Court Opinion

ID: 8247407
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:40:46.798448+00
Date Added: 2024-06-11T16:42:49.162095
License: Public Domain

STRAS, Justice
(concurring).
I agree with the court that the Stowman Law Firm is not entitled to recover a fee in this case. In contrast to the court, however, I would apply ordinary contract principles, not a good-cause standard, to reach this conclusion.
The court and I part company on the need to resolve the question of whether to extend Lawler v. Dunn, 145 Minn. 281, 176 N.W. 989 (1920), and Burns v. Stewart, 290 Minn. 289, 188 N.W.2d 760 (Minn.1971), to allow a law firm to recover a portion of a contingency fee when it has withdrawn voluntarily. The court’s theory seems to be that the retainer agreement does not address the precise circumstance presented by this case: a voluntary withdrawal caused by disagreement about the settlement value of the client’s action. In my view, the court’s reading of the agreement is too narrow.
The first paragraph of the retainer agreement states that the client retains Stowman “in the prosecution and recovery of my claim and cause of action.... ” The second paragraph says that the client “agree[s] to pay them for their services a sum equal to thirty-three and one-third (33 1/3%) percent of the gross amount recovered.” (emphases added). The second paragraph makes clear that the firm receives fees for its “services” only if the “recovery” is by “them,” the firm’s attorneys. Among other things, the “amount recovered” refers back to the retention of Stowman for “recovery of [the] claim.” Such an assumption is also built into the third paragraph: “[i]f there is no recovery by either settlement or verdict, I shall not be indebted to said attorneys for services rendered, and there shall be no attorney’s fees paid.” Again, the reference to “recovery” refers to recovery by the firm’s attorneys.
The sixth paragraph covers how the firm is to handle funds from a settlement or judgment. It states that “from the proceeds, if any, coming into the possession of the [attorneys], by way of settlement or judgment, the attorneys are authorized to deduct their attorney’s fees and costs of litigation not previously reimbursed by” the client. In other words, the retainer agreement assumes what is typical: the law firm represents the client to the point of settlement or judgment, funds recovered go to the law firm, and the law firm then disburses the funds — minus its one-third fee and expenses — to the client.
The seventh and eighth paragraphs not only reflect this understanding, they demonstrate that the parties expressly contemplated a disagreement over settlement valuation and the possibility of a voluntary withdrawal. The seventh paragraph allows Stowman to withdraw after reasonable investigation if the firm determines *768“that it is not feasible to prosecute such claim.” The eighth paragraph makes clear that “[n]o settlement of this claim may be made without first securing the consent of’ the client. Neither paragraph includes any provision for Stowman to receive a fee if it voluntarily withdraws before settlement or judgment. Both paragraphs, read together with the remainder of the retainer agreement, imply exactly the opposite: if there is no recovery by Stowman, Stow-man receives- no fee. This is how the typical contingency-fee agreement works.1
The final paragraph, entitled “Other,” contains blank lines for any special understandings between attorney and client. The “Other” paragraph is blank. At the bottom of the form, Jeffrey Stowman “accept[ed] eniployment on the above terms on behalf of Stowman Law Office.”
On its face, the retainer agreement is complete: there are, no missing, material terms. The agreement lays out precisely when and how Stowman receives a fee. It even covers the circumstances, akin to the situation here, when the client refuses to settle or the firm concludes that it is not “feasible” to prosecute the claim. The retainer agreement thus presents a garden-variety task of contractual interpretation: we must ascertain the intent of the parties through the language of their written contract. See Savela v. City of Duluth, 806 N.W.2d 793, 796 (Minn.2011); see also Doming v. Ind. Sch. Dist. No. 9, 207 Minn. 292, 298, 291 N.W. 613, 616 (1940) (ascertaining intent is the “cardinal rule” in the interpretation of contracts). The retainer agreement, like most contracts, does not explicitly address every possible contingency. But it is sufficiently clear to ascertain intent: Stowman is not entitled to a fee when it withdraws voluntarily before settlement or judgment.
The court apparently disagrees, presenting its holding as applicable when an “attorney’s recovery in the' event of withdrawal for good cause is not ... addressed in the contract.” The court does not explain why the retainer agreement in this case is incomplete, so it never goes the extra step of squaring its interpretation with other black-letter principles of contract interpretation, Those principles, once applied, also suggest that Stowman is not entitled to a fee.
