Court Opinion

ID: 9690315
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:04:25.369965+00
Date Added: 2024-06-11T18:18:55.215267
License: Public Domain

SHIRLEY S. ABRAHAMSON, C.J.
¶ 61. (concurring in part, dissenting in part). I agree with the majority on all issues (and join the majority opinion on all issues) except one. I would hold, as did the circuit court, that DeWitt was not entitled to charge interest on Galaxy's unpaid bills retroactively to January 1, 1997. I conclude that the retainer fee agreement permits DeWitt to charge interest only from November 27, 1997, the date that DeWitt notified Galaxy that it was exercising its contractual right to charge interest.
¶ 62. The court of appeals wrote that "[i]t is undisputed that the terms of the retainer letter... specified that interest would accrue if payment was not *604received within twenty days of receipt [of the monthly statements]."1 But the meaning of the words of the retainer letter is very much in dispute.
¶ 63. The retainer letter states, "We reserve the right to charge interest at the rate of 18% per annum (l1/2% per month) on all statements not paid within 20 days after their date" (emphasis added). Instead of giving a specific date from which interest would begin accruing, the retainer letter merely empowers DeWitt to begin charging interest at some future date to be determined. DeWitt sent monthly bills to Galaxy. None of these monthly bills charged interest or stated that interest was or would be charged, although payments were in arrears.
¶ 64. DeWitt announced to Galaxy its intention to charge interest in a letter dated November 24, 1997. Interest would be charged if payment in full were not received by December 1, 1997. The client made partial payment, and DeWitt responded to the partial payment by a letter dated December 8, 1997, in which it demanded payment of interest; a schedule attached to the letter calculated interest retroactively from January 1, 1997. This attached schedule reflected DeWitt's decision to seek collection of interest retroactively from January 1, 1997, an arbitrarily selected date unrelated to the retainer or to dealings between lawyer and client.
¶ 65. At oral argument, counsel for DeWitt explained that the provision in the retainer letter contract meant that interest would automatically accrue from the time payment was due, and that DeWitt reserved *605the right to waive that interest. But reserving the right to charge interest is not the same as reserving the right to waive interest that is automatically imposed. If DeWitt wanted to reserve the right to waive interest that was automatically imposed, it should have stated so clearly in the retainer letter.
¶ 66. At best the retainer letter is ambiguous about interest. As a general rule, contractual ambiguities are construed against the drafter.2 This rule of interpretation is especially appropriate in an arrangement for legal fees because the rules of professional conduct place an affirmative duty on an attorney to *606communicate to the client the basis for any fees before or within a reasonable time after commencing the representation.3 The majority opinion, condoning DeWitt's demand for retroactive interest, is not in keeping with either the spirit or the letter of the rules designed to ensure clear communication between an attorney and client regarding the fees.4
¶ 67. The majority opinion relies on Estreen v. Bluhm5 and other cases for the proposition that the interest due to DeWitt should run from the time the liquidated amount was due.6 However, neither Estreen nor the other cases cited involve a contract that includes a "reserve the right to charge interest" provision or a dispute over attorney's fees. Estreen and the other cases therefore add little, if anything, to the analysis of the retainer letter in the present case. The majority opinion's application of the "general rule of Estreen"7 to this specialized contract provision and attorney-client fee agreements oversimplifies the matter at hand.
*607¶ 68. In short, clients should pay their bills for legal services timely. Attorneys should be able to collect their fees and interest (if interest is part of the agreement). DeWitt reserved the right to charge interest and should be able to exercise that right, but not retroactively. A client should get notice of the attorney's exercise of the contract right to charge interest; a client should not be placed at the mercy of an attorney's decision to seek interest retroactively with a date arbitrarily selected by the attorney.
¶ 69. For the reasons set forth, I write separately on this issue.

 DeWitt Ross & Stevens, S.C. v. Galaxy Gaming & Racing Ltd. P'ship, 2003 WI App 190, ¶ 48, 267 Wis.2d 233, 670 N.W.2d 74.

 Estreen v. Bluhm, 79 Wis. 2d 142, 155, 255 N.W.2d 473 (1977) (citing Moran v. Shern, 60 Wis. 2d 39, 49, 208 N.W.2d 348 (1973)). See also Dieter v. Chrysler Corp., 2000 WI 45, ¶ 15, 234 Wis. 2d 670, 610 N.W.2d 832.
Based on this general rule, the Restatement (Third) of the Law Governing Lawyers states the rale of interpretation of attorney-client fee contracts as follows: "[C]ontracts between clients and lawyers are to be construed from the standpoint of a reasonable person in the client's circumstances. The lawyer thus hears the burden of ensuring that the contract states any terms diverging from a reasonable client's expectations." Restatement (Third) of the Law Governing Lawyers § 18 cmt. h, at 159 (1998).
See also Beatty v. NP Corp., 581 N.E.2d 1311, 1315 (Mass. App. Ct. 1991):
As a general proposition, the meaning of a written document, if placed in doubt, is construed against the party that wrote it... and the principle surely counts double when the drafter is a lawyer writing on his or her own account to a client. In setting fees, lawyers "are fiduciaries who owe their clients greater duties than are owed under the general law of contracts." Restatement (Third) of the Law Governing Lawyers § 46, comment b (Tent. Draft No. 4, 1991).

 See SCR 20:1.5(b) ("When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.").
See ABA Standing Comm, on Ethics and Profl Responsibility, Formal Op. 93-379 (1993) ("At the outset of the representation the lawyer should make disclosure of the basis for the fee and any other charges to the client. ... Initial disclosure of the basis for the fee arrangement fosters communication that will promote the attorney-client relationship.").

 The issues of written fee agreements and settling fee disputes have been before the court in a rules petition and probably will come before the court again in the report of the Ethics 2000 Committee recommending changes in the rules.

 Estreen v. Bluhm, 79 Wis. 2d 142, 255 N.W.2d 473 (1977).

 Majority op., ¶¶ 50-51.

 Id., ¶ 51.