Wednesday, Augu. 14, 20001
Fee Award Under Anti-Bias Law Belongs to Lawyer, Not Client—S.C.
By KENNETH OFGANG, Staff Writer/Appellate Courts
Attorney fees awarded to a prevailing party under the Fair Employment and Housing Act “belong to the attorneys who labored to earn them,” not to their clients, absent an agreement to the contrary, the state Supreme Court ruled yesterday.
In a 5-1 decision, with Justice Joyce L. Kennard dissenting, the high court reversed a First District Court of Appeal decision holding that court-awarded fees belong to the client and that attorneys who prevail under FEHA are limited to whatever fees are established by contract.
The ruling will require Leslie Flannery to prove that her former lawyer, John F. Prentice, had agreed to take less than the nearly $1 million in fees awarded him and his co-counsel in Flannery’s suit against the California Highway Patrol.
Traffic officer Flannery claimed she was terminated in a discriminatory manner and in retaliation for an earlier gender-bias claim. An Alameda Superior Court jury awarded her $250,000, and Judge Demetrios Agretelis initially awarded over $1 million in attorney fees.
The CHP appealed, and the Court of Appeal ordered reconsideration of the fee award. The judge then cut the fees, awarding a total of $891,000 in fees and costs, plus $80,000 for fees and costs incurred in litigating the amount of fees.
The last ruling was affirmed in January of last year.
In the interim, Flannery sued Prentice, his partner John Houston Scott, the law firm of Prentice & Scott, and Prentice’s former firm, Bley & Bley. Pleading claims for declaratory relief, breach of fiduciary duties, legal malpractice, and constructive fraud, she sought to keep the entire attorney fee herself.
Flannery claimed that the attorneys had agreed orally that their fee would be limited to 40 percent of the net recovery, and that they failed to advise her that they might claim an additional amount based on a court award. She also claimed they were negligent in failing to present competent evidence of future wage loss.
Prentice & Scott cross-complained against Flannery, seeking a determination of the fees that they were entitled to based on FEHA, quantum meruit, or their fee agreement with the plaintiff—which they alleged provided for a fee equal to 40 percent of the net recovery or the entire court-awarded fee, whichever was greater.
San Francisco Superior Court Judge David Garcia granted summary judgment, ruling that the lawyers were entitled to keep the fees, and that they had not committed malpractice. The Court of Appeal reversed on the fee issue, while resolving the malpractice claim in an unpublished portion of the opinion that the high court did not review.
But Justice Kathryn M. Werdegar, writing for the Supreme Court, said the Court of Appeal’s ruling was contrary to the Legislature’s intent behind the FEHA attorney fee provision, which is Government Code Sec. 12965(b).
The Legislature included the fee provision, Werdegar reasoned, because it encourages attorneys to take FEHA cases and thus safeguards the fundamental public policy behind the act.
“Attorneys considering whether to undertake cases that vindicate fundamental public policies may require statutory assurance that, if they obtain a favorable result for their client, they will actually receive the reasonable attorney fees provided for by the Legislature and computed by the court,” the justice reasoned.
The justice rejected the argument that an interpretation of FEHA allowing lawyers to keep their fees is unnecessary, the contention being that attorneys will always be able to protect themselves by obtaining written fee agreements.
Such agreements can’t always be obtained and aren’t always required in noncontingency cases under the State Bar Act, the justice said. And even where an agreement is required by law, she noted, the attorneys aren’t required to forfeit their fees if they don’t obtain one, which would be the result of accepting Flannery’s argument, Werdegar said.
The justice also rejected the plaintiff’s reliance on federal decisions allowing clients to waive statutory attorney fees, the reasoning being that where fees are awarded to the “prevailing party,” they belong to that party and not to the party’s lawyer.
Those decisions, Werdegar concluded, don’t involve the precise issue presented by Flannery’s case. And even if they did, she added, the California courts don’t have to follow federal courts’ interpretations of federal law when interpreting similar state laws.
Kennard argued in dissent that the federal precedents were persuasive, and that the burden should be on lawyers to protect their fees.
“Lawyers are free to enter into contracts with their clients for the payment of attorney fees, as long as they do so in a manner consistent with their ethical obligations to serve their clients’ interests over their own....The fee dispute between the lawyers and the client in this case resulted from the lawyers’ failure to obtain a written contract regarding the payment of their fees. To give effect to the plain language in section 12965, subdivision (b) that a trial court’s award of attorney fees is made to the prevailing party, not the prevailing lawyer, does not leave the lawyer without protection against a client who retains the fee award and does not pay the lawyer.”
The case is Flannery v. Prentice, 01 S.O.S. 4037.
Copyright 2001, Metropolitan News Company