Is a lawyer that terminates representation under a contingent fee contract over a disagreement with the client regarding the client's refusal to accept a settlement offer entitled to an attorney fee if the case later settles? "No" the Kentucky Supreme Court has answered unanimously in Lofton v. Fairmont Specialty Insurance Managers, No 2010-SC-749 (June 21, 2012).
Denise Maxey hired lawyer Rodger Lofton to represent her in a personal injury and accident case on a contingent fee basis. Maxey was required to cover costs associated with the claim but Lofton's fee was contingent. After Maxey rejected a $25,000 offer to settle her claim at a mediation conference, Lofton withdrew as her counsel, a withdrawal for which he had to obtain permission from the circuit court. Subsequently, Maxey did settle her claim for $25,000. Lofton claimed that he was entitled to an attorney's fee based on at least a quantum meruit basis.
The Kentucky Supreme Court, in an opinion written by Justice Bill Cunningham, ruled unanimously that Lofton was not entitled to any fee. The Court's opinion offers a clear-eyed and straightforward of the attorney-client relationship:
Before accepting a case, an attorney has the opportunity to investigate the value of a claim and determine whether to advocate the cause. This frequently calls for work to be performed before a formal attorney-client relationship is formed. The work often goes uncompensated. For the attorney, time and effort must be spent in evaluating a possible claim. Once that information is gathered, the attorney has the power to proceed with the case or part ways with the client, fully aware of the risks involved in his representation in a claim or suit. But once the contract is signed, the client is vested with the power to determine the ends of the representation and claim.
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There are bound to be disagreements between attorneys and clients during the relationship, but such a conflict does not merit termination of the entire relationship. Attorneys and clients do not stand on equal ground in making decisions about the ends or goals of such a relationship. A disagrement with a client over whether to accept a settlement offer is not good and sufficient cause for an attorney to withdraw with expectation of a quantum meruit fee.
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We simply find that a disagreement as to the value of a case does not provide sufficient good cause which rises to that level. We would view the matter differently if the attorney and the client had reached a mutual understanding as to what the settlement goals would be, and then the client later departed from that understanding and adopted a substantially different settlement objective. Here, however, Lofton and Maxey did not discuss in advance of the first mediation their respective settlement objectives.
This dispute highlights two absolutely essential points: (1) the vital importance for both client and attorney of educating the client about the lawsuit process and how their claim would be valued both in settlement considerations and by a jury; and, (2) the client, of course, has the final say on whether or not the accept a settlement offer, which has always been the case pursuant to Kentucky Supreme Court Rule 1.2(a). The Court's caveat -- "we would view the matter differently" -- indicates its view that an attorney that properly and fully educates a client as to the value of the client's claim yet finds the client unreasonably rejecting a settlement offer (here the client was apparently steadfast in demanding not less than $1.2 million prior to Lofton's withdrawal but later accepted the same offer of $25,000 that Lofton advised her to take) will be deemed to have earned at least a quantum meruit fee.
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Posted by: auto accident lawyer tampa | June 26, 2012 at 08:42 AM