Saucier v. Hayes Dairy Products, Inc.

• Citation: 373 So.2d 102
• Decision Date: 15 December 1978
• Docket Number: No. 61562,61562
• Parties: Fred SAUCIER v. HAYES DAIRY PRODUCTS, INC. and the Hartford Group Insurance Company.
• Court: Louisiana Supreme Court

Page 102

373 So.2d 102

Fred SAUCIER v. HAYES DAIRY PRODUCTS, INC. and the Hartford Group Insurance Company.

No. 61562.

Supreme Court of Louisiana.

Dec. 15, 1978.

On Rehearing June 25, 1979.

Michael A. Patterson, Roy, Kiesel, Patterson & Abadie, Baton Rouge, amicus curiae, for defendant-appellant.

George W. Reese, in pro. per.

Emile L. Turner, Jr., New Orleans, for plaintiff-applicant.

Charles B. W. Palmer, Amite, amicus curiae.

SANDERS, Chief Justice.

The issue presented is whether an attorney discharged by his client without cause prior to the completion of his services is entitled to the percentage fee stipulated in his contingent fee contract, drawn and recorded in conformity with LSA-R.S. 37:218, when the client subsequently recovers from the adverse party. The Court of Appeal allowed recovery. We affirm.

Relator, Fred Saucier, was injured in an automobile accident on February 9, 1971. He employed Attorney George Reese to represent him in a claim for damages. Saucier executed a contingent fee contract, providing in pertinent part:

" * * *

"In consideration of services rendered or to be rendered I hereby assign to my said attorney an undivided thirty-three and one-third (33 1/3%) per cent interest in and to my said claim if it is to be resolved that the claim is one for damages.

"It is understood and agreed that neither I nor my said attorney may settle, compromise, or dismiss or in any way discontinue my claim without the written consent of the other. * * * "

After investigating the claim and conducting settlement negotiations, Reese filed suit in behalf of his client on January 25, 1972. There was a delay in bringing the case to trial, allegedly due to the client's deteriorating medical condition. On January 15, 1975, Saucier dismissed Reese and retained other counsel. Two weeks later, Reese filed his employment contract with the Clerk of Court and served certified copies on all parties to the suit in accordance with LSA-R.S. 37:218. He also intervened, claiming 33 1/3% Of any recovery.

Prior to trial of the main demand, the parties agreed upon a settlement of $75,000. Reese acquiesced in the settlement, without prejudice to his intervention. Following trial of the intervention, the district court limited Reese's recovery to quantum meruit, awarding him $3,000 for legal services, plus court costs and medical expenses paid for his client. The district court did not assign reasons for its judgment.

The Court of Appeal found that Saucier discharged Reese without cause. Basing its award upon the contingent fee contract, it increased the award to $25,000, or 33 1/3% Of the recovery. La.App., 353 So.2d 732 (1972). We granted certiorari to review the judgment. La., 355 So.2d 265 (1978).

From a review of the record, we conclude that the evidence supports the Court of Appeal's factual findings. Hence, we accept its factual determination that the client discharged the attorney without cause.

When the contingent fee contract was executed and recorded, LSA-R.S. 37:218 provided:

"By written contracts signed by the client, attorneys at law may acquire as their fee an interest in the subject matter of the suit, proposed suit, or claim in the prosecution or defense of which they are employed, whether the suit or claim be for money or for property. In such a contract for employment, it may be stipulated that neither the attorney nor the client may, without the written consent of the other, settle, compromise, release, discontinue or otherwise dispose of the suit or claim. Either party to the contract may, at any time, file it with the clerk of the district court in which the suit is pending or is to be brought and have an original or certified copy made and served by registered or certified mail on the opposing party. After such service, any settlement, compromise, discontinuance, or other disposition made of the suit or claim by either the attorney or the client without the written consent of the other is null and void and the suit or claim shall be proceeded with as if no such settlement or discontinuance had been made." ¹

The present contract was drawn, recorded, and served in compliance with the statute. A determination of the basis for and amount of recovery, therefore, requires consideration of the nature of the contract and effect of the statute.

The relator contends that, despite the employment contract and compliance with the statute, a client may without cause discharge his attorney at any time and relegate the attorney to the recovery only on quantum meruit for services rendered to the time of discharge. The attorney asserts that he is entitled to recover the full amount of the contract when he has complied with the statute and the client has discharged him without cause.

A contingent fee contract is a contract for legal services in which the attorney's fee depends upon success in the enforcement of the client's claim. The attorney bears the risk of loss insofar as his legal services are concerned. Due v. Due, La., 342 So.2d 161 (1977); Pocius v. Halvorsen, 30 Ill.2d 73, 195 N.E.2d 137, 13 A.L.R.3d 662 (1963). Such contracts promote the distribution of needed legal services by reducing the risk of financial loss to clients and making legal services available to those without means.

