The Iowa Supreme Court enforced a contingent fee

The only certainty about litigation is uncertainty. Depending on how the litigation unfolds, a contingency fee contract is a gamble for both attorney and client. A contingency fee contract allots to the attorney the risk of much work with little reward and allots to the client the risk of little work with substantial fees. The question presented in this case is whether we will reevaluate the risk of a contingency fee contract from a position of hindsight.

After a severe car accident with a city bus left a motorist in critical condition, the motorist’s family sought legal representation. A Sioux City law firm agreed to represent the motorist’s interests. Pursuant to this agreement, a contingency fee contract required the motorist to pay onethird of the recovery, if any, to the law firm for attorney fees. Sixteen months later, the city suggested mediating the case. The motorist was offered $7.5 million to settle the case. This offer was accepted.

When the motorist failed to pay the one-third contingency fee, the law firm filed a petition to enforce its payment under the contingency fee contract. The motorist argued the one-third contingency fee was in violation of Iowa Rule of Professional Conduct 32.1.5(a), which prohibits a lawyer from collecting an unreasonable fee. The district court disagreed with the motorist, finding the one third-contingency fee was reasonable at the time of its inception. Judgment was ordered against the motorist for one-third of the recovery plus interest.

The motorist appealed, and we retained the appeal. On our review, we conclude the one-third contingency fee contract was reasonable at the time of its inception. Consistent with our existing caselaw, we will not use the noncontingency fee factors under rule 32:1.5(a) to reevaluate this contingency fee contract from a position of hindsight. This case does not