South Carolina Lawyer
SC Lawyer, May 2007, #3.
Fee agreement enforceability
South Carolina LawyerMay 2007Fee agreement enforceabilityBy John FreemanOn October 5, 2006, the Court of Appeals issued an unpublished opinion that turned out to be, among lawyers at least, one of the most discussed opinions of the year. The case was Tillmanv. Grant, No. 2006-UP-340 (Ct. App. 2006), available at www.judicial.state.sc.us/opinions/unpublishedopinions/index.cfm?fuseaction=displayOpinion&caseNo=2006UP340. The case involved a problem every experienced attorney has dealt with at one time or another, efforts to collect under the fee contract from a recalcitrant client.
A basic rule of lawyering is that you should not sue a client over fees. The risks you run are huge, starting with the strong likelihood, if not the inevitability, that you will be on the receiving end of a counterclaim filed on behalf of the client. In Tillman, the suing lawyer, Wheeler Tillman of North Charleston, did not get tagged with a counterclaim. He actually collected the contingent fee set according to his fee contract. Further, he received a fee award for suing to collect his fee, also in accordance with his retainer agreement. Nonetheless, the outcome left Tillman unhappy and has been viewed with some concern by various lawyers.
The reason lawyer Tillman was not pleased with the Court of Appeals' ruling is he wanted more than the $36,000 his 40 percent contingent fee would have yielded based on his client's $90,000 settlement. Specifically, Tillman sought a $61,915 fee based on time spent on the matter at his hourly rate of $175 per hour. Tillman contended he was entitled to the extra money because a clause in his contract required his client, Grant, to pay him either the contingent fee or a fee based on hours invested at $175, "whichever amount is greater," in the event the client fired him before settlement or verdict.
The $90,000 recovery in question flowed from a personal injury settlement that was agreed to at the close of the first day of trial. At that time, in open court, the "terms of the settlement were placed on the record and the parties acknowledged their consent to settle." The insurance company subsequently tendered a settlement check and a release. Up to this point, things were fine, but then the situation changed.