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ATTORNEY FEE DISPUTE AFTER TERMINATION UNDER CONTINGENT FEE CONTRACT - ORE TENUS RULE - POPE, MCGLAMRY, KILPATRICK, MORRISON & NORWOOD, P.D. V. DUBOIS

Pope, McGlamry, Kilpatrick, Morrison & Norwood, P.D. v. DuBois, [Ms. 2160197, July 14, 2017] __ So. 3d __ (Ala. Civ. App. 2017). In an opinion by Judge Thomas (Pittman, J., concurs; Thompson, P.J., Moore, and Donaldson, J.J., concur in the result), the court affirms the trial court's judgment declining to award intervenor law firm any attorney fees or expense reimbursement from the settlement of the former client's (DuBois's) personal injury case. Pursuant to a written fee contract, the client had employed two law firms, including the Pope, McGlamry law firm (hereinafter "firm"). While the firm was representing the claimant on a contingency fee basis, George Walker, III, a partner in the firm, and David Rayfield, an associate, worked on the DuBois tort claim.

Prior to the settlement of the case, Walker and Rayfield left the firm for various reasons. Subsequently, DuBois terminated the firm from representing him in the litigation and determined that he would proceed in the litigation with Rayfield as his counsel.

The firm intervened in the action and filed a verified complaint for attorney's fee lien under § 34-3-61, Ala. Code 1975, as well as expense reimbursement of $80,388.45. Approximately a year after the firm had been terminated under the fee agreement, the tort claim was settled.

The trial court subsequently heard the firm's claim for an award of fees and concluded that the firm had failed to meet its burden of proving that it was entitled to an award of attorney fees. Although the firm's managing partner testified at the ore tenus hearing that the firm did not maintain contemporaneous records of time spent on contingency fee cases, he estimated that it had spent as many as 1,750 hours working on the case before it was terminated. He also testified that the firm sought $58,000 in expense reimbursement rather than the $85,000 that had been set forth in the verified complaint that he had signed. Ms. at *17. The witness also admitted that he did not have personal knowledge of the amount of time spent on the matter other than looking at what he described as "the logs and discussions with other members in the firm." Ms. at *17-18. The partnership claimed a fair value of its representation was between $437,000 and $481,000 plus the $58,000 in claimed expenses. Ibid.

Rayfield testified that he had done the vast majority of the work on the case before the firm had been terminated, but that work was not substantial and included many items that were done by his assistant. Ms. at *24. He testified that by contrast, the case became very active, complex, and difficult during the final year before the settlement, that is the period after the firm had been terminated. Ibid.

Applying the Peebles v. Miley factors on ore tenus review, the court affirmed the trial court's judgment that the firm was not entitled to any fee or expense reimbursement. The court noted that an attorney seeking a fee " 'wins' " by obtaining a favorable result on behalf of the client and should, therefore, be rewarded for his or her gamble. Ms. at *35, quoting Peebles v. Miley, 439 So. 2d 137, 142 (Ala. 1983). The court, however, concluded that the ore tenus testimony supported a finding that it was not the firm's work on DuBois's case that resulted in the settlement, but the work done after its employment was terminated. Ms. at *35-36.

The court also noted that only a portion of DuBois's claims resulted in an economic recovery, and the firm had presented no evidence of the time spent working on those specific claims. Ms. at *37. In affirming the court's rejection of the firm's claim for expenses, the court noted that it was the firm that initiated litigation seeking what the contract had provided as "the fair value" of its services. Ms. at *40. The court held that:

Sufficient evidence was presented at trial from which the trial court could have concluded that, despite knowing of the impropriety, the firm had averred in its complaint that DuBois should be required to pay the improperly included interest charges. Both Kilpatrick and the firm's attorney signed the complaint. Rule 11(a), Ala. R. Civ. P., which provides the appropriate procedure regarding the signing of, among other things, pleadings provides, in relevant part: "If a pleading ... is signed with the intent to defeat the purpose of this rule, it may be stricken as sham and false and the action may proceed as though the pleading ... had not been served." After determining that the firm lacked a reasonable basis for the averments set forth within its complaint regarding the amount of expenses allegedly owed by DuBois, the trial court acted within its discretion in refusing to consider the firm's request for an award of those expenses.

Ms. at *41.

The court rejected the firm's contention that while the trial court had discretion to set the amount of fees, it did not have discretion to award no fee. The court noted this principle is limited, as it presupposes "that the party seeking an award of attorney fees has introduced actual bills, or some other reliable evidence, demonstrating the amount of work done." Ms. at *43. Citing the Third Circuit's seminal case on the lodestar method of awarding fees, Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973), the court held that the firm had failed to meet its burden of providing " 'some fairly definite information as to the hours devoted to' DuBois's case and the trial court therefore lacks sufficient evidence upon which to formulate an award of attorney fees." Ms. at *46.

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