Wilson v. Lynch Lynch Co., L.P.A. , 99 Ohio App. 3d 760 ( 1994 )

The decision reached by the majority further erodes upon the rights of lawyers, causing them to be:

"[T]he only persons in this state who are prohibited from enforcing written contracts according to their express terms and conditions when such contracts involve payment for services and a dispute, regardless of cause or merit, arises over representation." Reid, Johnson, Downes, Andrachik Webster v.Lansberry (1994), 68 Ohio St.3d 570, 577-578, 629 N.E.2d 431, 437 (Douglas, J., concurring in part and dissenting in part).

I, too, believe that "even those who are most critical of lawyers and the legal profession would find [the policy adopted by the majority] to be patently unfair." (Emphasis sic.) Id. at 578, 629 N.E.2d at 437. As such, I must respectfully concur in part and dissent in part.

Initially, I will note that this matter arose from a summary judgment exercise, and the trial court is to construe the evidence most strongly in the favor of the nonmoving party, the appellant. Civ.R. 56(C). This court is not to weigh the evidence, but to determine if the nonmoving has produced evidence on any issue on which it bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108, 570 N.E.2d 1095, paragraph three of the syllabus.

The record herein contains sufficient evidence for the purposes of summary judgment that appellant performed services on the underlying matter. As delineated below, the testimony offered at the depositions is replete with material to substantiate appellant's claim that genuine issues of material fact remain. I emphasize again that the question before us is whether summary judgment was properly granted here, not who would ultimately prevail on this issue.

The majority places great emphasis on the phrase "unbilled legal services," and expends a substantial amount of effort analyzing its relationship to appellant's entitlement to the fees under the theory of "novation." Such a discussion is unnecessary, as the record quite simply reveals that the "unbilled legal services" are those services rendered in connection with the matter from which this claim arose prior to the co-counsel affiliation between appellant and appellee Lynch. The majority rather summarily opines that "these past `unbilled services' were of a general nature in relation to the estate, rather than services or litigation specifically relating to the issue of a reduction of any excess executor and attorney fees charged by the fiduciary." However, in reaching this conclusion, the majority fails to construe the evidence most strongly in favor of the appellant. The record contains evidence that appellant performed work on the subject matter prior to the referral.

At deposition, the appellant, when questioned by appellee, Matthew J.D. Lynch, testified as follows concerning the fee agreement:

"A. And again, I think it was also the intention of everybody that — that one of the things that I provided as a basis forthis agreement was an extensive amount of work on the file, andwith the Dolan law firm⁷ that had gone on prior to the agreement. I think, in part, the agreement was a recognition of the extensive work that I had — had already done on the matter. [Footnote added.]

"* * *

"A. * * * [T]here came a time that [appellees, the Bests and Davis,] came into the office to see me and — and — and subsequent to that, I began to take some action and representthem in — in making inquiries of the Dolan firm about some ofthe matters. And the discussions back then were that — that I would just make some initial inquiries, try to find out some information for them. That there would be an hourly billing on some of those matters, but that if the matter ever matured into something more, there was some indications that there would be a — there would, in fact, have to be some other fee arrangement that would be made.

"* * *

"A. The initial occasions in the representation were that I was to direct myself to just a couple of specific questions concerning the — the estate, very limited contract. But you know, as the representation continued, you know, there became more and more indications that there were more and more problems with the estate * * *.

"* * *

"A. Well again, the agreement was that — that there weresubstantial services that had already been performed — that hadbeen performed prior to that time that there were uncompensated,and that would — that would be merged into this agreement,yeah." (Emphasis added.)

The appellant further delineated his understanding of the basis for the fee splitting:

"A. But — but yeah, there — it did contemplate also that — the basis of the agreement was that, under any circumstances [sic], I wasn't going to perform a lot of services under this contract. I mean, even if I had not gotten the appointment to the bench, and even if I continued to practice law, I — I was not going to be deeply involved in this matter from that point on * * *.

