The Ferguson Firm, Pllc., App/cross Resp v. Teller & Associates, Resp/cross App ( 2013 )

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2013 DEC 30 ftM 9- 2U
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
THE FERGUSON FIRM, PLLC,
DIVISION ONE
Appellant,
No. 68329-2-1
v. (Linked with No. 69220-8-1)
TELLER & ASSOCIATES, PLLC UNPUBLISHED OPINION
Respondent. FILED: December 30, 2013
Dwyer, J. — Sandra Ferguson, the principal of The Ferguson Firm, PLLC,
spent substantial time and effort developing an employment discrimination case
without the assistance of co-counsel. However, by early 2010, she found herself
in need of a firm willing to advance litigation costs and—in the event that she was
suspended from the practice of law—take responsibility for the case. She
approached Stephen Teller, principal of Teller &Associates, PLLC,1 and the two
eventually agreed to work together on the case. Although the two discussed
acceptable fee splitting arrangements, they dispute what agreement, if any, was
ultimately reached. Subsequently, the Supreme Court suspended Ferguson from
practicing law for 90 days. During the period of her suspension, and while Teller
was solely representing the clients, a settlement agreement was reached.
Thereafter, Ferguson filed an attorney's lien and filed a lawsuit against Teller,
claiming that Ferguson was entitled to a substantial percentage of the contingent
1Sandra Ferguson and Stephen Teller are principals of theireponymous law firms. The
firms, not the individuals, are parties to this case. Nevertheless, our opinion will use last names
and gendered pronouns when referring to the parties, as well as to the individuals.
No. 68329-2-1 (Linked with No. 69220-8-l)/2
fee, not the 50 percent amount that Teller claimed Ferguson was entitled to
pursuant to their contract.
The trial court granted in part Teller's motion for judgment on the
pleadings and, subsequently, granted Teller's motion for summary judgment,
dismissing the case. Because no genuine issues of material fact exist as to
whether a valid contract existed between the parties, we affirm the trial court's
grant of summary judgment in favor of Teller. We also affirm the trial court's
denial of Teller's motion for sanctions, but we do so without prejudice.
I
On August 24, 2009, Ferguson entered into a fee agreement with four
women (hereinafter the clients) who eventually became the named plaintiffs in a
lawsuit against the ABC Corporation2 (hereinafter the underlying matter). The
clients were female managers who alleged that they had been subject to similar
discrimination by the ABC Corporation. Ferguson's fee agreement with the
clients provided for a hybrid one-third contingency fee and a flat fee. The
agreement did not obligate Ferguson to file a lawsuit or to litigate the case;
instead, Ferguson agreed to attempt to negotiate a settlement. Nevertheless, in
order to preserve their claims, Ferguson ultimately did file suit on behalf of the
clients in February of 2010.
During this time, Ferguson was defending herself against suspension by
the Supreme Court. By June 2010, both Ferguson and the clients were aware
2ABC Corporation is a pseudonym used by the parties, presumably to protect the identity
of the corporation.
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that she could be suspended at any time thereafter. In part because of the
possibility of suspension, Ferguson devoted substantial time to locating
competent co-counsel. However, she also wanted to locate a co-counsel willing
to advance litigation costs because she was unwilling to advance costs and her
clients were either unwilling or unable to pay their own costs. Ferguson
approached a number of firms, including Teller's.
In early September 2010, Ferguson and Teller discussed various fee
sharing arrangements but did not reach an agreement. With a mediation session
imminent, Ferguson e-mailed Teller, "If the mediation does not result in
settlement, assuming you are still willing to proceed with me, we would enter into
a new fee agreement with [the clients] and with each other." Subsequently,
Teller e-mailed Ferguson, "Be sure to let the clients know that I've not taken on
any role yet. Ithink it's a good case and I'd like to be involved if we can work out
a fee agreement." In late October, a mediation took place in the underlying
matter. However, the mediation concluded without a settlement. One day later,
Ferguson again sought Teller's assistance as co-counsel. Ferguson stated that
she had reconsidered fee splitting arrangements that the two had discussed
previously and determined that her firm "need[ed] to associate with a firm who
can advance the costs." Teller agreed, at that point, to advance costs, and
evidently Ferguson and Teller discussed a fee splitting arrangement because
Teller e-mailed Ferguson on November 10, 2010, stating that, "Our proposed fee
split is incorporated into the [attached] retainer for [the clients'] signatures."
