No Fee From Rejected Settlement Proposal

Surprise! You cannot collect a contingent fee if your client rejects a settlement offer and later collects nothing.

In this Louisana Supreme Court decision in the case of Cullpepper & Carroll v. Cole (No. 05-C-1136) attorneys sought a one-third fee of a rejected settlement proposal in an estate case.

Check this out: “Having found a contingent fee contract exists, we now turn to the question of whether Mr. Culpepper is entitled to recover any attorney’s fees under this contract. Pursuant to the parties’ agreement, Mr. Culpepper is entitled to one-third “of whatever additional property or money” he obtained on behalf of Mr. Cole. It is undisputed that Mr. Cole recovered no additional property or money as a result of the litigation against his mother’s estate. Because Mr. Cole obtained no recovery, it follows that Mr. Culpepper is not entitled to any contingent fee.

Nonetheless, Mr. Culpepper urges us to find that his contingency should attach to the settlement offer he obtained on behalf of his client, even though his client refused to accept that offer. According to Mr. Culpepper, he did the work for which Mr. Cole retained him, and he is therefore entitled to one-third of the amount offered in settlement, notwithstanding Mr. Cole’s rejection of the settlement offer.”

The holding: “To allow Mr. Culpepper to recover a contingent fee under these circumstances would penalize Mr. Cole for exercising his right to reject the settlement. We find no statutory or jurisprudential support for such a proposition. Indeed, this court has rejected any interpretation of the Rules of Professional Conduct which would place restrictions on the client’s fundamental right to control the case.”

I remember sitting in a bar in New York 18 years ago with some lawyers from West Virginia. Their fee contract provided that they got one-third of the best offer the lawyer recommended to them, even if the ultimate judgment collected by the client was less than the best offer. I never understood how they got away with that provision in a contract.

This contract was worse.