Opinion ID: 2274583
Heading Depth: 2
Heading Rank: 3

Heading: Basis for Calculating Lilley's Contingent Fee

Text: [¶ 13] The State has advanced several public policy reasons why Lilley's contingent fee pursuant to its attorney lien should be limited to 35% of the interpleader fund instead of 35% of Steamship's jury award plus interest. Although we agree that the basis for Lilley's contingent fee should be 35% of the interpleader fund, we rest our conclusion on other grounds. [¶ 14] The amount of an attorney's contingent fee pursuant to an attorney lien is determined according to the contingent fee agreement. 7 Am.Jur.2d Attorneys at Law § 320 (2007). Unless the contingent fee agreement provides otherwise, an attorney is entitled to receive the specified fee only when and to the extent the client receives payment. Restatement (Third) of The Law Governing Lawyers § 35(2) (2000); see also M. Bar R. 8(e)(4) (2008) (abrogated 2009). [4] In the absence of [a] prior agreement to the contrary, the amount of the client's recovery is [the] computed net of any offset, such as a recovery by an opposing party on a counterclaim. Restatement (Third) of The Law Governing Lawyers § 35 cmt. d; see also Levine v. Bayne, Snell & Krause, Ltd., 40 S.W.3d 92, 94-96 (Tex. 2001) (applying Restatement (Third) of The Law Governing Lawyers § 35 cmt. d); Underwood v. Rich, 48 Ga.App. 550, 173 S.E. 224, 226-27 (1934) (finding that basis for calculating attorney's contingent fee was client's net recovery after any set offs); Wooldridge v. Bradbury, 185 Ky. 587, 215 S.W. 406, 407-08 (1919) (same); Maiullo v. Genematas, 16 Mich.App. 231, 167 N.W.2d 849, 850-51 (1969) (same); Kramer v. Fallert, 628 S.W.2d 671, 674 (Mo.Ct.App.1981) (same); William J. Murphy, Attorney At Law, P.C. v. State, 157 A.D.2d 155, 557 N.Y.S.2d 555, 556 (1990) (same). [¶ 15] In this case, the 2004 Agreement expressly rescinded the 2002 Agreement; therefore, we consider the 2004 Agreement's terms. The 2004 Agreement provided that the contingent fee would be based upon the actual collection of judgment or settlement and paid via direct deduction from funds received in trust. The total jury award was never collected by Steamship or received in trust. The amount in the interpleader fund is the amount that was owed to Steamship after the Bank's foreclosure claims were set off against Steamship's jury award. [¶ 16] The 2004 Agreement also states that the contingent fee would be calculated as 35% to ... Lilley ... for settlement or trial (not to include appeal) of gross recovery. (Emphasis omitted.) Contract language is only ambiguous when it is reasonably susceptible [to] different interpretations. Am. Prot. Ins. Co. v. Acadia Ins. Co., 2003 ME 6, ¶ 11, 814 A.2d 989, 993 (quotation marks omitted). When a contract is unambiguous, we review it de novo and interpret it according to the plain meaning of the language used. See id. (quotation marks omitted). Contrary to Lilley's contentions, this provision is unambiguous and the plain meaning of its language directs that the contingent fee be based on the gross, or total, amount recovered by Lilley and held in trust for the benefit of its client. In this case, the gross amount recovered by Lilley is the amount in the interpleader fund. [¶ 17] According to the 2004 Agreement, Lilley may only base its contingent fee on the total amount that was recovered, actually collected, and received in trust. Nothing in the 2004 Agreement overcomes the presumption that an attorney's contingent fee is based on the amount received for the client after any set offs. See Restatement (Third) of The Law Governing Lawyers § 35(2) & cmt. d; M. Bar R. 8(e)(4). Therefore, Lilley's 35% contingent fee should have been based upon the amount in the interpleader fund. [5] The entry is: Judgment vacated as to the basis for calculating Lilley's contingent fee. In all other respects, the judgment is affirmed. Remanded to the Superior Court for recalculation of Lilley's contingent fee consistent with this opinion. JABAR, J., dissenting. [¶ 18] I respectfully dissent from the Court's conclusion that Lilley's 35% contingent fee should be based upon the amount deposited in the interpleader fund, rather than Steamship's $1,500,000 jury award. The Court's analysis is premised on the fact that Steamship never actually collected the jury award, as only $739,000.38 was deposited into the interpleader fund following a court-ordered set off against the Bank's foreclosure deficiency judgment. The Court acknowledges that the Bank's foreclosure action and Steamship's tort/contract action were not fully consolidated, and that a request for set off was never adequately pleaded. In my view, Lilley's contingent fee should be calculated based upon the amount of Steamship's jury award. [¶ 19] As the Court's opinion recounts, Steamship made numerous attempts to consolidate