Teller's proposed fee agreement set forth, in pertinent part, "Teller &Associates,
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PLLC, and The Ferguson Firm PLLC, have between them agreed to a 50/50 split
of fees, and each firm assumes joint responsibility for the representation." On
the same day that Teller sent Ferguson the proposed fee agreement, Ferguson
e-mailed the clients stating, "At this point, Steve has agreed to take joint
responsibility for your case. His firm and mine will represent you going forward."
On November 18, 2010, Ferguson and Teller met with the clients and
provided them with paper copies of the fee agreements; three of the four clients
accepted the agreement and one chose not to pursue her claim. On November
22, Teller filed his notice of appearance. Shortly thereafter, Ferguson and Teller
exchanged e-mail messages in which Ferguson questioned Teller's commitment
to the case:
Are you in this case for the duration or not? Do you intend to
withdraw if this case does not settle in the near future?
Because you said something yesterday, about your other case not
settling and you are looking for things to cut out... etc .. . which
led me to have great concern that you were referring to withdrawing
as co-counsel in this case. I need to know now, if that is the case.
Or did I misunderstand again?
Your immediate response will be greatly appreciated.
Teller assured Ferguson that he was committed to the case. Subsequently,
Teller began working on the case, including expending over $9,000 in costs.
Thereafter, on February 2, 2011, a second mediation was held. This
session also failed to result in a settlement. The next day, Ferguson was
suspended from practicing law for 90 days. See In re Disciplinary Proceeding
Against Ferguson, 170 Wn.2d 916, 246 P.3d 1236 (2011). Ferguson withdrew
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from representing the clients and Teller successfully moved for a nine month
continuance of the trial date. In late April 2011, while Ferguson was still
suspended, the clients entered into a settlement agreement with the ABC
Corporation. The settlement resulted in an earned contingency fee of
$530,107.58.
On April 11, 2011, Ferguson e-mailed Tellersaying that she was
"somewhat confused whether the contract between us governs the fees I am
paid . . . while Iam suspended, orwhether my fees for work on the case must be
based on quantum meruit." (Emphasis added.) Ferguson added that "because
the clients have no 'dog in the fight' one way or the other, the agreement
between you and Iwould stand and would govern the fee Iam paid." (Emphasis
added.) On April 15, Ferguson e-mailed Teller saying, "Just so you know, apart
from the ethics issue, I may decided [sic] to take the position that I have not
obtained the benefit ofthe bargain we made when we agreed to the 50/50
arrangement. Ihave not yet decided." (Emphasis added.) On April 20th,
Ferguson e-mailed Teller, "I am entitled to fees based on quantum meruit. Iam
not sure I need to repudiate the 50/50 joint representation agreement we
had " (Emphasis added.) Ferguson went on to say, "We entered into our
50/50 joint representation agreement contemplating the possibility of my
suspension" and "/ agreed to that fee split ONLY because you agreed to advance
costs and be equally responsible for the workload " (Emphasis added.) On
April 25, Ferguson e-mailed Teller,"/ agreed that you would receive 50% of the
fees BECAUSE you agreed to take the case forward with me and to advance
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costs. That was the reason for our contract." (Emphasis added.)
Thereafter, on April 27, Ferguson filed an attorney's lien asserting that,
under a theory of quantum meruit, Ferguson was entitled to 90 percent of the
contingent fee earned as a result of the settlement. On May 27, Ferguson filed a
lawsuit against Teller. Ferguson asserted four causes of action: (1) a declaratory
judgment as to whether a fee agreement existed, (2) a declaratory judgment as
to whether quantum meruit was appropriate, (3) breach of contract, and (4)
negligent misrepresentation. By stipulation, the amount of the contingent fee
was deposited into the King County Superior Court registry on July 18, 2011.
Teller subsequently moved for judgmenton the pleadings pursuant to CR
12(c). During the hearing on this motion, Ferguson's counsel, Brian Waid,
conceded Ferguson's breach of contract claim. There is no indication that
Ferguson, who was present at the hearing, objected to this concession.
