We grant certiorari to consider the first impression question of whether a lawyer’s “interest” in contingent fee cases 1 is a part of the marital estate for purposes of equitable division in a matrimonial action. We find that contingent fee cases by their very nature do not constitute a vested interest and cannot be deemed jointly-acquired marital property until recovery is accomplished.
The second and only remaining issue on certiorari is whether the Court of Appeals had jurisdiction to determine the propriety of the trial court’s order ruling Husband’s projected income taxes were an appropriate consideration in dividing future income. We find that appellate body had jurisdiction to rule on the issue and did not err. 2 Therefore, the opinion of the Court of Appeals is vacated in part, the judgment of the district court is reversed, and the cause is remanded for further proceedings.
Sidney A. Musser, Jr. (Husband), is a successful attorney whose practice primarily includes representation of workers’ compensation claimants. These cases were handled on a contingency fee basis, and at the time Husband and Kenna Musser (Wife) were separated, Husband had 400 such cases pending. In valuing the marital estate, the trial court included Husband’s law practice as “work in progress” by assigning a value to each of the 400 pending cases.
Husband does not contest the manner in which the trial court valued the contingency fee cases. Rather, he asserts the cases should not be included in the marital estate because fees earned in the contingency fee cases constitute future income. We agree.
Contingent Fee Cases Are Not Marital Property.
Title 12 O.S.1991, § 1278 provides for property division to be made out of property which was
acquired
by the parties jointly
during their marriage.
This Court has held the assets of a professional practice of one spouse are appropriate elements of the marital property where those assets constitute jointly-acquired property.
Traczyk v. Traczyk,
However, we have also determined that § 1278 prohibits a trial court from dividing property that is
to be acquired in the future. Ettinger v. Ettinger,
Several jurisdictions have considered the question of whether an attorney’s contingent fee cases should be treated as marital property in a divorce action. Although the courts have almost uniformly agreed that it is impossible to establish a present value for con *39 tingent fee eases still in existence, the authorities have split on the issue before us. Despite the inability to determine a present value, some courts have concluded that such cases are marital property and devised ways to establish a value for property division purposes.
The difficulty in determining the value of contingency fee cases that have not been completed is illustrated by
Metzner v. Metzner,
The court in
In re the Marriage of Vogt,
In Garrett, the court determined that
“while it is true that an attorney is not entitled to the full benefit of his contract until the contingency upon which it is based is fulfilled, this does not mean that valid enforceable contract rights do not exist regardless of its fulfillment.”140 Ariz. at 567 ,683 P.2d at 1169 .
In making this determination, the court noted that the attorney or his estate is at least entitled to the reasonable value of his services in the event he is discharged or dies prior to fulfillment of the contract under Arizona case law.
Likewise, the court in
Due v. Due,
However, the courts in
Garrett
and
Due
failed to recognize that an attorney is paid
only if the client eventually receives money
by settlement or judgment.
See Quanstrom v. Standard Guar. Ins. Co.,
In
First Natl Bank & Trust Co. of Tulsa v. Bassett,
Likewise, the estate of a deceased attorney is entitled to receive the reasonable value of the services rendered by the attorney under a contingency fee contract for legal work performed by the attorney even though he died prior to settlement of the case by replacement counsel.
City of Barnsdall v. Curnutt,
Under the rationale of Bassett and Cumutt, an attorney is not entitled to receive payment for services rendered unless the client succeeds in recovering money damages. For this reason, we conclude that because Husband in the case at bar is not certain to receive anything under the contingency fee contracts, those contingency fee cases should not be considered marital property. At most, Husband has a potential for earning income in the future. He is not assured of earning anything for his efforts nor does he acquire a vested interest in the income from those cases unless his client recovers, an event impossible to accurately predict. Therefore, we deem pending contingency fee cases of a law firm to be future income and not a part of the marital assets. Mocnik, supra.
This holding comports with the decisions of other jurisdictions. For instance, the court in
In re the Marriage of Zells,
In
In re the Marriage of Tietz,
Likewise, the court in
Goldstein v. Goldstein,
“it is impossible to know in advance whether any specific contingent fee case will ultimately yield a fee — or, if it does, how much the fee will be. It is also nearly impossible to gauge how much work and expense will be required after the date of the divorce to become entitled to collect a contingent fee. These qualities of contingent fee agreements make them too remote, speculative and uncertain to be considered marital assets in maHng an equitable division of property.”414 S.E.2d at 476 .
The Superior Court of Pennsylvania discussed the characteristics of contingency fee contracts in determining whether goodwill of a law firm should be considered marital property.
Beasley v. Beasley,
“In eases where there is a contingent fee arrangement, the value of work completed, or work done and the costs advanced, is absorbed by the sole proprietor and cannot be recouped until the case is completed.”
‡ ⅜ ¾: ‡ ⅜ ‡
“It is tenuous and risky to attempt to evaluate the likely return on contingent fees and as such, no value can be placed on them for purposes of equitable distribution.”
⅜ ⅜ ⅜ ⅜ ⅜ ⅜
“Contingent fees, while having a degree of similarity to pensions, do not have the same expectation of vesting which permits greater certainty in fixing value and for establishing present worth.”
⅜ ⅜ ⅜ ⅜ ⅜ ⅜
“The major contention of the cross-appellant/husband is that since this is an office that works entirely on a contingent fee basis, there cannot be an evaluation of present value by evaluating the work in progress. The expert for appellant/wife agreed that work in progress is not a basis for assessing present value. This would appear to be true.... Just as we could not establish good will based on contingent fee earnings, as at best these are potential earnings, so must we limit consideration of contingent fees for purposes of present value.”518 A.2d at 554-56 .
Consequently, Husband’s 400 contmgency fee eases are not assets to be included in the marital property and divided between the parties. The value of such cases, if any, may not be considered in calculating property division alimony.
Moreover, because of the difficulty in valuing pending contmgency fee agreements to determine the present value, it would likewise be difficult to assess a value for such cases for future income purposes. As a result, using pending contmgency fee cases to determine support alimony would typically pose a problem. However, in the ease at bar, Husband agreed that the 400 pending contingency fee cases had an average value of $2,000.00 each, and he did not object to the trial court assigning such future value to those cases. Therefore, although the cases may not be considered in calculating property division alimony, those 400 cases constitute future income which may, in this case, be considered by the trial court in establishing support alimony.
Hubbard v. Hubbard,
For the above and foregoing reasons, the opinion of the Court of Appeals is VACATED IN PART, the judgment of the district court is REVERSED, and the cause REMANDED for further proceedings consistent with this opinion and the opinion of the Court of Appeals undisturbed by this opinion.
Notes
. A contingency fee contract is defined as:
"one that provides that a fee is to be paid to the attorney for his services only in case he wins, that is, a fee which is made to depend upon the success or failure to enforce a supposed right, and which fee is generally paid out of the recovery for the client.” Pocius v. Halvorsen,30 Ill.2d 73 ,195 N.E.2d 137 , 139 (1964). See also Martin v. Buckman,883 P.2d 185 (Okla.Ct.App.1994), cert, denied (October 4, 1994) (similarly defining "contingent fee contract”).
. Only the issues raised in Husband's Petition for Certiorari will be addressed; we do not consider other issues previously raised by the parties.
Hough v. Leonard,
. Contra Beasley v. Beasley, infra, which held that though contingent fees have a degree of similarity to pensions, they do not have the same expectation of vesting as pensions.
. Rule 5.4 of the Oklahoma Rules of Professional Conduct, 5 O.S.1991, Ch. 1, App. 3-A, likewise prohibits the sharing of legal fees with a non-lawyer.