"A. * * * I think you were being brought in as a — as counsel in this to — to handle the litigation at that point. * * *"

Independently, the evidential table is replete with material to demonstrate that appellant performed work after the referral:

"A. It was a wide ranging discussion between you and [me] as to what had gone on in the file. I gave you, I think, a fairly thorough background and briefing of a fairly complex and involved legal matter, and I think you, you know, based on — on that briefing, I think had a very thorough understanding of — of that.

"* * *

"A. * * * [Y]ou and I had several discussions and/or meetings in — in connection with this legal matter. We discussed the — the history of the matter, and the facts of the matter, and our — we shared our — our legal thoughts on the matter."

Clearly, this colloquy provides an evidential table sufficient to overcome the summary judgment hurdle. Construing this evidence most favorably, one may conclude that the appellant had performed work on the underlying action, bothbefore and after the referral, creating the entitlement to payment pursuant to the fee-splitting agreement.

The majority also disputes appellant's contention that a contingent fee arrangement was entered into by the parties. However, reasonable minds could conclude that the parties had intended such a fee agreement. Specifically, the materials supplied in connection with appellees' motion for summary judgment, appellant's opposition to the motion, and appellees' reply, when viewed in a light most favorable to the appellant, support this proposition.

Appellees submitted copies of two letters dated December 1, 1988 and December 15, 1988, in support of their motion for summary judgment. The December 1, 1988 letter from appellee Lynch to the Bests and Davis, notes: "I look forward to working with [appellant] to resolve this situation as soon as possible." The December 15, 1988 letter from appellant to appellee Lynch, apparently prepared subsequent to a telephonic communication between the two attorneys, provides in relevant part:

"An agreement has been reached between yourself, myself, and the Best family concerning your proposal, as follows:

"* * *

"3. Any fees paid by the Best family to you for this representation representing the contigency [sic] fee portionwill be split between you and [me] with you receiving seventyfive percent (75%) of that fee and me receiving twenty fivepercent (25%) of that fee." (Emphasis added.)

Furthermore, appellant attached an affidavit to his opposition to the motion. In addition to the portion relied upon by the majority,⁸ the affiant stated the following:

"9. Affiant did provide all assistance requested of him by [appellee] Lynch[;] on no occasions [sic] did he refuse to cooperate with or assist [appellee] Lynch, and did provide legal services to the Best family.

"* * *

"11. [Appellee] Lynch repeatedly consulted with Affiant over the nearly two year period from December, 1988 through November, 1990 pertaining to matters surrounding the Estate of Walter Best.

"12. [Appellee] Lynch represented to Affiant in December, 1990 that he had set aside Affiant's fee."⁹

Finally, appended to appellees' reply brief, are the affidavits of the Bests and Davis. All three contain the following statement:

"[A]t no time did the undersigned enter into any understanding, agreement, oral contract, or written contract with [appellant] for the payment of legal fees on any other basis [other than hourly], including any contingent fees, until December of 1988 when [appellant], the undersigned, and [appellee] Matthew Lynch entered into the agreement contained in the letters of December 1 and December 15, 1988."

By appellees' own admissions, these affidavits taken in conjunction with the letters and, in particular, the December 15, 1988 letter delineating the fee schedule, certainly support the conclusion that the parties had entered into a fee-splitting agreement.¹⁰

Not only do I disagree with the majority's analytical conclusions regarding the state of the evidence, I also disagree with the legal pronouncements espoused in its dicta. The majority rather summarily concludes that appellant "voluntarily withdrew from the case long before any recovery was generated; therefore, no obligation existed on Lynch's part to share the contingent fee * * *." Again, without viewing the evidence in a light most favorable to the appellant, the majority dismisses his claim in a cursory fashion by concluding: "Any claim to be made directly against Lynch by appellant had to result from an agreement between Lynch and appellant which had to be supported by independent consideration of some kind." However, in King v.Housel (1990), 52 Ohio St.3d 228, 556 N.E.2d 501, the court recognized the right of one attorney to directly pursue another: "`[W]here both attorneys have rendered services and one collects the entire fee, he is liable to the other in accordance with the terms of [a fee-sharing] agreement.' Gugle v. Loeser (1944),143 Ohio St. 362, 28 O.O. 318, 55 N.E.2d 580, at paragraph two of the syllabus." Id. at 230, 556 N.E.2d at 504.

