Court Opinion

ID: 9854496
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:08:24.896489+00
Date Added: 2024-06-11T09:23:07.027481
License: Public Domain

Hamilton, J.
(dissenting)—I agree with the majority that respondent performed extensive and valuable legal services for appellants, and that he is entitled to compensation for such services. Unfortunately, however, I cannot agree with the majority view that the instructional error— which the majority concede—was nonprejudicial to appellants.
At the outset, it is necessary to bear in mind that respondent pursued his cause of action upon two distinct and alternative theories—(1) that he was entitled to stated *496sums or percentages under the terms of two contingent fee contracts, and/or (2) that he was entitled to the reasonable value of his services. The amount or amounts which respondent would be entitled to recover could easily vary substantially depending upon the theory adopted by the jury.
The jury accepted the first theory, found the existence of the asserted contingent fee contracts, and awarded compensation accordingly. It reached this result, however, under instructions which misplaced the burden of proof with respect to factors which, under the circumstances of this case, the law and public policy require be established by respondent if he would sustain the asserted fee contracts. Furthermore, the jury was not advised in any fashion by the instructions it received as to the fiduciary nature of an attorney-client relationship and the bearing such a characteristic of the relationship between the parties had upon respondent’s first theory.
As the majority correctly point out, the pertinent rule as to the burden of proof in an action to establish and enforce a fee contract entered into after the attorney-client relationship has come into existence is set forth in Albert v. Munter, 136 Wash. 164, 239 Pac. 210 (1925). This court there stated, at 175:
Nevertheless it is true that, even in a jurisdiction where attorneys and parties are authorized by statute to make contracts for compensation of the attorneys during the existence of the relation of attorney and client, the contract may be considered void, or voidable, until it is shown by the attorney that the contract with his client was fair and reasonable, free from undue influence, and made after a fair and full disclosure of the facts upon which it is predicated. (Italics mine.)
That the rule enunciated in the Albert case, is one of almost universal recognition can be affirmed by a reference to the following authorities: Rupp v. Cool, 147 Colo. 18, 362 P.2d 396 (1961); Bryant v. Hand, 158 Colo. 56, 404 P.2d 521 (1965); Lawrence v. Tschirgi, 244 Iowa 386, 57 N.W.2d 46 (1953); Coleman v. Sisson, 71 Mont. 435, 230 Pac. 582 *497(1924), as reaffirmed in Daniels v. Paddock, 145 Mont. 207, 399 P.2d 740 (1965); Morton v. Forsee, 249 Mo. 409, 155 S.W. 765 (1913), as recognized in Fein v. Schwartz, 404 S.W.2d 210 (Mo. App. 1966); and In re Schanzer’s Estate, 7 App. Div. 2d 275, 182 N.Y.S.2d 475, aff’d 8 N.Y.2d 972, 204 N.Y.S.2d 349, 169 N.E.2d 11 (1959, 1960). And for earlier cases and pertinent discussion see Annots., Ann. Cas. 1917A, 531 (1917) and 19 A.L.R. 847 (1922); 7 Am. Jur. 2d Attorneys at Law § 267 (1963); 7 C.J.S. Attorney and Client 204a (2) (1937); 2 E. Thornton, Attorneys at Law §§ 428-32 and 532 (1914); E. Weeks, Attorneys at Law § 346 (2d ed. 1892).
Without going into a detailed analysis of the foregoing authorities, a succinct summary of the applicable rule—for comparison with the rule of the Albert case, supra—can be found in Rupp v. Cool, supra, where the Supreme Court of Colorado states, at 21:
Once the confidential relationship of attorney and client exists, the law governing contracts entered into between them is very different. The test applied to such contracts when the attorney seeks to enforce the same is well stated in 7 C.J.S., Attorney and Client, §204 (2):
“Where after the relationship has been established, an attorney and client enter into an agreement in reference to the attorney’s compensation, * * * the burden is on him to prove that the agreement was fairly and openly made, was supported by an adequate consideration, and that he gave the client full knowledge of the facts and of his legal rights, when he entered into the agreement, and that the services to be performed were reasonably worth the amount stated in the agreement; i't ^ Hi »
Or, in Fein v. Schwartz, supra, where the Missouri court noted, at 223:
Directing our attention to the contention of appellant that respondents failed to sustain the burden in the respects complained of, we agree with their understanding of the law that where a contract for compensation is executed by an attorney and his client after the establishment of the fiduciary relation, the burden is on the attorney to show that the transaction was fair, that the *498compensation provided for did not exceed a fair and reasonable remuneration for the services rendered or to be rendered, that the contract was free from all fraud and undue influence and that it was entered into by the client freely and with a full understanding as to her rights.
In developing and enunciating the rules reflected in the foregoing quotations, the courts and authorities have, with considerable uniformity, pointed to such considerations as the highly confidential and fiduciary relation existing between attorney and client once the relationship has been established; the potential dominance extant by virtue of the superior legal training, knowledge and experience of the attorney as opposed to that of the ordinary client; the opportunity, if not the temptation, to overreach or obtain undue advantage which is inherent in a relationship involving such a strong degree of trust and confidence; the ethics, the dignity, and the integrity intrinsic in and essential to the legal profession and continued public reliance thereon; the obligation and responsibility of the attorney to fully, fairly, and to the best of his ability advise his client in all matters pertaining to the business, transaction, employment or fees involved; and the maintenance and perpetuation of standards which will prevent fee negotiations—particularly those arising during the attorney-client relationship—from entering into the arena or embracing the customs of the common market place.
