The Tennessee Court of Appeals

The client retained attorney Hodges, who had filed a wrongful death suit and secured a settlement offer and was discharged

Three days later, Mr. Hodges and Mr. Martin filed a notice of attorneys’ lien in the wrongful-death action, claiming a right to one-third of Plaintiffs’ total recovery or one third of $700,000, the defendants’ latest offer.

After discharging Mr. Hodges, Ms. Cordova retained attorneys David Rich and David Hall of Honeycutt, Doyle, and Rich, PLLC (collectively, “HDR”). The fee agreement with HDR entitled it to 33% of her eventual recovery.

Within a week of being retained, HDR received a $600,000 offer of judgment from the Ready Mix defendants. Ms. Cordova did not accept the offer, and HDR promptly began discovery. In February of 2015, Plaintiffs amended their complaint to add additional claims and defendants.

The plaintiff’s insurer also asserted subrogation claims

At the mediation, Plaintiffs accepted the Ready Mix defendants’ settlement offer of $1,350,000. Mr. Elliot and Mr. Rich, however, could not agree on the amount of Travelers’ subrogation interest or the allocation of HDR’s fee between Plaintiffs and Travelers. Nevertheless, Plaintiffs completed the settlement with the Ready Mix defendants. The settlement proceeds were held by the court pending resolution of the various lien claims to the settlement proceeds and assessment of costs.

The court on the lien issues

Plaintiffs first contend Mr. Hodges forfeited his entitlement to a fee by engaging in unethical conduct. Alternatively, they contend that a “reasonable fee” for Mr. Hodges was nothing because he was discharged for cause early in the litigation.

For its part, the Hodges Estate contends the trial court erred by calculating Mr. Hodges’s fee using the $400,000 settlement offer rather than the $600,000 offer.

Associating with Mr. Martin without written consent did not negate entitlement to a fee

Although neither Mr. Hodges nor Mr. Martin denied that they failed to obtain Plaintiffs’ written consent to the fee-sharing arrangement, this transgression is not “of a most flagrant sort,” and it does not go “directly to the heart of the fiduciary relationship that exists between attorney and client.” White, 937 S.W.2d at 803. We reached the same conclusion in Coleman v. Coleman, No. W2012-02183-COA-R3-CV, 2013 WL 5308013 (Tenn. Ct. App. Sept. 19, 2013). We reasoned that the violation of Rule 1.5(e) was not “flagrant” because the client was informed about the fee when her relationship with the firm began, and she “did not pay more overall attorney fees because of the referral fee agreement.” Id. at *19

As to the fee award itself

The record before us reveals that only one factor was considered, the “results obtained,” which constitutes an error of law. Accordingly, we vacate the attorney fee awarded to the Hodges Estate and remand with instructions for the trial court to award a reasonable fee that is based on the relevant facts and factors. See Tenn. Sup. Ct. R. 8, RPC 1.5(a)