The Second Appellate District finds that an inadequate settlement claim is speculative without proof of the underlying adversary’s willingness to pay a higher settlement or proof of a better trial result. In addition, the tension between attorney’s fees and the client’s interest is not a conflict of interest. Finally, abusive client conduct concerning fee claims is sanctionable.
John T. Barnard and his wife pursued an inverse condemnation action against the City of Los Angeles for damage to his property. He retained the law firm of Perona, Langer, Beck & Lallande under a contingency fee arrangement. There were disputes about the value of the property as well as the cost of repairs. After Barnard reneged on a settlement, Perona prepared for trial. Barnard asked Perona to compromise its fee, claiming that its conduct had prevented consummation of the prior settlement deal. Barnard then became co-counsel on the case and negotiated a settlement on his own behalf without Perona’s knowledge or involvement. Once the settlement was final he refused to pay the contingent fee claiming the firm had been negligent.
The trial court granted non-suit on Barnard’s claim that Perona’s conduct lowered the settlement value of the case because the claim was speculative. The court rejected Barnard’s defense to the fee claim that Perona had a conflict of interest and rendered judgment for Perona for its fees.
The Court of Appeal agreed that Barnard had no evidence that the case, if handled differently, would have resulted in a higher settlement or verdict. It is not enough to claim that it is possible to obtain a better settlement or a better result at trial. The mere probability that a certain event would have happened will not furnish the foundation for malpractice damages. Barnard offered no evidence that the City would have offered more or that a trier of fact would have awarded more.
The Court of Appeal agreed that Perona did not violate ethical rules eliminating its right to fees. The fact that varying settlement offers would have resulted in different fees was not an inherent conflict of interest. There is always a tension between lawyer and client about fees, and Perona did not pressure Barnard to accept a resolution that would have resulted in a higher fee. In fact, Barnard chose the resolution that resulted in the lower fee. The presence of a Perona attorney at a settlement conference to defend its fee was not a conflict because Barnard was co-counsel on the case and had put Perona in the position of defending its fee. The Court of Appeal found no evidence of abandonment of Barnard by Perona.
The Court of Appeal agreed that Barnard’s appeal was frivolous and was filed to avoid payment of the fee. Since Barnard was in pro per he was able to pursue the appeal without expense. In two other cases Barnard engaged in disputes with other attorneys about fees he had incurred where he litigated each case beyond all reason. The Court of Appeal awarded Perona’s request for fees and costs.
Comment: This case establishes that prior case law about the difficult proof required for a claim that an attorney’s conduct compromised settlement value is applicable in settings beyond the family law and personal injury context. It also clarifies that the inherent tension between an attorney’s fee and the client’s interest is not a conflict of interest. Finally, it establishes that some abusive litigation conduct by clients to avoid fees will be subject to sanctions.