Louisiana courts have long approved the contingent fee contract. See Hope v. Madison, 194 La. 337, 193 So. 666 (1940); Andriac v. Richardson, 125 La. 883, 51 So. 1024 (1910); Clay v. Ballard, 9 Rob. 308, 41 Am.Dec. 328 (1844); Flower v. O'Conner, 7 La. 198 (1834). Since 1906, our Legislature has protected it by statute. See Act 124 of 1906. In addition, the Louisiana Code of Professional Responsibility recognizes such a contract.

DR 5-103 provides in pertinent part:

"(A) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation he is conducting for a client, except that he may:

(1) Acquire a lien granted by law to secure his fee or expenses.

(2) Contract with a client for a reasonable contingent fee in a civil case." 21A LSA-R.S., p. 206.

Attorney's fees, of course, are subject to review and control by the courts. Husk v. Blancand, 155 La. 816, 99 So. 610 (1924); Norrell v. Chasan, 125 N.J.Eq. 230, 4 A.2d 88, 120 A.L.R. 1238 (1939); 7 Am.Jur.2d, Attorneys at Law, § 215, p. 172. One of the factors courts consider, however, is whether the fee is fixed or contingent. DR 2-106, Louisiana Code of Professional Responsibility, 21A LSA-R.S., pp. 188-189.

LSA-R.S. 37:218 is designed as a legislative aid in the judicial regulation of the practice of law. See Ex parte Steckler, 179 La. 410, 154 So. 41 (1934); Meunier v. Bernich, La.App., 170 So. 567 (1936). It recognizes the contingent fee contract and protects the attorney in the collection of his fee. When an attorney follows the statute, he has an enforceable right to share in the funds eventually recovered.

The statute, in our opinion, does not prevent the dismissal of the attorney, with or without cause. The client's power to dismiss the attorney remains intact. LSA-C.C. Art. 3028; Due v. Due, supra; Louque v. Dejan, 129 La. 519, 56 So. 427 (1911). When the dismissal is without cause, however, the statute safeguards the contractual contingent fee. United Gas Public Service Co. v. Christian, 186 La. 689, 173 So. 174 (1937); D'Avricourt v. Seeger, 169 La. 620, 125 So. 735 (1929); Guilbeau v. Fireman's Fund Insurance Company, La.App., 293 So.2d 216 (1974); Carlson v. Nopal Lines, 460 F.2d 1209 (5th Cir. 1972); Patterson, Contingent Fee Contracts: The Dilemma of the Discharged Attorney, 24 La. Bar J. 107, 116.

In Carlson v. Nopal Lines, supra, the United States Fifth Circuit Court of Appeal, considering a Louisiana contingent fee contract complying with LSA-R.S. 37:218, stated:

"A client may discharge his attorney, even a contingent fee attorney, and the attorney may not then insist that the attorney-client relationship continues after discharge. But the power to discharge, and the fact of discharge, are not determinative of the discharged attorney's rights under a Louisiana statutory contingent fee contract. The lawyer's rights under such a contract turn at least in part on whether the lawyer's performance gives the client good cause for dismissal or whether the dismissal frustrates what had been satisfactory performance of the attorney's obligations. See Acadian Production Corp. of Louisiana v. Land, 136 F.2d 1, 3 (5th Cir. 1943); United Gas Public Service Co. v. Christian, 186 La. 689, 173 So. 174 (1937)."

Courts elsewhere have reached the same result without a protective statute. See, e g., Walters v. Hastings, 84 N.M. 101, 500 P.2d 186 (1972); Carter v. Dunham, 104 Kan. 59, 177 P. 533 (1919); Annot., 136 A.L.R. 231, 233, 245; S. Speiser, Attorneys' Fees, § 4:34, p. 181 (1973).

The decisions have advanced two main theories for awarding the contractual fee: damages for breach of contract and constructive performance. Under the first theory, the court awards damages measured, at least presumptively, by the fee agreed upon. Roberts v. Montgomery, 115 Ohio 502, 154 N.E. 740 (1926); S. Speiser, Attorneys' Fees, § 4:35, p. 183 (1973). The second theory is that the client has prevented full performance without cause. Hence, the contract is considered performed. D'Avricourt v. Seeger, supra; Annot., 136 A.L.R. 231, 233; S. Speiser, Attorneys' Fees, § 4:34, pp. 181-182 (1973).

In D'Avricourt v. Seeger, supra, this Court held:

"It is expressly provided in article 2040 of the Civil Code that: 'The condition is considered as fulfilled, when the fulfillment of it has been prevented by the party bound to perform it.'

"The contract of sale of the two-thirds interest of Mrs. Bickmann and Mrs. Manzella to the Gentilly Development Company was clearly an act, on their part, of entering into another contract destructive of their first contract with plaintiff. A party cannot get out of his contract in that manner. No one...