Thereafter, the trial court granted Teller's CR 12(c) motion, but only with respect
to Ferguson's breach of contract and negligent misrepresentation claims. In a
subsequent letter to the parties, the trial judgewrote, "Mr. Waid did state that
Plaintiff was withdrawing her claim for breach of contract based on the authority
cited in Defendant's CR 12(c) motion, specifically Mazon v. Krafchick, 158 Wn.2d
440, 144 P.3d 1168 (2006). The court dismissed the claim of negligent
misrepresentation based on that same authority."
Thereafter, Teller moved for summary judgment, seeking a declaratory
judgment that "(1) an express fee agreement existed between Defendant Teller
and Plaintiff Ferguson and (2) Ferguson's claim for compensation in quantum
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meruit must be dismissed." Ferguson filed a cross-motion for summary
judgment. At oral argument, the trial court ruled that Teller had "established as a
matter of law the existence of an express contract between the parties to divide
attorney fees 50/50." Three days later, the trial court granted summary judgment
in favor of Teller with respect to the "issue of whether Ferguson's suspension
from the practice of law was a condition subsequent that rendered their
agreement unenforceable so that attorney fees should be divided on a quantum
meruit basis." Ferguson moved for reconsideration,3 which the trial court denied
on February 16, 2012.
On February 9, 2012, Teller moved for an award of fees and costs
pursuant to CR 11 and RCW 4.84.185. The trial court denied Teller's motion,
and Teller timely appealed.
On February 15, Ferguson's attorney, Waid, filed a notice of intent to
withdraw. He also filed a declaration and attachments, wherein he documented
the circumstances of his withdrawal, including allegations that Ferguson had
deceived the court. Waid was replaced by Ferguson's current counsel.
Ferguson timely appealed the trial court's rulings in Teller's favor.
II
As a preliminary matter, we refuse to consider Ferguson's declaration in
support of her motion for reconsideration. Her declaration contained new
evidence, which implicated new theories of the case, neither presented to nor
considered by the trial court prior to its ruling on summary judgment.
3Ferguson failed to include her motion for reconsideration in our Clerk's Papers.
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"On review of an order granting or denying a motion for summary
judgment the appellate court will consider only evidence and issues called to the
attention of the trial court." RAP 9.12. A litigant may not make arguments on a
motion for reconsideration that are "based on new legal theories with new and
different citations to the record." Wilcox v. Lexington Eve Inst.. 130 Wn. App.
234, 241, 122 P.3d 729 (2005). "CR 59 does not permit a plaintiff to propose
new theories of the case that could have been raised before entry of an adverse
decision." Wilcox. 130 Wn. App. at 241.
Ferguson contends that she provided additional evidence after summary
judgment because she was not yet aware of Waid's asserted conflict of interest,
and of an alleged scheme to interfere with her attorney-client relationship.
Regardless of whether Ferguson's allegations in the declaration are true, they
have no bearing on the trial court's summary judgment order, which addressed
whether Ferguson and Teller had formed a contract. Accordingly, our review is
circumscribed to the evidence called to the attention of the trial court prior to the
entry of its order on summary judgment.
Ill
Ferguson contends that the trial court erred by dismissing the breach of
contract and negligent misrepresentation claims. This is so, Ferguson asserts,
because the trial court's ruling was not based on the legal standards for dismissal
under CR 12(c) but, instead, on Waid's erroneous concession that the breach of
contract claim was legally baseless. This claim is unavailing.
"We review de novo a trial court's order for judgment on the pleadings."
No. 68329-2-1 (Linked with No. 69220-8-l)/9
Pasado's Safe Haven v. State, 162 Wn. App. 746, 752, 259 P.3d 280 (2011).
"Absent fraud, the actions of an attorney authorized to appear for a client are
binding on the client at law and in equity." Rivers v. Wash. State Conference of
Mason Contractors, 145 Wn.2d 674, 679, 41 P.3d 1175(2002). "The'sins of the
lawyer' are visited upon the client." Rivers, 145 Wn.2d at 679 (quoting Taylor v.
ML, 484 U.S. 400, 433, 108 S. Ct. 646, 98 L. Ed. 2d 798 (1988) (Brennan J.,
dissenting)).
