Burrow v. Arce

997 S.W.2d 229 (1999)

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Nature of the Case

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Facts

An explosion at a chemical plant killed twenty-three workers and injured hundreds of others. A group of 126 plaintiffs (Ps) was filed by Ds. The group settled for $190 million wherein Ds received a contingent fee of more than $60 million. Forty-nine of these plaintiffs then filed this suit against Ds alleging professional misconduct and demanding forfeiture of all fees the attorneys received. Ps allege that Ds solicited business through a lay intermediary, failed to fully investigate and assess individual claims, failed to communicate offers received and demands made, entered into an aggregate settlement with Phillips of all {s' claims without Ps' authority or approval, agreed to limit their law practice by not representing others involved in the same incident, and intimidated and coerced their clients into accepting the settlement. Ps claimed breach of fiduciary duty, fraud, violations of the Deceptive Trade Practices-Consumer Protection Act, negligence, and breach of contract. Ps claim Ds signed up plaintiffs en masse to contingent fee contracts, often contacting plaintiffs through a union steward. In many instances, the contingent fee percentage in the contract was left blank, and 33-1/3% was later inserted despite oral promises that a fee of only 25% would be charged. The attorneys settled all the claims in the aggregate and allocated dollar figures to the plaintiffs without regard to individual conditions and damages. No plaintiff was allowed to meet with an attorney for more than about twenty minutes, and any plaintiff who expressed reservations about the settlement was threatened by the attorney with being afforded no recovery at all. Ds claim no aggregate settlement or any other alleged wrongdoing occurred, but regardless of whether it did or not, all their clients in the Phillips accident suit received a fair settlement for their injuries. Ds claim a Kansas lawyer invited Ps to a meeting, where he offered to represent them in a suit against Ds for a fee per claim of $2,000 and one-third of any recovery. Ds claim that Ps were enticed by the prospect of further recovery with minimal risk, and joined the suit whose only purpose is merely to extort more money from their former attorneys. The court granted summary judgment because the settlement of Ps' claims was fair and reasonable. With no actual damages from any misconduct, Ps were not entitled to a forfeiture of any of the attorneys' fees. Ps appealed. The court disagreed, however, that actual damages are a prerequisite for fee forfeiture. The court refused to hold that fee forfeiture was either automatic or total for an attorney's breach of fiduciary duty to his client. whether a fee should be forfeited, and how much of it, depends on the following factors: (1) the nature of the wrong committed by the attorney or law firm; (2) the character of the attorney's or firm's conduct; (3) the degree of the attorney's or firm's culpability, that is, whether the attorney committed the breach intentionally, willfully, recklessly, maliciously, or with gross negligence; (4) the situation and sensibilities of all parties, including any threatened or actual harm to the client; (5) the extent to which the attorney's or firm's conduct offends a public sense of justice and propriety; and (6) the adequacy of other available remedies. Ds appealed.