its tort and contract claims with the Bank's foreclosure deficiency action. Steamship filed a motion to dismiss the Bank's action, asserting that the Bank's claims were compulsory counterclaims that should have been raised in the Bank's answer to Steamship's original complaint. This motion was denied. Next, Steamship alleged its tort and contract claims as counterclaims in the Bank's action. Steamship's claims were dismissed with prejudice. Ultimately, the two cases were consolidated pursuant to M.R. Civ. P. 42(a) for purposes of discovery. In all other respects, the cases proceeded along different tracks. [¶ 20] Nearly a year and a half after summary judgment was entered in favor of the Bank in the foreclosure action, a jury awarded Steamship $1,500,000 in its action against the Bank. This Court affirmed the judgment on the jury verdict. S.S. Navigation Co. v. Camden Nat'l Bank, 2006 ME 11, ¶¶ 7-10, 889 A.2d 1014, 1017-18. Following this decision, Steamship filed a motion to set aside the foreclosure judgment. In its memorandum opposing Steamship's motion, the Bank, for the first time, requested a set off of the foreclosure deficiency judgment against Steamship's jury award. The Bank never actually filed a motion or pleading on the issue. Over Steamship's objection, the trial court granted the Bank's set off request. This Court approved the set off on appeal. Camden Nat'l Bank v. Dunican et al., Mem-07-84 (May 8, 2007). [¶ 21] The Court now acknowledges that the trial court made two mistakes in the handling of this case. First, according to the Court, the record strongly suggests that the Bank's foreclosure action and Steamship's tort/contract action should have been consolidated, and that each side's claims were compulsory counterclaims to the other's primary claims. Supra n. 3. It follows, therefore, that Steamship was improperly denied the opportunity to litigate both matters together. [¶ 22] Second, the trial court granted the Bank's request for a set off. Set off had not been pleaded, as is required by our case law. See FDIC v. Notis, 602 A.2d 1164, 1165-66 (Me.1992). Although the Court's opinion describes our decision to affirm the set off as the product of unusual circumstances, it seems clear to me that the Court believes that the Bank's set off request should never have been granted. [¶ 23] To avoid the legal implications of these mistakes, the Court's opinion creates a hypothetical procedural history. Despite conceding that the Bank's foreclosure action and Steamship's tort/contract action were not fully consolidated, the Court declares that,  functionally, the Bank's deficiency judgment and Steamship's jury award were part of a single recovery. Supra ¶ 12 (emphasis added). Despite acknowledging that a request for a set off must ordinarily be adequately pleaded, the Court chooses to treat the set off as if it had been pleaded as a claim or counterclaim in either the foreclosure action or the tort/contract action. Id. (emphasis added). [¶ 24] The Court then builds its analysis on this fictional foundation. Explaining that $739,000.38, not the full $1,500,000 jury award, was deposited into the interpleader fund, the Court concludes that Steamship never recovered the full amount of the jury award. The Court emphasizes the physical location of the money; however, the only reason that Steamship never collected the total jury award, and that the full $1,500,000 was not deposited into a trust account, was because of the improper court-imposed set off. [¶ 25] Absent a proper set off, the recovery in a contingent fee case should include all cash and credit received by the client. See Restatement (Third) of The Law Governing Lawyers § 35 cmt. d (2000) (stating that a client's recovery for contingent fee purposes includes damages, restitution, back pay, similar equitable payments, and amounts received in settlement); 7A C.J.S. Attorney & Client § 402 (2004) (explaining that the amount actually recovered by a client is the amount allowed by the judgment less the amount of any claim, expense, or offset that may properly be deducted therefrom (emphasis added)). Clearly, Steamship benefited financially from the amount of the jury verdict that was applied to pay off the foreclosure deficiency judgment. Even though Steamship never actually received the money, its debt was significantly reduced, and it was in a much better position to pay other creditors. [6] [¶ 26] I do agree with the Court that Lilley properly established and perfected the attorney lien against the recovery Steamship received from the Bank. Because the set off was improperly granted and because the Bank's foreclosure action and Steamship's tort/contract action were never consolidated, Lilley's contingent fee should be based upon the total $1,500,000 jury award. I would, therefore, affirm the judgment of the Superior Court in all respects.