Ferguson's attorney, Waid, conceded the breach of contract claim on the
record:
We did allege breach of contract, and I have my client's
authorization to do this. I will - I will concede the defendant's
argument that under Mazon vs. Krafchick - and I've lectured about
that case before - that under Mazon vs. Krafchick we cannot prove
a breach of contract. I think that's also significant to the 12(b)(6)
motion that Your Honor will consider that's noted on Tuesday.
Subsequently, the trial court granted in part Teller's motion for judgment on the
pleadings with respect to Ferguson's breach of contract and negligent
misrepresentation claims, dismissing them both. Nevertheless, Ferguson now
asserts that Waid's concession was a clear error of law, claims that Waid's
concessions violated the rules of professional conduct, and proceeds to address
the merits of the legal position that Waid declined to take.
Ferguson authorized Waid's concession by allowing him to appear as her
representative and by refusing to contest his concession in the trial court. Waid's
concession is binding upon Ferguson, regardless of whether Waid's legal
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analysis was flawed.4 Accordingly, Ferguson's arguments regarding the merits of
the legal position Waid declined to take are unavailing. In the trial court, Waid
did not take a legal position on the breach of contract claim, but instead
conceded that the claim was not viable. By doing so, he waived the opportunity
for Ferguson to argue the merits both in the trial court and on appeal. The trial
court properly dismissed the breach of contract claim.
The trial court also properly dismissed Ferguson's negligent
misrepresentation claim in light of Mazon v. Krafchick, 158 Wn.2d 440, 144 P.3d
1168 (2006). Mazon stands for the proposition that co-counsel may not sue each
other to recover lost or reduced prospective fees. Mazon, 158 Wn.2d at 448.
The gravamen of Ferguson's claim is that Teller misrepresented his intention to
prepare for trial and advance costs and, instead, focused his efforts on
effectuating a settlement. From this, Ferguson asserts that she is entitled to all
damages proximately caused by Teller's misrepresentation. In effect, Ferguson
asks for the difference between what she earned by virtue of the clients settling
and what she could have earned had the case been taken to trial, with a better
result being achieved. What Ferguson seeks to recover is lost prospective fees,
which Mazon prohibits. Accordingly, the trial court did not err.
IV
Ferguson next contends that the trial court erred by granting summary
4 Even if Waid's concession violated the Rules of Professional Conduct, which we do not
assume, such a violation would not form the basis for an appellate challenge to Waid's trial court
legal strategy. See Hizev v. Carpenter. 119Wn.2d 251, 261-62, 830 P.2d 646 (1992) (explaining
that the Rules of Professional Conduct are not statutes promulgated by the legislature and are
not intended as a basis for civil liability).
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judgment in favor of Teller on the issue of whether Ferguson and Teller
contracted to evenly split the contingency fee. This is so, she reasons, because
the trial court resolved genuine issues of material fact in favor of Teller. We
disagree.
This court reviews a summary judgment order de novo, engaging in the
same inquiry as the trial court. Snohomish County v. Rugg, 115 Wn. App. 218,
224, 61 P.3d 1184 (2002). Summary judgment should be granted ifthere are no
genuine issues of material fact and the moving party is entitled to judgment as a
matter of law. CR 56(c). On a summary judgment motion, the trial court must
review all evidence in the light most favorable to the nonmoving party. Lamon v.
McDonnell Douglas Corp., 91 Wn.2d 345, 350, 588 P.2d 1346 (1979). The
motion should be granted when a reasonable person could reach only one
conclusion. Lamon, 91 Wn.2d at 350.
"Washington follows an objective manifestation test for contracts, looking
to the objective acts or manifestations of the parties rather than the unexpressed
subjective intent of any party." Wilson Court Ltd. P'ship v. Tony Maroni's, Inc.,
134 Wn.2d 692, 699, 952 P.2d 590 (1998).
Ferguson asserts five reasons for why the trial court improperly granted
summary judgment on the issue of contract formation: (1) the trial court
disregarded evidence that Ferguson rejected the draft retainer agreement that
Teller presented to the clients; (2) the trial court disregarded evidence that Teller
knew that Ferguson had another attorney to handle the case in the event of her
suspension; (3) the trial court disregarded evidence that Ferguson and Teller
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intended to negotiate a separate written co-counsel agreement; (4) the trial court
decided the ultimate issue when it held that Teller substantially performed; and
(5) Ferguson's and Teller's words and conduct establish that there was no fee-
sharing contract. Each of these assertions will be addressed in turn.
