their recovery. ¶ 9 I am also of the view that it could have been determined that the contingency fee agreement was unreasonable based on the circumstances of the case at the time the contract was made. [3] Accordingly, I would a) administer a public reprimand to respondent, b) order that he pay the costs of this proceeding not later than 30 days after this Court's opinion becomes final, c) order respondent to make restitution to Peggy Hepler of all amounts he received beyond the probate court ordered attorney fees within 30 days of this Court's opinion becoming final, and d) order respondent to release his attorney's lien on Peggy Hepler's real property within 30 days of this Court's opinion becoming final.