161 F. Supp. 3d 752
W.D. Mo.2015Background
- Jennifer Clark filed a wrongful-death suit after her husband died in a 2005 Chevrolet Cobalt crash; claim was submitted to GM’s Feinberg-administered Compensation Fund and settled for a $3,819,320 gross award.
- Clark signed a written fee agreement (May 2014) giving counsel a 40% contingent fee on gross recovery and making the client liable for costs even if there was no recovery; local counsel (PalmerOliver) was added by addendum splitting fees 75/25.
- The Court conditionally approved the settlement but withheld approval of the attorneys’ fee pending supplemental briefing under Missouri Rule of Professional Conduct 4-1.5(a) and ordered fees deposited in the Court registry.
- Plaintiffs’ counsel produced affidavits asserting 40–50% contingency fees are customary in such cases and that they did not keep contemporaneous time records; counsel described limited work to secure Compensation Fund approval (no depositions, no trial).
- The Court found the record supported an estimate of no more than 450 total hours worked and under $5,000 in advanced expenses; it applied a two-step reasonableness test (reasonable in principle at inception; reasonable in operation after quantification) and concluded the 40% fee ($1,527,728) was unreasonable and therefore void.
- The Court awarded counsel a quantum meruit fee of $945,000 (enhanced from a $157,500 base at $350 blended hourly to account for contingency/importance), reimbursed expenses, and distributed the remaining registry funds to claimants (80/10/10 split).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 40% contingency fee in the written agreement was reasonable under Mo. R. Prof. Conduct 4-1.5(a) | 40% is standard in auto products-liability/wrongful-death cases; fee agreement complied with disclosure rules; counsel need not keep hours. | Fee must be judged in this case’s circumstances; amount may be unreasonable given work, expenses, and reduced risk. | The 40% ($1,527,728) was unreasonable both at inception and in operation; the Fee Agreement is void and unenforceable. |
| Whether courts should apply a two-part reasonableness test (inception and operation) to contingent-fee agreements | Limit review to reasonableness at the time of contracting. | Courts may and should assess both the agreement at inception and how it operated when quantified. | Adopted two-part test: agreement must be reasonable at inception and reasonable in operation after quantification. |
| Whether counsel may recover under quantum meruit where a contingent-fee agreement is void | Counsel argued they are entitled to the contracted percentage. | If agreement void, counsel may still recover a reasonable fee under quantum meruit for services performed. | Counsel entitled to quantum meruit; court computed a reasonable fee ($945,000) based on factors (time, skill, result, contingency). |
| Proper distribution of registry funds after fee determination | Counsel proposed distribution per written 40% agreement. | Court must enforce professional-conduct limits and distribute remaining funds equitably to claimants after reasonable fee and expenses. | After awarding $945,000 and reimbursing costs, remaining $583,238.68 distributed 80% to Plaintiff and 10% each to decedent’s parents. |
Key Cases Cited
- Eng v. Cummings, McClorey, Davis & Acho, PLC, 611 F.3d 428 (8th Cir. 2010) (fee-splitting agreement unenforceable where it violated Missouri Rules of Professional Conduct)
- Neilson v. McCloskey, 186 S.W.3d 285 (Mo. Ct. App.) (attorneys must earn fees by performing appropriate work or assuming financial/ethical responsibility)
- Tobin v. Jerry, 243 S.W.3d 437 (Mo. Ct. App.) (Rule 4-1.5(a) factors govern fee reasonableness)
- McCoy v. The Hershewe Law Firm, P.C., 366 S.W.3d 586 (Mo. Ct. App.) (trial court discretion in evaluating Rule 4-1.5 factors and quantum meruit framework)
- In re Swartz, 686 P.2d 1236 (Ariz. 1984) (a fee reasonable when contracted can become excessive in retrospect; supports reviewing post-contract events)
- Berry v. Volkswagen Group of Am., Inc., 397 S.W.3d 425 (Mo. 2013) (trial courts are experts on attorneys’ fees)