First, Ferguson's present assertion that she ultimately rejected the retainer
agreement Teller presented to the clients does not establish trial court error.
Ferguson repeatedly confirmed the existence of a contract in a series of e-mail
exchanges5 and presents no evidence of objective manifestations indicating
otherwise.
Second, Ferguson's assertion that Teller knew that Ferguson had another
attorney to handle the case if she was suspended also does not establish trial
court error. The e-mail Ferguson cites in support of this claim actually refutes her
position: "Prior to mediation, however, I think I need my own attorney, Shawn
Newman, to be my back-up should I get suspended." (Emphasis added.) This
e-mail was sent several months before the fee agreement at issue was executed,
and Ferguson's statement explicitly addresses the relevant time period as being
"prior to mediation." Ferguson's objective manifestations following mediation
indicate that circumstances changed when the case failed to settle; indeed,
Ferguson's e-mail messages to Teller admitting that they had a contract belie the
suggestion that evidence of this earlier e-mail created a genuine issue of material
fact.
Third, no trial court error is apparent from Ferguson's assertion that she
See supra pp. 5-6.
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intended, and that Teller understood, that they would enter into a written co-
counsel agreement separate from the contract with the clients. Ferguson
e-mailed Teller, "Ifthe mediation does not result in settlement, assuming you are
still willing to proceed with me, we would enter into a new fee agreement with
them and with each other." This language, coupled with Ferguson's assertion
that she has employed separate co-counsel agreements in the past,6 does
suggest that Ferguson, at one time, contemplated entering into a separate co-
counsel agreement. However, the numerous e-mail messages sent by Ferguson
following the presentation ofTeller's retainer agreement to her and to the clients,
wherein she acknowledges the existence of a contract, could lead a reasonable
person to only one conclusion—that the retainer agreement drafted by Teller
constituted a contract between the attorneys.
Fourth, the trial court did not improperly decide the ultimate issue of
whether Teller lived up to his end of the bargain. This is so because Ferguson
provided no evidence that Teller failed to advance litigation costs orwas unwilling
to advance costs in an amount equal to that which Ferguson had contemplated.
The parties did not specify that Teller had to pay a certain amount of costs in
order to perform pursuant to the contract. Moreover, there is no evidence that
the parties ever intended to make substantial performance under the contract
contingent upon paying a certain amount of money other than simply "litigation
costs." The case settled before Teller had advanced the amount of money
6Ferguson stated that she has used separate co-counsel agreements both with Teller
and with other attorneys.
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Ferguson had, perhaps, contemplated. However, Teller did advance costs and
represented the clients, leading to the clients' decision to settle. The contract did
not require more.
Fifth and finally, the parties' words and conduct after the fee agreement
was signed by the clients did not establish the absence of a contract. Ferguson
asserts that Teller's response to Ferguson's e-mail sent on December 8, 2010,
wherein she asked whether Teller was planning to withdraw, shows that both
parties thought that he could withdraw without breaching a contract. This e-mail
exchange does not accomplish what Ferguson wants it to—Teller merely says he
does not plan to withdraw. Furthermore, the numerous e-mail messages
referring explicitly to the existence of a contract establish that the parties
understood that they had an agreement. This e-mail exchange is not
inconsistent with the parties' objective manifestations indicating that a contract
was formed.
Ultimately, the objective manifestations of the parties reveal that both
intended to contract for a 50/50 fee splitting arrangement. Accordingly, the trial
court did not err when it held that there was a contract to that effect, and it did not
improperly resolve genuine issues of material fact when it ruled in favor ofTeller.
V
Ferguson next contends that the trial court erred by granting summary
judgment in favor ofTeller on the issue of whether the contract was enforceable
against Ferguson as a matter of law. This is so, she asserts, because Teller
failed to provide consideration for the fee agreement, because Ferguson
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"substantially performed," and because the agreement violated public policy
pursuant to RPC 1.5(e). We disagree.
Ferguson first contends that Teller failed to provide consideration for the
fee agreement. This is so, she reasons, because the amount of costs that Teller
advanced was miniscule when compared to the amount that Ferguson
anticipated he would advance. Ferguson's contention lacks merit.
