Court Opinion

ID: 9646806
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:11:41.526086+00
Date Added: 2024-06-11T14:59:06.727289
License: Public Domain

DISSENTING OPINION
The issue that divides the Board in this case concerns the allegation that Respondent attempted to charge a “clearly excessive fee” in violation of DR2-106(A). Resolution of this issue revolves around the following: (1) the legal significance of the fact that Respondent in this case had performed all that could reasonably be expected of him up until the time he was discharged by his client without cause; (2) an interpretation of the court’s opinion in Kaushiva v. Hutter, 454 A.2d 1373 (D.C.), cert. denied, 464 U.S. 820, 104 S.Ct. 83, 78 L.Ed.2d 93 (1983); and (3) the legal standard in a disciplinary proceeding applicable to establishing that a fee is “clearly” excessive in the context of a contingent fee arrangement and a subsequent settlement offer. All of these key points involve questions of law.
At the outset, the dissenting members of the Board concur in the majority’s view that a client has an absolute right to discharge an attorney at any time, with or without cause. However, where an attorney is discharged without cause, as was the case here,1 the general rule is that the discharged attorney is entitled to an appropriate fee as of the time of discharge.
In this case, Respondent was retained in April 1982 by Ms. Houston in a personal injury case, and he was subsequently discharged by Ms. Houston in August 1982. The “primary reason [for the discharge] was that Mr. Waller [Respondent] was not pursuing a Workers’ Compensation claim.” Hearing Committee Report, p. 3. However, it is undisputed that “the written attorney-client [contingent fee] agreement does not provide for representation of the claim” for Workers’ Compensation; that “neither party discussed Workers’ Compensation” in the initial meeting where Respondent was retained; and that “at the end of such meeting both parties believed the representation was limited to the third party claim” for personal injury. Id. at 8.
Moreover, the Hearing Committee also determined to credit Mr. Waller’s testimony “that he did not believe it to be in Ms. Houston’s interest to pursue a Workers’ Compensation claim ... and advised her against it.” 2 In light of these facts, both *756the majority and dissenting members of the Board agree that Respondent’s fee should be evaluated on the basis that he was discharged without cause.
As set forth in the majority’s report: Respondent claimed at different times that his fee was: (1) $3,500 based on one-third of the [settlement] amount that the third party [insurance] carrier had offered; (2) $3,000 based on a quantum meruit; and (3) one-third of any settlement.
Majority Opinion, p. 750. The Hearing Committee found, and the Board’s majority agrees, that Respondent performed all services that were reasonably expected of him up until the time of his discharge, although such services were “minimal.” Hearing Committee Report, p. 4.
Respondent testified that his claim for one-third of a settlement offer was based on his reading of Kaushiva, where the Court of Appeals ruled:
We hold that an attorney who enters into a contingency fee agreement with his client, substantially performs, and is then prevented by his client from completing performance, is entitled to the full amount in the fee agreement. Only where an attorney renders less than substantial performance will quantum meru-it be the appropriate measure of damages.
454 A.2d at 1374. In Kaushiva, the attorney was retained on September 20 under a contingent fee agreement and was discharged on November 12 without cause. During this interval, the attorney had represented his client in arbitration hearings on three separate days. On the date of discharge, the next step in the arbitration proceeding was the submission of post-hearing briefs on December 14, which the attorney was prevented from doing as a result of the discharge. More than one month after the attorney’s discharge, an arbitration award for a substantial amount was made in favor of the discharged attorney’s client. The Kaushiva court concluded that the discharged attorney had “substantially performed” and was therefore entitled to receive the full amount of the contingent fee, even though he had not prepared or filed the additional briefs required in the arbitration proceeding.
In this case, the majority of the Board acknowledges that “Respondent performed the services he should have [performed] prior to his discharge.” However, the majority characterizes those services as “not substantial,” and on that basis concludes that the claimed fee was “clearly excessive.”
The majority thus interprets Kaushiva as prescribing a test of quantitative sub-stantiality on an absolute scale, and since Respondent’s services prior to discharge were not quantitatively substantial in absolute terms, the majority concludes that he therefore was “not entitled to the one-third contingency fee.” Majority Opinion, p. 751. The majority’s interpretation places a gloss on Kaushiva that is more rigid than is inherent in the more flexible “substantially performed” standard adopted by the court, especially as applied to the facts of this case.
As the majority recognizes, two of the fees that Respondent claimed, both said to be “clearly excessive,” were tied directly to a possible settlement, i.e., the settlement actually offered by the insurance carrier or “any other settlement amount.”3 The initial settlement offer from the insurance carrier was on the table shortly after Respondent’s discharge. Since Respondent had done all he should have done up to the time of his discharge, a claimed fee of one-third of this proffered settlement is not frivolous under Kaushiva. If the case had been settled by his client for the amount then offered within weeks of Respondent’s discharge, Respondent would have “substantially performed” within the meaning of Kaushiva, or at least Respondent could have reasonably so believed. The same would be rue for any other settlement offer made within a reasonable period after Re*757spondent’s discharge and not attributable to substantial services of replacement counsel.
When Respondent and his client entered into a contingent fee arrangement, Respondent was immediately placed in an “at risk” position. He was obligated to pursue his client’s claim, which he did up until the time of discharge, with the risk that the case might require a large amount of effort and could result in no recovery for the client and therefore no fee whatsoever. Conversely, Respondent was clearly entitled to one-third of any settlement accepted by his client at any time after entering into the contingent fee agreement, even if settlement had occurred within days (or even hours) after the contingent fee agreement was made and even if Respondent had then devoted only an hour or so to the case. Such are the inherent risks, and possible rewards, of a contingent fee arrangement.