The majority also declares that "appellant could not have provided such assistance beyond that contemplated under DR 2-110(A)(2)."¹¹ While a judge is precluded from performing further legal work, he should be afforded a reasonable time in which to wind-up his practice. This is to safeguard the interests of soon-to-be former clients by allowing appellant and others similarly situated to inform new counsel of past events or by clarifying files. This type of "representation" should be permissible, and even encouraged, as long as the judge does not provide advice about the future conduct of the representation. To hold otherwise would be contra the underlying tenets of the legal profession, as the best interests of the client would not be served. Furthermore, nothing within R.C. 4705.01 or Canon 5(F) of the Code of Judicial Conduct precludes a judge from receiving compensation for work performed prior to donning a robe and assuming the bench, whether the fee is based upon hourly billings or a contingent fee.

While I disagree with these conclusions for the reasons stated previously, I also take issue with the legal principle announced by the majority. Specifically, I take umbrage with the majority's conclusion that to be entitled to a split-fee arrangement, appellant had to "[remain] as co-counsel of record long enough to have rendered some legal services and to have maintained some responsibility for the case * * *." Under this published rule, an attorney would be required to perform work on the matter after it has been referred to co-counsel. Merely rendering services before the referral would be insufficient to support a division of fees under the majority's application of the pertinent canon. However, no court in Ohio, to this writer's knowledge, has reached such a conclusion. The only requirement here appears to be that the referring attorney perform some measurable work on the matter. See, e.g., Waterman v. Kitrick (1990), 60 Ohio App.3d 7, 572 N.E.2d 250; R.C. 4705.08 and DR 2-107(A). Nothing requires that the work be undertaken subsequent to the transfer of the file.

Additionally, I part company with the majority, as its decision would invite attorneys to delay referring matters in a timely fashion. Rather than direct the matter to co-counsel with appropriate expertise with the two advocates sharing the proceeds based upon a prearranged percentage, the initial attorney may be more inclined to retain the file to ensure that he has "justified" his fees should they be subsequently questioned by either the client or co-counsel. Such actions may not be in the best interest of the client, and they should be discouraged, not encouraged. Therefore, as long as the record demonstrates that an attorney who has entered into a fee-splitting arrangement on a contingent fee matter has rendered some measurable work on the matter, a court should not subject the attorney to the task of demonstrating the reasonableness of the resulting fee under these circumstances.

Finally, the majority concludes by returning its focus to the issue of "novation" and embarks on an auxiliary discussion of "the sufficiency of the consideration," and whether appellant's "services had value." The majority, in undertaking this analysis, applies standards which are applicable to noncontingent fee matters.¹² For the reasons previously discussed, I do not venture into the "troubled waters" of that question.

Additionally, I find that the majority's conclusion is wholly inconsistent with the contingent fee practice which is based upon the concept that an attorney agrees to accept employment and receive payment conditioned upon resolution of the matter favorable to the client.¹³ Regardless of the size of the award, the attorney is entitled to that agreed-upon percentageirrespective of the amount of time spent by that attorney on the file. The size of the fee is not subject to review as long as it is not unreasonable in proportion to the sum recovered by the client. In other words, as long as the percentage is reasonable, the size of the fee generated should not be questioned. This syllogism is also predicated on the notion that the parties have entered into an arm's-length agreement for the attorney's services.