"Consideration is a bargained-for exchange of promises." Labriola v.
Pollard Grp.. Inc., 152 Wn.2d 828, 833, 100 P.3d 791 (2004). Determining
whether consideration supports a contract is a question of law. Hanks v. Grace,
167Wn. App. 542, 548, 273 P.3d 1029, review denied. 175Wn.2d 1017 (2012).
"Courts generally do not inquire into the adequacy of consideration and instead
utilize a legal sufficiency test" which "'is concerned not with comparative value
but with that which will support a promise.'" Labriola, 152 Wn.2d at 834 (quoting
Browning v. Johnson, 70 Wn.2d 145, 147, 422 P.2d 314, 430 P.2d 591 (1967)).
We will "not relieve a party of a bad bargain . . . unless the consideration is so
inadequate as to constitute constructive fraud." Emberson v. Hartley, 52 Wn.
App. 597, 601, 762 P.2d 364 (1988).
Ferguson fails to perceive the distinction between adequacy and
sufficiency of consideration. Adequacy deals with the comparative value of the
exchanged acts or promises, whereas sufficiency deals with that which will
support a promise. We will not invalidate a contract for insufficient consideration
merely because the parties exchanged acts or promises that differed in
comparative value. So long as the consideration exchanged will support the
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promise, the consideration is sufficient. Nevertheless, Ferguson argues, in
effect, that we should invalidate the contract because Teller paid very little yet
profited considerably when the clients decided to settle. Implicit in her position is
that Teller did not give comparative value for what he received, or, stated
differently, that Teller did not give adequate consideration. However, the
consideration provided by Teller does not suggest constructive fraud and, absent
evidence to the contrary, we find no need to inquire into adequacy. Ferguson
and her clients determined that they needed someone to finance the litigation
and, to that end, contracted with Teller to advance costs. The fact that Teller
received a good deal when the clients chose to settle does not mean that the
consideration he provided was inadequate.
Ferguson next contends that she "substantially performed" and should,
therefore, receive one-third of the second settlement offer that the clients
rejected. The basis for her claim is that she procured two sizeable settlement
offers, ultimately rejected by the clients, prior to the case being settled. Her
contention lacks merit.
"It has long been the rule in this state that where the compensation of an
attorney is to be paid contingently, and the attorney is discharged prior to the
occurrence of the contingency, the measure of the fee is not the contingent fee
agreed upon but reasonable compensation for the services actually rendered."
Barr v. Day, 124 Wn.2d 318, 329, 879 P.2d 912 (1994). The "substantial
performance" exception to the general rule that clients may fire their attorneys at
any time with or without cause is meant to protect attorneys from their clients.
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Barr. 124 Wn.2d at 329.
Ferguson's contention is unavailing because she was not fired by her
clients—she was forced to withdraw due to her suspension by the Washington
State Supreme Court. The "substantial performance" exception is designed to
protect attorneys from clients, not attorneys from other attorneys. More
specifically, the exception protects attorneys from clients, with whom lies the
authority to accept or reject a settlement offer,7 who would seekto unjustly enrich
themselves by firing their attorney immediately prior to accepting a settlement
offer. Because Teller could not accept or reject a settlement offer without the
clients' authorization, there is no reason to extend this exception to protect
Ferguson from Teller. Accordingly, Ferguson may not avail herself of the
"substantial performance" exception.
Ferguson finally contends that the fee division violates public policy as
expressed by RPC 1.5(e). This is so, she avers, because (1) Ferguson and
Teller did not sign the retainer agreement; (2) the retainer agreement did not fully
disclose to the clients, in writing, Teller's duty to advance litigation costs; and (3)
Ferguson's suspension ended joint responsibility. Her contention lacks merit.
"Attorney fee agreements that violate the RPCs are against public policy
and unenforceable." Vallev/50th Ave.. LLC v. Stewart. 159 Wn.2d 736, 743, 153
P.3d 186 (2007). RPC 1.5(e) allows for nonproportional fee agreements
between attorneys, subject to some restrictions:
(e) Adivision of a fee between lawyers who are not in the
7"A lawyer shall abide by a client's decision whether to settle a matter." RPC 1.2(a).