The majority’s overly mechanical interpretation of Kaushiva, as imposing a quantitative substantiality test, tends to focus attention on the question whether the Respondent was actually entitled to a fee of the claimed amount. A disciplinary proceeding, however, is not the proper forum in which to decide the actual amount of a disputed fee. Rather, the precise question before the Board is whether Respondent’s assertion of entitlement to a one-third fee was so wholly devoid of reason as to make it “clearly excessive” and therefore an ethical violation, i.e., whether he knew, or ought to have known, that the claimed fee was clearly beyond any amount permissible under Kaushiva.
When an attorney with a contingent fee agreement has performed all that could be reasonably expected of him at the time of discharge and thereafter claims one-third of a settlement offer made shortly after his discharge, the dissenting members of the Board believe that Bar Counsel must prove by clear and convincing evidence that the attorney’s claimed fee is clearly without any basis and therefore “clearly excessive.” That Bar Counsel has not done in this case.
The majority’s approach also under-emphasizes the fact that Respondent was clearly entitled to a fee of some amount and that the claimed amount could not be “clearly excessive" except by reference to the permissible amount. Attorneys with contingent fee arrangements typically place a “value” on a case in terms of a prospective settlement offer from the other side. Essentially the Respondent here claimed a fee based on the perceived “value” of the case in light of a settlement offer that was on the table shortly after his discharge.
Perhaps the most troubling aspect of this case is that the settlement offer, on which Respondent based his one-third claim, may have been triggered by conduct that was itself unethical. Respondent contacted the insurance company on August 19 and obtained the settlement offer on September 7, well after his discharge on August 10. He thereby violated DR2-110(B)(4) (failure to withdraw) as the Board unanimously agrees. We have difficulty with the notion that Respondent’s unethical conduct in pursuing the insurance company after his discharge may have contributed to the very settlement offer on which he bases his asserted fee. However, we believe that the issue, properly framed, is whether Bar Counsel has proved by clear and convincing evidence that Respondent knew or should have known that he had no basis for asserting his claim to the one-third fee. It is not clear that Respondent solicited the offer that he obtained from the insurance company, and in any event, he did not pursue the settlement offer or try to persuade Ms. Houston to accept it. The issue is not free from doubt, and therefore, exactly because of those doubts, we conclude. that Bar Counsel has not proved his case by clear and convincing evidence.
The Board’s majority finds support for its position concerning the unreasonableness of Respondent’s claimed fee in Respondent’s testimony to the effect that the claimed “amounts were only a negotiating position.” Majority Op. at p. 751. We disagree. Respondent’s willingness to negotiate, especially when coupled with the fact that his former client was then repre*758sented by competent replacement counsel, is equally consistent with the inference that Respondent was acting in good faith. The evidence may tend to show that Respondent was reasonable and flexible on the amount of his fee.
Accordingly, the evidence in this case is not sufficient to prove that Respondent knew, either actually or impliedly, that he was seeking a “clearly excessive fee” under Kaushiva. We believe that the same conclusion also applies to the other basis on which Respondent requested a fee, i.e., a fee of $3,000 based on quantum meruit. Since Respondent at the same time was asking for $3,500 based on one-third of the initial settlement offer from the insurance carrier, a fee of $3,000 asserted to be on quantum meruit is not, without more, so untenable under Kaushiva as to warrant an inference of bad faith in an ethical context.4
Finally, we believe that the majority has not given due recognition to the inherent uncertainty in ascertaining the dividing line between a disputed fee that raises an ethical question under the Disciplinary Rules and one that should be resolved as a contract matter. Fletcher v. Krise, 120 F.2d 809 (D.C.Cir.) cert. denied, 314 U.S. 608, 62 S.Ct. 88, 86 L.Ed. 489 (1941) (the rule permitting an attorney recovery for the reasonable value of his services is based on quasi-contract); Wisconsin Op. E-82-5 (dispute over amount of fee payable to a discharged attorney with a contingent fee arrangement does not raise an ethical issue); Kentucky Op. E-269 (same); Philadelphia Op. 80-92 (same). When this uncertainty is combined with Board Rule 10.4, requiring alleged disciplinary violations to be established by “clear and convincing evidence,” Bar Counsel necessarily has a difficult burden to carry in proving a “clearly excessive fee” in the context of a contingent fee arrangement and a settlement offer made shortly after the attorney’s discharge without cause. We do not believe that burden has been met here, and accordingly, the dissenting members of the Board recommend that the court should find no violation of DR2-106(A).
If there is no “clearly excessive fee” as required for a violation of DR2-106(A), then the majority’s conclusion that Respondent violated DR9-103(B)(4) (failure to deliver client’s papers) must also fall. An attorney generally has a retaining lien on client’s papers or other property to secure the attorney’s fee for professional services. Respondent in this case was obviously entitled to a fee of some amount, and he was not paid any amount. The majority opinion is predicated on the legal theory that Respondent forfeited his otherwise valid lien by asking for the allegedly “clearly excessive fee.” If the court agrees with the dissent that the record does not sustain a finding of a clearly excessive fee, then there will be no need to consider the majority’s legal theory. Indeed, in the absence of an excessive fee, the majority apparently agrees that Respondent was entitled to assert a retaining lien, especially where, as here, the retained papers were easily replaced and the lien did not unduly obstruct or interfere with replacement counsel’s ability to present the client’s cause. Majority Opinion, pp. 751-52.
If the alleged violations of DR2-106(A) and DR9-103(B)(4) are both eliminated, this case is reduced to a single violation of DR2-110(B)(4) (failure promptly to withdraw), and while a short suspension might possibly be at the outer limits of an appropriate sanction, public censure is the sanction recommended by the undersigned members of the Board.
/s/ J. Randolph Wilson
J. Randolph Wilson
Vice Chair
Mr. Foster and Mr. Carter join in this Dissenting Opinion.
Dated: May 12, 1986.