In Williamson v. Belovich (1993), 84 Ohio App.3d 628,632-633, 617 N.E.2d 786, 789, the court upheld an attorney's entitlement under a contingent fee "contract to take fifty percent of all proceeds, including statutory attorney fees * * *." In obtaining the conclusion, the court cited Wilmington v.J.I. Case Co. (C.A.8, 1986), 793 F.2d 909, which states:

"To our minds, to limit attorney compensation in that manner would be an unwarranted interference with a private contract. As the Eleventh Circuit has observed, a contingent fee contract represents the client's and the attorney's notions of a reasonable fee * * *." Id. at 923.

Under the position espoused by the majority, the contingent fee would, in essence, be significantly gelded, if not abolished, under such facts. In every case, a client dissatisfied with the compensation the attorney receives would be able to petition the court to review the fee agreement in relation to the work provided.¹⁴ I do not endorse, nor do I believe, that the Supreme Court of Ohio has sanctioned such strict scrutiny of fee-splitting arrangements.

In conclusion, the evidential table was sufficient to establish a question of fact that the appellant worked on the file, and that payment for these services was governed by a fee-splitting agreement accepted by the parties. Absent a patently unreasonable contingent fee arrangement, I would not require the appellant to "[remain] as co-counsel of record long enough to have rendered some legal services and to have maintained some responsibility for the case * * *" to earn his fee, thereby lessening the blow of the punch line from, as Justice Douglas stated: "the worst of the bad jokes about lawyers." Lansberry, 68 Ohio St.3d at 577, 629 N.E.2d at 437.

For obvious reasons, the analysis is dispositive of appellees' assigned error regarding the court's denial of their motion for attorney fees. Notwithstanding the foregoing, I concur with the result obtained by the majority in its treatment of appellees' assignment. Additionally, I concur with the majority's disposition of appellant's fraud allegation.

Therefore, I must respectfully concur in part and dissent in part.

⁷ The Dolan law firm had been responsible for handling the estate and ultimately agreed to a reduction in attorney and executor fees. It is from this reduction that appellant is claiming his entitlement.

⁸ The majority stresses the fact that appellant, in his affidavit uses the term "fee" rather than "contingent fee" to describe the compensation arrangement. However, I believe that this is a distinction without substance in a summary judgment exercise. Furthermore, the letter exchange of December 1, 1988 and December 15, 1988 clearly calls for a contingent fee contract.

⁹ There is no dispute that Lynch had set aside $29,137.50. This amount represents one quarter of the $116,665.00 contingent fee received by Lynch. From this, one may reasonably infer that Lynch understood there to be a valid fee-sharing agreement.

¹⁰ The majority also suggests that appellant does not have a cause of action against Lynch. However, as noted previously, the record indicates that Lynch accepted the terms of the fee-splitting contract, and Lynch even put the appellant's share aside.

¹¹ The majority suggests that the agreement is void as it may violate a Supreme Court of Ohio Disciplinary Rule. However, in King at paragraph two of the syllabus, the Supreme Court of Ohio held: "A lawyer's failure to fully disclose a fee agreement to a client as required by DR 2-107(A)(1) may not be used by the noncomplying attorney to avoid enforcement by the other of an otherwise valid fee agreement.

¹² While the majority recognizes that "a contingent fee agreement need not have the same proportionate relationship to the work actually performed as would an hourly fee," I do not share their general view that an attorney must demonstrate the reasonableness of the resulting fee generated in connection with a contingent fee contract under all circumstances, although I understand that some contingent fee situations might require such a showing.

¹³ This, of course, assumes that the client recovers. Obviously, if not, the attorney is precluded from pursuing the client for the value of his services for the work performed.

¹⁴ I would envision the following scenario: An attorney is retained in a wrongful death matter. The extent of the coverage afforded under the insurance policy of the tortfeasor is substantially less than the damages suffered, and the insurance company, upon receipt of a letter of representation from the attorney, elects to tender the policy limit.

The majority would require the attorney to demonstrate the reasonableness of the standard one quarter or one third fee for drafting one letter to an insurer. Clearly, no attorney could justify an hourly billing which would generate such an entitlement.