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same firm may be made only if:
(1) (i) the division is in proportion to the services provided by
each lawyer or each lawyer assumes joint responsibility for the
representation;
(ii) the client agrees to the arrangement, including the
share each lawyer will receive, and the agreement is
confirmed in writing; and
(iii) the total fee is reasonable.
RPC 1.5(e).
Ferguson first contends that both she and Teller were required to sign the
fee agreement. Neither RPC 1.5(e) nor Comment 78 to the rule includes such a
requirement, and Ferguson has failed to provide a compelling reason why this
court should read into the rule such a requirement.
Ferguson next contends that the retainer agreement did not fully disclose
Teller's duty to advance litigation costs. Neither RPC 1.5(e) nor Comment 59 to
the rule includes such a requirement. Ferguson asserts that the contract violated
the rule because Teller had a strong incentive to settle the case; however, her
assertion disregards the fact that the clients have the ultimate authority to
authorize a settlement. RPC 1.2(a). Neither the letter nor the spirit of RPC
1.5(e) required the attorneys to disclose to the clients that Teller would pay for all
litigation costs.
Ferguson finally contends that her suspension ended her joint
responsibility with Teller. WSBA Advisory Opinion 1522 states, "The Committee
8"[T]he client must agree to the arrangement, including the share thateach lawyer is to
receive, and the agreement must be confirmed in writing."
9"An agreement may not be made whose terms might induce the lawyer improperly to
curtail services for the clientor perform them in a way contrary to the client's interest."
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was of the unanimous opinion that 'joint responsibility' as used in RPC 1.5(e)(2)
refers to legal liability to see that the client's work is competently performed."
The term "legal responsibility" does not involve the practice of law. See Elane v.
St. Bernard Hosp., 284 III. App. 3d 865, 872, 672 N.E.2d 820 (1996) (a former
lawyer who became a judge sought enforcement of a fee agreement even though
she could no longer practice law). There appears to be no meaningful distinction
between "legal liability" and "legal responsibility" in this context. Therefore, the
fact that Ferguson was suspended from practicing law did not mean that she no
longer had "legal liability" with respect to the clients in the underlying matter.
Accordingly, the fee does not, as Ferguson asserts, violate public policy as
expressed by RPC 1.5(e).
VI
Ferguson next contends that she is entitled to choose between a quantum
meruit method of fee division or a lodestar fee calculation. This is so, she
reasons, because her fee agreement with Teller permits her to elect between
these methods of fee calculation. We disagree.
The contract provision invoked by Ferguson reads, in pertinent part, as
follows:
6- DISCHARGE: If client discharges attorneys, or if
attorneys withdraw for cause (e.g., dishonesty of client), client
agrees to pay attorneys a reasonable attorney fee and any non
reimbursed costs. The attorney fee shall be, at attorney's option,
either (a) an hourly fee for the attorney time expended at $345.00
per hour for Mr. Teller or Ms. Ferguson . . .; (b) contingency
percentage computed from the last settlement offer; or (c) a pro
rata portion of the contingent fee ultimately recovered based on
relative contributions to the case by the lawyers and any successor
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No. 68329-2-1 (Linked with No. 69220-8-l)/20
law firm as determined by Washington law and the factors set out in
the Rule of Professional Conduct 1.5(a).
Ferguson is incorrect because this provision, by its terms, applies if attorneys
withdraw for cause. Only Ferguson withdrew. Accordingly, Teller is not, as
Ferguson claims, the "successor law firm." A successor law firm would be a firm
that would take over the case after both Ferguson and Teller withdrew for cause.
Because only Ferguson withdrew, she may not avail herself of this contract
provision.
VII
Teller contends that we should sanction Ferguson for the manner in which
she has conducted this appeal and that we should reverse the trial court's order
denying sanctions and remand in light of newly discovered evidence. We decline
to sanction Ferguson for her conduct ofthis appeal. Further, we affirm the trial
court's denial of Teller's request for sanctions. However, we affirm the trial
court's order without prejudice. In rendering our decision, we do not intend for
the law of the case doctrine to preclude Teller, if he chooses to do so, from
presenting new evidence to the trial court in support of a new request for
sanctions.
Affirmed.
We concur:
^(LuWP