First, we must read and interpret contracts, like statutes, as a whole, not. as separate isolated provisions. See Halla Nursery, Inc. v. City of Chanhassen, 781 N.W.2d 880, 884-85 (Minn.2010). In addition to the other provisions discussed above, the fourth paragraph of the retainer agreement says that, in the event Stow-man recovers nothing for the client, the client musí) still pay costs. Specifically, the fourth paragraph states that “[ajctual costs, if any, advanced by [Stowman] ... will be paid by the undersigned regardless of the outcome.” (Emphasis added.) Sig*769nificantly, there is no analogous provision regarding fees accompanying the term in the seventh paragraph allowing Stowman to withdraw voluntarily, which strongly suggests that Stowman would be entitled only to costs, if anything, from the client in the event of a voluntary withdrawal.
Second, even if the retainer agreement were ambiguous regarding its application to this situation, “it is axiomatic that the contract will be construed against the drafter.” Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn.1979). Here, Stowman drafted the contract.
Third, any ambiguity in a contract may be clarified by reference to parol evidence. Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 832 (Minn.2012); Betlach v. Wayzata Condo., 281 N.W.2d 328, 330 (Minn.1979) (“[A]ll evidence offered -to clarify or explain ambiguous terms ... should be admitted, as long as it is not for the purpose of varying terms whose meaning is plain.”). Here, the communications between Stowman and the client included a statement, once found on Stowman’s website, that “[t]o give the best possible service, we do NOT charge a fee unless we recover money for you, our client.” (Emphasis added.) If there were any doubt about whether Stowman was entitled to a fee in the situation presented here, this statement indicates it was not.
Finally, as the court notes, this is not an ordinary commercial contract;- it is an agreement between an attorney and a client. I understand the point made by the court that different concerns govern attorney-client relationships. However, I believe that our obligation to regulate the practice of law, along with attorneys’ ethical obligations toward their clients, compels a rule that is more solicitous of client interests, not less.2
Several provisions of the Minnesota Rules of Professional Conduct support my view. One rule makes clear that the “basis or rate of the fee ... shall be communicated to the client....” Minn. R. Prof. Conduct 1.5(b). In other words, the burden to communicate clearly, in a way that the client can understand,' is on the attorney. The attorney has an even greater responsibility when fees are contingent on the outcome of the matter. Not only must the agreement be in “a writing signed by the client,” it must “state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the' lawyer in the event of settlement, trial or appeal....” Minn. R. Prof. Conduct 1.5(c). If there is ambiguity in the written contingency-fee agreement on when and how to calculate fees, then the attorney has neither clearly “stated the method by which the fee. is to be determined” nor the percentage that “shall accrue.” This failure of communication cuts against the attorney’s right to collect a fee, not against the client.
In this ease, both general principles of contract interpretation and the special concern'we-have shown for clients through our rules should lead us to. interpret .and apply the retainer agreement according to its plain meaning. For these reasons, we need not reach the question of whether the Stowman firm’s withdrawal was not “justifiable,” as the court of appeals decided, or without “good cause,” as the court decides. I would decide the case based on basic principles of contract interpretation, and conclude that, by the terms of the retainer agreement, Stowman is not entitled to a *770fee upon voluntary withdrawal. Accordingly, I respectfully concur only in the result.

. The court asserts that I ignore the possibility that an attorney may be required to withdraw from some cases for ethical reasons, which would require the attorney to either forego a fee or continue to represent a client notwithstanding the duty to withdraw. As to the former possibility, a contingency-feq agreement already accounts for the risk that an attorney will not receive a fee despite doing substantial work on the case. In assessing their risk, attorneys are capable of accounting for the possibility that either they or the client will terminate the representation before the matter is finally resolved. Indeed, contingency-fee agreements already include a “risk premium.” Cf. Gisbrecht v. Barnhart, 535 U.S, 789, 810, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002) (Scalia, J., dissenting) (discussing the idea of a "risk premium” in contingency-fee agreements). Regarding the latter possibility, attorneys must adhere to their ethical obligations, even at some financial cost to themselves, and in interpreting contracts for legal services, we should not assume that attorneys will disregard those obligations.

. These considerations also cause me to question whether the court's rule is consistent with precedent allowing recovery for unjust enrichment only when ■ one party confers a benefit on another party and "retention of the benefit is not legally justifiable.” Caldas, 820 N.W.2d at'838,