Tuesday, May 14, 2019

Contingent Fee With Ambiguity Draws Tennessee Censure

From the web page of the Tennessee Supreme Court

The Tennessee Supreme Court has upheld an attorney’s public censure, concluding that the sanction was not arbitrary or capricious and was supported by substantial and material evidence. 

This disciplinary matter arose out of Carlos Eugene Moore’s representation of his client in a personal injury action.  Mr. Moore entered into a contingent fee agreement with his client, which provided that if the client refused to accept a settlement offer that Mr. Moore advised was reasonable and should be taken, the client would be required to pay Mr. Moore the contingency fee “on the basis of that offer” unless waived by Mr. Moore. 

When Mr. Moore received a settlement offer, he advised his client that she should accept the offer, but she refused.   The trial court then granted Mr. Moore’s motion to withdraw from representation of the client, and Mr. Moore filed a series of motions for a lien against his client’s eventual recovery in her personal injury case for fees and expenses “presently owed.”

The hearing panel determined that Mr. Moore’s contingency fee agreement violated the Rules of Professional Conduct because the fee was unreasonable in that it was not contingent on the case’s outcome but rather contingent upon Mr. Moore’s determination that a settlement offer was “reasonable.”  The panel also determined that, in Mr. Moore’s motions to assert lien filed, Mr. Moore violated the Rules of Professional Conduct by seeking an amount in excess of the fee agreement and using an hourly rate, which was not contemplated in the written fee agreement.  Accordingly, the panel imposed a public censure as Mr. Moore’s discipline.  The chancery court, on appeal, upheld the decision of the hearing panel.  Mr. Moore then appealed to the Tennessee Supreme Court. 

In the unanimous opinion authored by Chief Justice Jeff Bivins, the Court agreed with the hearing panel that the contingent fee agreement was ambiguous at best and that, under two possible interpretations, the fee was based on the original settlement offer and not the client’s eventual recovery.  Thus, the fee was unreasonable and violated the Rules of Professional Conduct because the Rules only allow a contingency fee on the outcome of the matter. The Court also agreed with the hearing panel that the contingency fee agreement violated the Rules of Professional Conduct because it gave Mr. Moore a proprietary interest in any settlement offer arising in the case.  The Court determined that the hearing panel’s judgment was supported by evidence that is both substantial and material. As a result, the panel’s judgment was not arbitrary or capricious.  The Court affirmed the judgments of the trial court and the hearing panel imposing a public censure. 

To read the Court’s opinion in Carlos Eugene Moore v. Board of Professional Responsibility, authored by Chief Justice Jeff Bivins, go to the opinions section of TNCourts.gov.

(Mike Frisch)


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