Opinion ID: 1060409
Heading Depth: 1
Heading Rank: 4

Heading: the common fund doctrine

Text: Before discussing the precise issues presented in this case, it may be helpful to first review the relevant aspects of the common fund doctrine. In the absence of a statute or contract providing for the payment of attorneys' fees, attorneys in Tennessee must generally look only to their own client for their fees. See Remco Equip. Sales, Inc. v. Manz, 952 S.W.2d 437, 439 (Tenn.Ct.App.1997). This principle usually follows even when the work of the attorney proves useful to persons other than the client. See Boston, Bates & Holt v. Tennessee Farmers Mut. Ins. Co., 857 S.W.2d 32, 34-35 (Tenn.1993). However, an exception to this rule arises when the attorney has succeeded in securing, augmenting, or preserving property or a fund of money in which other people are entitled to share in common. Travelers Ins. Co. v. Williams, 541 S.W.2d 587, 589-90 (Tenn.1976). In such a case, the attorney may oblige the beneficiaries of the fund or property to contribute to his or her fee by assessing that fee directly against the fund or property itself. See id. Known as the common fund doctrine, this doctrine is designed to spread attorneys' fees among various beneficiaries to a fund, and it is supported by two primary rationales. First, the doctrine prevents the beneficiaries of legal services from being unjustly enriched by requiring them to pay for those services according to the benefit received. See Pennington v. Divney, 182 Tenn. 207, 211-12, 185 S.W.2d 514, 516 (1945). Second, the doctrine serves to spread the costs of litigation proportionally among all of the beneficiaries so that the plaintiff does not bear the entire burden alone. See Hobson v. First State Bank, 801 S.W.2d 807, 809 (Tenn.Ct.App.1990) (citation omitted). Indeed, in furtherance of this latter rationale, the doctrine may be applied irrespective of whether the other beneficiaries to the common fund actually receive the benefits of the common fund. See id. Because of the rationales supporting the doctrine, courts typically apply it only against the fund's passive beneficiaries, who are typically those beneficiaries not employing separate counsel to represent their own interests. See Travelers Ins. Co., 541 S.W.2d at 590. [4] However, while the hiring of separate counsel can avoid application of the common fund doctrine under most circumstances, a beneficiary who hires separate counsel cannot escape application of the doctrine completely. Plainly stated, unless the separate counsel meaningfully participates in acquiring, preserving, or increasing the common fund, see Montcastle v. Baird, 723 S.W.2d 119, 123 (Tenn.Ct.App.1986), the beneficiary may be obliged to pay fees to the original or lead counsel in addition to those fees payable to the separate counsel. These circumstances can arise when (1) the original or lead counsel was responsible for the lion's share of work in acquiring, preserving, or increasing the common fund, Hobson, 801 S.W.2d at 809; (2) the work of separate counsel inured only to the benefit of a single beneficiary, and not to the fund itself, Gilpin v. Burrage, 188 Tenn. 80, 90, 216 S.W.2d 732, 737 (1948); Merchants & Planters Bank v. Myers, 644 S.W.2d 683, 688 (Tenn.Ct.App.1982); or (3) the separate counsel was hired expressly to advocate interests contrary to those of the common fund. [5] With this general background in mind, therefore, we turn to the two issues presented in this case: (1) whether the common fund doctrine may be applied to the proceeds of a wrongful death action generally; and (2) whether the children in this case, who hired separate counsel to protect their interests, are nevertheless required to pay an equitable share of the appellant's attorneys' fees. [6] Importantly, if the common fund doctrine does not apply here, or if the children are held not to be passive beneficiaries to the action, then the appellant's attorney must seek compensation from his client alone, and he may not recover any additional fees from the children's share of the settlement.