Good Deed Not Punished

A law firm’s accommodation to accept fees from a judgment when the client became unable to keep up with the agreed hourly rate did not convert the arrangement to an unwritten contingency fee, according to an unpublished decision of the Kansas Court of Appeals

contrary to Demster’s assertion, the district court did not enforce a contingency fee agreement. In a contingency fee agreement, the attorney agrees to be paid in the form of a fixed amount or percentage of the potential recovery—but in the event there is no recovery, the lawyer forgoes compensation. See, e.g., Consolver v. Hotze, 306 Kan. 561, 562, 395 P.3d 405 (2017) (describing a “standard contingency fee agreement”). That is not what happened here. Rather, the district court determined that the Firm was entitled to $98,057.32 in unpaid attorney fees and expenses and $764.74 in costs based upon the parties’ written attorney representation and fee agreement in which Demster agreed to fixed hourly billing rates. The fee award was calculated by multiplying the applicable hourly rate by the number of hours worked, regardless of whether the Firm recovered on Demster’s behalf. That is not a contingency fee.

The parties’ written fee agreement did not transform into a contingency fee agreement by virtue of the Firm’s willingness to delay receiving payment. Neither did the Firm agree to forgo payment if its efforts were not victorious. Rather, the Firm agreed to delay receiving payment after it determined that Demster was having trouble making regular payments and that it was likely to recover on her behalf. So, rather than continuing to regularly invoice Demster for the legal fees and expenses as they were incurred when she could not afford the payments, the Firm decided to agree to delay receiving payment from the judgment. Demster argues that because the Firm stopped regularly sending her invoices, the Firm agreed to accept a contingency fee arrangement. While it is clear the Firm’s position would have been strengthened if it had continued to send Demster invoices and somehow indicate that the Firm agreed to accept delayed payment of those invoices, that failure did not somehow terminate the preexisting representation contract or create a contingency fee agreement. The parties simply changed the payment due date of the hourly fees, not the basis or amount of the payment.

Moreover, even if Demster had not agreed to fulfill her contractual obligation under the written fee agreement using the judgment obtained in her favor by the Firm, the district court still would have had the authority to order her to do so as a form of further relief pursuant to K.S.A. 60-1703. Accordingly, affirming the district court’s judgment and order does not require this court, explicitly or implicitly, to enforce an unwritten contingency fee agreement.

Demster’s real grievance appears to be with the district court’s factual finding that, when Demster ran out of money, she agreed to pay the Firm’s further-incurred fees and expenses out of the judgment, and not with the district court’s exercise of subject matter jurisdiction over the petition. However, Demster does not challenge that factual finding on appeal; nor does she pursue any theory attacking the validity of the oral agreement, such as a statute-of-frauds challenge. Rather, Demster only challenges the district court’s exercise of subject matter jurisdiction. That challenge fails.

The client has sued her daughter in connection with an inheritance granted by her mother. (Mike Frisch)