In fact, some authorities have found the array of public policy considerations so formidable as to cast a presumption of fraud or undue influence upon all contracts for compensation negotiated between attorney and client during the course of the relationship, which, they hold can only be overcome by the production of clear and most satisfactory proof. See Annots., Ann. Cas. 1917A, 531 and 19 A.L.R. 487, supra. Other authorities have suggested that the burden resting upon the attorney of establishing the fidelities of the fee transaction should be extended to agreements for compensation negotiated before the actual employment has taken place, arguing that no sound reason *499exists for any distinction between initial and later fee discussions. 2 E. Thornton, Attorneys at Law, § 432 (1914).
Against this background, then, and in keeping with the rule laid down in the Albert case, supra, it seems to me appellants were entitled as a matter of law to have the jury instructed that respondent had the burden of establishing by a preponderance of the evidence that the asserted contingent fee contracts were (1) fair and reasonable, (2) free from undue influence, (3) entered into after a fair and full disclosure of all pertinent matters, and (4) fully understood and comprehended by appellants.
Instead, the jury, by instructions Nos. 4 and 5, were instructed:
For the plaintiff to recover on an express contract for legal services performed by the plaintiff on behalf of the defendant, the plaintiff has the burden of proving, by a fair preponderance of the evidence:
1. That the parties had a meeting of the minds resulting in a contract between them as to
(a) the work to be done by the plaintiff, and
(b) the compensation to be paid, and
2. That the agreement was fair and reasonable. (Instruction No. 4.)
If you find that:
1. Due to the defendant’s mental condition or the relationship of trust and confidence between the attorney and client, the defendant was acting under duress, undue influence or coercion, or
2. That the plaintiff failed to fully and fairly apprise the defendant as to his legal and economic position, respecting a particular contract for legal services, then such express contract cannot be enforced and you will not bring in a verdict based on such an agreement.
The defendant has the burden of proving the foregoing by a fair preponderance of the evidence. The defendant likewise has the burden of proving payment by a fair preponderance of the evidence. (Italics mine.) (Instruction No. 5.)'
Unmistakably, these instructions misplaced the burden of prpof with respect to the presence or absence of .the. ele-*500merits of undue influence and full disclosure. Furthermore, they were in the nature of formula instructions, which, when erroneous, have been condemned as prejudicial by this court. Donner v. Donner, 46 Wn.2d 130, 278 P.2d 780 (1955); See v. Willett, 61 Wn.2d 681, 379 P.2d 915 (1963).
Proper exceptions were taken by appellants to these instructions, and in lieu thereof appellants submitted a series of proposed instructions, the gist of which is found in proposed instruction No. 3, which reads:
The relationship of attorney and client is one of the strongest fiduciary relationships known to law and has always been regarded as one of special trust and confidence. The law, therefore, requires that all dealings between the attorney and his client shall be characterized by the utmost fairness and good faith and it scrutinizes with great closeness all transactions between them. A contract for compensation of the attorney made during the existence of the relationship of attorney and client may be considered void or voidable and the attorney has the burden of proving that the contract with his client was fair and reasonable and that he used no undue influence and the compensation contract was made after the attorney made a fair and full disclosure of the facts upon which it is predicated, and that it was entered into by the client freely and with a full understanding as to his rights.
Aside from a slightly argumentative tinge, the instruction otherwise appears to be squarely in keeping with the rule of the Albert case, supra.
The trial court not only rejected all of appellants’ proffered instructions, embracing as they did appellants’ underlying theory of the case as it pertained to respondent’s contract theory, but the trial court also failed to inform the jury by any instruction that the parties at the time of the asserted fee negotiations stood in any form of a confidential or fiduciary relation, or to define such a relationship to the jury, thereby leaving the jury free to place its own interpretation on the “relationship of trust and confidence” referred to in instruction No. 5.
Thus, it seems to me, by virtue of misdirection and non-direction, the jury inescapably entered upon its delibera*501tions with the conception that the parties virtually stood on an equal footing during the course of the pertinent fee negotiations, and the existence or nonexistence of the asserted contracts was to be measured by the same standards as be applicable to the ordinary garden variety contract. This, it seems to me, was prejudicial to appellants, for, whether appellants be wise or foolish, educated or uneducated, provident or improvident, they were entitled to have the jury properly instructed, particularly as related to their theory of the case. Certainly, it requires no citation of authority to support the proposition that a failure to properly submit a litigant’s theory of the case to the jury constitutes prejudicial error.
The fact that the jury found against appellants upon the elements of undue influence and full disclosure does not necessarily mean, as the majority would have it, that the jury would have found in favor of respondent on these issues had it been correctly instructed as to respondent’s burden of proof in respect thereto. At best we can only speculate as to the jury’s findings had it been properly instructed. Hence, the most that can be fairly said, without substituting our deliberations for those of the jury, is that the jury more probably found that the appellants failed to carry the burden of proof which the instructions incorrectly placed upon them. This could likewise have been its reaction had respondent been impressed with the burden of proof. If this be correct, and the jury sustained the fee contracts upon an incorrect basis, then appellants were also prejudiced in that the jury could not and did not reach nor could it consider respondent’s alternative theory of quantum meruit, which, had the jury done so, might well have produced a lesser verdict.
Under these circumstances, and as unfortunate and unhappy as it may be to remand this long and intensely contested litigation for retrial, it seems to me there can be no other result consistent with retaining and maintaining the high standards the law and public policy place upon the legal profession in fee negotiations.
*502I would conclude by stating that this dissent intends no imputation of unprofessional conduct on the part of respondent, nor does it arise out of sympathy for any other party. It rests solely upon the ground that instructional error was committed, which I cannot conscientiously view as harmless.
Bradford, J. Pro Tern., concurs with Hamilton, J.
Hill, J. (concurring)—For the reasons epitomized in the third paragraph of the dissent, I concur therein.
December 31,1968. Petition for rehearing denied.