CHARLESTON – A decision issued by the West Virginia Supreme Court of Appeals illustrates the importance of settlement contracts. The case, which follows a personal injury case taken on a contingency-fee basis resulted in a disagreement between several attorneys that provided representation.
Thomas Basile, a West Virginia attorney, had sought relief of a lower court ruling concerning fees in a case that involved another law firm, the Calwell Practice PLLC. Basile could not be reached for comment, while Stuart Calwell declined to make a statement concerning the Feb. 17 ruling.
These sorts of disagreements, while not necessarily common, do occur in significant numbers, according to Joshua P. Fershée, associate dean for Faculty Research & Development, and professor of law, and director, LL.M.: Energy & Sustainable Development Law at the West Virginia University College of Law.
“It happens a large number of times,” Fershée told The West Virginia Record when asked how often there are court actions brought between attorneys concerning the division of fees following an award. “I’ve seen this in other cases when contingency fee cases have high front-end costs…you have to figure out how to allocate (the award) among the people who earned the money.”
The questions of this suit and the decision from the West Virginia Supreme Court of Appeals dealt less with the division of attorney fees and more instead with the timely filing of any motions concerning those fees. Essentially, the court’s decision equated to stating that the plaintiff, Basile, hadn’t filed the proper motions within the correct time frame, and thus the ruling of the lower court remained correct according to the law.
“It seems consistent with what I would expect a court to do,” Fershee explained. “What this case is doing is really establishing the timeliness of filing. The outcome hinges on when it was filed.”
Although Fershée hasn’t closely followed the minute details of this case, he was able to speak about the core legal issues represented.
It’s important that legal professionals pay close attention to any settlement contract that is signed when agreeing to represent a client on a contingency fee basis, especially in law firm situations where one attorney may opt to leave the firm during the course of litigation, he said. When that happens, a letter is sent to the client informing them of their attorney’s departure from a firm and providing them with the option of remaining with the attorney that has been representing them, choosing another attorney from the firm, or finding new representation entirely.
It seems common sense that attorneys would have plans for this sort of situation in place, but that’s not always the case. Some, if any partnership agreements are vague in the area of fee division in the event of a split, which often leads to litigation between attorneys.
“I have a section in my casebook where we talk about the importance of having provisions for when a law firm breaks up,” said Fershée. “I actually have a case that is in my casebook that has a similar problem (to the Basile v. Calwell case).”
The reality is that law firms, like other businesses often dissolve. In the excitement of forming a new business agreement, or a new law firm, the importance of a detailed plan for breaking up the firm is often overlooked. The ambiguity of some contracts can lead to problems.
“Most businesses do end,” Fershée explained, “So I do teach that segment every year on how important it is for all businesses, but particularly for law firms, to have a plan for how they’re going to separate their assets and their liabilities.”
