Summary 2007 WY 120

Summary of Decision issued August 1, 2007

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Case Name: Horn and Horn, PC. v. Wooster and Duddy

Citation: 2007 WY 120

Docket Number: 06-195

Certified Questions from the United States District Court, District of Wyoming, the Honorable Clarence A. Brimmer, Judge

Representing Appellants (Defendants): Weston W. Reeves and Anna R. Olson of Park Street Law Office, Casper, Wyoming. Argument by Mr. Reeves.

Representing Appellees (Plaintiffs): C.M. Aron of Aron & Henning, LLP, Laramie, Wyoming.

Questions: Should Client’s malpractice award be reduced by the contingent fee Attorney would have received absent his malpractice in the personal injury case? Can the Associated Attorney recover the agreed portion of the contingent fee, either as an offset against the contingent fee or as a separate claim against the Principal Attorney?

Facts/Discussion: The federal district court for the District of Wyoming certified two questions to this Court concerning how a negligent attorney’s contingent fee in the underlying personal injury action should be accounted for in a subsequent malpractice award to his former client.
Question One: The Court has never had occasion to address how a negligent attorney’s contingent fee should be treated in a subsequent malpractice action brought by the client. Historically, a negligent attorney had been entitled to deduct from a subsequent malpractice award the amount he would have been entitled to as a contingent fee in the underlying action. In the latter part of the twentieth century, some courts began to rule a negligent attorney was not entitled to such a deduction. Other courts simply stated that a negligent attorney should not benefit from shoddy or negligent work. In Jackson State Bank v. King, the Court stated that even though legal malpractice may be attributable to negligence on the part of the attorney, the right to recompense is based upon the breach of the contract with the client. Wyoming precedence established that in the absence of willful conduct, the damages recoverable for legal malpractice are those typically available for breach of contract and the award was designed to put the plaintiff in the same position as if the contract had been performed less the proper deductions. The Court noted that in the First Circuit case of Moores, the court stated that in a negligence action, the plaintiff is entitled to recover only those damages which were a foreseeable consequence of the defendant’s negligence. Concentrating on the question of what the client lost as a result of the attorney’s negligence requires the deduction of all expenses which the client would have incurred in order to successfully prosecute his claim, including the attorney’s fee expense. The well-accepted principles for calculation of damages in both contract and tort cases should be applied and the plaintiff should receive an award that would place him in the same position he would have enjoyed had the negligence not occurred.
The Court stated they have clear authority regarding a prevailing party’s right to collect attorney’s fees from his opponent. In Wyoming the American rule is applied. The Court saw no reason for creating an exception to the American rule when legal malpractice was involved.
Some courts have ruled that a negligence attorney is not entitled to a deduction of his contingent fee from a malpractice award against him but, utilizing a quantum meruit theory, may be entitled to a deduction for the value of his services which benefited the client. The Court stated that using the above approach to calculate damages would be difficult because the facts would present nearly unlimited opportunities for the client to second-guess the first attorney’s tactics and work product.
Question Two: The Court stated that plaintiffs did not cite any authority to support their position that an attorney should be allowed to maintain an action against his co-counsel for negligence in prosecuting the underlying personal injury action. To adopt a cause of action between co-counsel simply because the attorney proposed to give the client the benefit of any judgment in his favor would not square with the Court’s other precedent and could result in a case where the client’s best interests are compromised by the self interests of feuding attorneys.

Holding: The Court concluded that consistent with their damages jurisprudence in other areas of the law, a malpractice plaintiff is entitled to an award in the net amount he would have received under the contingent fee agreement had the underlying action been successful. The Court declined to recognize a cause of action by an attorney against his negligent co-counsel.

The first certified question was answered in the affirmative and the second in the negative.

J. Kite delivered the decision.

J. Burke, dissenting: The Justice dissented because he did not believe it was appropriate to adopt a rigid rule allowing deduction of the attorney’s contingent fee percentage in all legal malpractice cases. The deductibility of those fees should be tied to the benefit that the client received from the attorney’s efforts. Where the client has received no benefit, no deduction should be allowed. The Justice stated he believed that Moores supported a more flexible rule than the majority stated.
In the final analysis, it does not appear to the Justice that any court currently applies the rule adopted by the majority. The modern view regarding deductibility is appropriate and the reasoning supporting that view persuasive. He stated he felt the Court should adopt the general rule that the contingent fee should not be deducted. In those cases where it would be inequitable to disallow the deduction, as in Moores, a quantum meruit approach would be more appropriate. In the instant case, the certified question does not include any facts indicating any benefit. Accordingly, the Justice would have answered “No” to the first certified question.

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