Smith, In re

• Decision Date: 10 March 1953
• Docket Number: No. 4075,4075
• Citation: 42 Wn.2d 188,254 P.2d 464
• Parties: In re SMITH. C. D.
• Court: Washington Supreme Court

Page 188

42 Wn.2d 188

254 P.2d 464

In re SMITH.

C. D. No. 4075.

Supreme Court of Washington, en Banc.

March 10, 1953.

A. Vernon Stoneman, Seattle, for Washington State Bar Ass'n.

Arthur E. Simon, Seattle, for the accused.

HAMLEY, Justice.

This disciplinary proceeding was instituted on April 2, 1951, when Washington State Bar Association (association) filed charges of professional misconduct against respondent Joseph B. Smith. Smith was admitted to the bar of the state of Washington in 1925, and maintains his office at Seattle, Washington.

The charges pertain to respondent's conduct in relation to his client in a certain action for divorce. In January, 1950, Mrs. Nellie Keller (now Mrs. Nellie Keller Shirey) engaged respondent to represent her in a divorce action which had been instituted by her husband. On February 9, 1950, respondent prepared and both parties executed a written agreement, the operative portion of which reads as follows:

'* * * I Nellie Keller agree to pay Joseph B. Smith, a sum in addition to the amount he would be allowed as fees by the opposing side, equal to Twenty Percent (20%), or in other words I will pay him 20% in addition to the amount the opposing side is willing to allow as attorney fees for his services. It is also agreed that I shall not have to pay him any fees unless he makes a recovery or settlement.

'(Sd.) Nellie Keller

'I agree to represent Nellie Keller according to the terms above and to do my best to make as large recovery as is possible for her.

'(Sd.) Joseph B. Smith'

Pursuant to this agreement, respondent prepared, served and filed a cross-complaint for divorce. He also procured two restraining orders and orders to show cause; carried on certain investigations in Tacoma, Washington; participated in negotiations which led to the preparation and execution of a property settlement agreement; and secured a divorce for Mrs. Keller on her cross-complaint, the proceeding being then uncontested.

During the course of the proceedings, and pursuant to court order, Mr. Keller paid three hundred dollars to Mrs. Keller as temporary support money, and seventy-five dollars to respondent as attorney's fees. Under the terms of the property settlement agreement, Mr. Keller paid Mrs. Keller an additional sixteen hundred dollars as a compromise of the property rights as to separate and community property, and 'including support allowance, alimony and attorney fees of the said Nellie Keller.'

Respondent and his client then had a heated discussion as to the amount of attorney's fees to be paid to him, and regarding reimbursement to him for certain personal loans he had made to Mrs. Keller. The result was that respondent retained $625, which, according to his testimony, included reimbursement for loans and expenses and an attorney's fee of $454.50.

Mrs. Keller then complained to the association. Concurrently she instituted a civil suit against respondent in the superior court for King county, to recover $550 alleged to have been 'unlawfully and feloniously converted' by respondent in connection with the transactions referred to above.

The association served a complaint upon respondent, charging that he had been guilty of professional misconduct. The complaint states two grounds for disciplinary action. The first is that, in entering into a contingent fee agreement with a client involving the rendition of professional services in a divorce action, respondent was guilty of conduct unbecoming a lawyer, and of a breach of the canons of professional ethics. The second ground stated in the complaint is that, in charing the 'unconscionable' fee of $550 for professional services rendered in that case, respondent violated his oath and duties as an attorney and the canons of professional ethics.

A hearing was conducted before a trial committee, which thereafter made the following report to the board of governors of the association concerning the charges referred to above:

'I. That attorney Joseph B. Smith entered into a written contract to represent a party in a divorce action in which it was agreed that he was to receive a contingent attorney fee of twenty per cent of the amount recovered in the action for his client in addition to the amount allowed as attorney fees by the opposing side, and that such agreement was in violation of the code of ethics of the profession and previous rulings of the Washington State Board of Governors interpreting the canons of ethics and prohibiting such contingent fee agreements in divorce actions. Such agreement was a violation of his duties and obligations as an attorney.