. The client in this case preferred to have an attorney who would pursue both her workmens compensation claims as well as her tort remedies, as she had every right to. On the other hand, the record shows that Respondent was not hired to pursue the workmens compensation claim and clearly stated that he would not do so when asked. Respondent was equally free to decline employment that he did not care to undertake. Respondent was discharged "without cause” in the sense that his discharge did not come about as a result of any neglect or mistake on his part but simply because the client preferred to have one lawyer who would pursue all of her claims at once.

. Hearing Committee Report, p. 8. Ms. Houston’s primary personal injury claim was complicated by the fact that she was employed by Logan Temporaries in Rosslyn, Virginia and was sent on assignment to the District of Columbia as a personnel consultant to Ziff-Davis Publishing Co., where she suffered personal injuries as a result of slipping on a wet floor in the ladies room. Thus, the personal injury occurred in the District of Columbia, whereas Ms. Houston’s direct employer was located in Virginia. Moreover, as Respondent pointed out to Ms. Houston, any recovery from the insurance carrier in the primary negligence case might be subject to being offset by any payments received from Workers’ Compensation.

. Majority Opinion, p. 750. The third basis on which Respondent claimed a fee of $3,000 was said to be on the basis of quantum meruit. Id.

. As the Hearing Committee noted, Respondent was in error when he referred to $3,500 as being one-third of the settlement, but Respondent was clear he was claiming only one-third of the amount of the settlement. Hearing Committee Report, p. 4.