Discharged
attorneys denied fee award
By
David Ziemer
Wisconsin Law Journal
May
17, 2006
| What
the court held Case:
A. Avery v. Manitowoc County, No. 04-C-986. Issue:
Is a discharged attorney entitled to any damages where the reasonable value of
the time that the attorney would have spent on the case if not discharged exceeds
the value of the settlement? Holding:
No. In such a case, the attorney suffers no injury from the discharge, and is
thus entitled to no damages. |
Where
the regular hourly fee of an attorney hired on a contingency basis, multiplied
by the hours expended, exceeds the amount of the contingency fee, a previously
discharged attorney is not entitled to any fees.
In
so holding on April 28, U.S. District Judge Lynn S. Adelman denied an award of
any fees to the attorney initially hired by Steven A. Avery to prosecute his civil
rights claim against Manitowoc County.
Avery
was convicted of sexual assault and spent 18 years in prison before DNA testing
revealed his innocence, leading to his release.
Avery
later hired two separate groups of attorneys to represent him, on the same day
in October 2003. He signed a 40 percent contingency fee agreement with the law
firm of Gingras, Cates and Luebke (GCL), and also engaged Attorney Walter F. Kelly
on a 33-1/3 percent basis, with the understanding that Attorney Stephen M. Glynn
would assist Kelly.
Shortly
thereafter, Avery decided he wanted Kelly to represent him, and discharged GCL.
Kelly and Glynn then brought a 42 U.S.C. 1983 action on Avery’s behalf in
federal court.
In
November, 2005, Avery was arrested and charged with homicide and sexual assault
of a different victim. The Section 1983 action settled in February 2006 for $400,000,
and Judge Adelman directed Kelly to retain forty percent ($160,000) in his trust
account, pending resolution of the fee issue.
Applying
the leading Wisconsin case on the subject, Tonn v. Reuter, 6 Wis.2d 498 (1959),
Adelman held that Kelly and Glynn were entitled to the entire fee, and that GCL
was entitled to nothing.
In
Tonn, the Wisconsin Supreme Court held that the proper measure of compensation
for a lawyer who has been retained under a contingency fee agreement, and then
discharged without cause, is the amount of the settlement or judgment, less a
fair allowance for the services and expenses the lawyer would have expended performing
the balance of the representation.
Adelman
found that Kelly and Glynn incurred more than $28,000 in out-of-pocket expenses,
and spent 1,050 hours on the case. Their hourly billing rates are $300 and $350,
respectively, resulting in $328,000 worth of legal services. Adelman found that
both the rates and the hours expended were reasonable.
Applying
Tonn to these facts, Adelman concluded, “GCL is entitled to a forty percent
contingency fee on the settlement of $400,000 ($160,000) less a fair allowance
for the services and expenses which it necessarily would have expended in performing
the balance of the contract. The best measure of the services and expenses which
GCL necessarily would have expended in performing the balance of the contract
is the amount that Kelly and Glynn actually expended. This is so because Kelly
and Glynn expended a reasonable number of hours and charge reasonable rates. Kelly
and Glynn expended $328,000 in services and $28,000 in costs. Thus, a fair allowance
for the services and expenses that GCL necessarily would have expended exceeds
the $160,000 that its forty percent contingency fee would have produced.”
As
a result, Adelman held that GCL is not entitled to any fee.
Defending
the result, he wrote, “This result is not inequitable because … plaintiff
discharged GCL before it commenced work on the case. Kelly and Glynn are entitled
to whatever they agreed to with plaintiff. If their entitlement is less than $160,000
(which seems not to be the case), plaintiff is entitled to the balance.”
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David
Ziemer can be reached by email.