'II. That the attorney fee actually charged and retained by attorney Joseph B. Smith in such case, while not unconscionable was excessive considering the nature and extent of his legal services and the results obtained for his client.'

The trial committee report contains two additional paragraphs in which it is stated that respondent was, in other respects, guilty of professional misconduct in relation to his client in the divorce action. Since, however, these paragraphs relate to matters not referred to in the complaint, we do not notice them further in this opinion.

The trial committee closed its report with the recommendation that respondent's conduct would not warrant suspension or disbarment, but did warrant a reprimand. This report was considered and approved by the board of governors. Respondent was thereafter notified to appear before the board of governors to receive a reprimand.

The form of reprimand contains a place for respondent to signify whether he accepts or declines the reprimand. By its terms, acceptance of the reprimand would constitute an admission that the recitals contained in the reprimand are true and correct. It would also signify consent to having the reprimand become a part of respondent's permanent record, to be considered in any future disciplinary action.

Respondent advised the board of governors that he did not consider himself guilty of any wrong, and would not accept the reprimand. The board thereafter reaffirmed its previous action and submitted its report to this court 'for such disposal as it deems warranted.'

Two questions are presented for our consideration, one of which has to do with the asserted charging and acceptance of excessive fees. It will be observed that the report of the trial committee expressly disavows the allegation of the complaint that the fee received was 'unconscionable.' Instead, it is asserted that the fee was 'excessive,' considering the nature and extent of the services rendered and the results obtained for respondent's client.

Respondent and his client entered into an express contract as to fees. However, for reasons hereinafter set out, respondent's claim to the fees actually retained must rest, not upon the terms of an express contract, but upon quantum meruit. The gist of respondent's claim is thus the reasonableness of the fee charged. The place to determine any controversy between attorney and client as to the reasonableness of fees claimed under quantum meruit is in a civil action at law. Such an action is here pending. Under such circumstances, the use of disciplinary proceedings to determine whether or not a fee charged or collected is reasonable is wholly inappropriate. See Herrscher v. State Bar of California, 4 Cal.2d 399, 49 P.2d 832.

We are therefore of the view that, when the trial committee and the board found that the fee here retained was not unconscionable, the disciplinary proceedings, in so far as it relates to the amount of fee, should thereupon have been terminated. The determination that the fee retained was 'excessive' therefore cannot serve as a basis for the recommended reprimand.

It may also be noted that this determination by the trial committee and board is ineffectual for another reason. The rules for discipline of attorneys contemplate that, in reviewing matters of this kind, the supreme court is to have the benefit of the board's written findings. Rule 43, Discipline of Attorneys, 34A Wash.2d 196. Here we have no findings as to the facts, but only the legal conclusion that, considering the nature and extent of the services and the results obtained, the fee was excessive.

This brings us to the second and more important question presented in this proceeding. In entering into the contingent fee contract referred to above, was respondent guilty of professional misconduct, and if so, was the proposed reprimand appropriate?

It will be observed that the twenty per cent mentioned in the portion of the contract quoted above is not referenced to anything. The testimony indicates, however, that respondent construed the agreement as entitling him to twenty per cent of all sums received by Mrs. Keller, whether in the form of temporary support money paid by order of the court, or in connection with the property settlement. It is also to be noted that the property settlement itself provides that the sum therein agreed upon is to be paid in lieu of support allowance, alimony and attorney's fees, as well as in compromise of the respective property rights of the parties.

The only canon of professional ethics which relates specifically to contingent fees is Canon 13, supra, reading as follows:

'A contract for a contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness.' (Italics supplied.)

In Beck v. Boucher, 114 Wash. 574, 195 P. 996 (action for partition), the same rule is announced without reference to Canon 13. See, also, Hardman v. Brown, 153 Wash. 85, 279 P. 91 (collection of creditor's claim); and Hamlin v. Case & Case, Inc., 188 Wash. 150, 61 P.2d 1287 (claim for unpaid wages and cash).

Neither Canon 13 nor any other canon of professional ethics is helpful in determining whether a contingent...