In re Conservatorship of F.M.K., H.K., Conservator v. Hayes Lorenzen Lawyers, PLC
20-1272
| Iowa Ct. App. | Aug 4, 2021Background
- Parents signed a contingency-fee agreement with Hayes Lorenzen (40%) on Aug 27, 2015 to pursue medical-malpractice claims for their child; Hayes Lorenzen spent >3 years preparing the case and retained 14 experts.
- Mediation offers of $1.5M and later $1.75M were rejected by the parents, who demanded $20M; trial was set for October 2019.
- On June 4, 2019 Hayes Lorenzen sent a letter urging appointment of a guardian ad litem (GAL) and offered four options including withdrawal; parents chose to retain new counsel (Trial Lawyers for Justice), who used Hayes Lorenzen’s experts and file materials.
- Hayes Lorenzen filed an attorney’s lien claiming $700,000 (40% of the last defense offer of $1.75M) plus unreimbursed expenses (~$167,540.87); settlement later exceeded $1.75M but terms were confidential and $700,000 was reserved pending the dispute.
- The district court found the parents terminated the contract but nonetheless concluded the contingency-fee contract was reasonable at inception and awarded Hayes Lorenzen $700,000; parents appealed.
- The Iowa Court of Appeals affirmed, holding the district court did not abuse its discretion in finding Hayes Lorenzen did not terminate the contract and in awarding the $700,000 fee as reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hayes Lorenzen constructively terminated the attorney–client relationship | June 4 letter was an ultimatum forcing parents to terminate; firm abandoned them | Firm continued settlement negotiations and trial preparation; did not abandon | Court: firm did not terminate; parents elected to hire new counsel (no abuse of discretion) |
| Entitlement to 40% contingency fee when recovery occurred after parents changed counsel | No recovery occurred while Hayes Lorenzen represented them, so no contingency fee due | Contingency contract was valid and reasonable; firm performed majority of work and risked time/expense | Court: applied Munger; contingency fee reasonable at inception; $700,000 award upheld |
| If fee measured by quantum meruit, did Hayes Lorenzen prove fair and reasonable value | Parents argue firm failed to prove fair value and detailed billing not provided | Firm produced substantial evidence of multi‑year work, experts, and unreimbursed expenses; detailed billing not required under contingency context | Court: even under quantum meruit the record supported the fee; detailed time records were not required |
| Whether district court abused its discretion in setting fee amount | Award too high / improperly calculated given change in counsel and timing | District court is expert on fee reasonableness; substantial evidence supports its finding | Court: no abuse of discretion; $700,000 reasonable and affirmed |
Key Cases Cited
- Munger, Reinschmidt & Denne, L.L.P. v. Lienhard Plante, 940 N.W.2d 361 (Iowa 2020) (contingency-fee contracts generally enforceable; reasonableness assessed at inception)
- King v. Armstrong, 518 N.W.2d 336 (Iowa 1994) (district court is expert on reasonable attorney fees; fee awards reviewed for abuse of discretion)
- Iowa Sup. Ct. Disciplinary Bd. v. Muhammad, 935 N.W.2d 24 (Iowa 2019) (billing records used to assess fees when no contingency agreement governs)
- Iowa Sup. Ct. Disciplinary Bd. v. Hoffman, 572 N.W.2d 904 (Iowa 1997) (contingency fee may be excessive if recovery is unrelated to attorney’s work)
- Eisenhauer ex rel. T.D. v. Henry Cty. Health Ctr., 935 N.W.2d 1 (Iowa 2019) (abuse-of-discretion standard explained)