Kim Jackson Appellate Victory affirms summary judgment for lawyer and law firm

Judge Barnes issued the unanimous opinion of the Court.  She was joined by Justices Boggs and Branch.

Judge Barnes issued the unanimous opinion of the Court. She was joined by Justices Boggs and Branch.

In what is a fairly common occurrence, a client may ask an attorney at the outset of the representation for the “potential value” of a claim.  If the attorney notes that no discovery or research on his specific situation has been completed, then goes through the elements of the claim, describes in depth the potential categories and types of recovery, and ball parks the value of those categories, all the while explicitly telling the client that the estimate assumes “all the stars align,” and “liability can be established” under a “best case scenario,” can the client later sue for fraud in the inducement if the claim turns out to be a loser?

In a word, no, according to the latest Court of Appeals victory by Kim Jackson.

In this case, the client asked the attorney to take his misclassification case on a contingency fee basis.  The attorney refused.  They then agreed to an hourly fee agreement to evaluate the claim and make efforts at pre-suit settlement.  They also agreed that the attorney would consider handling the case on contingency or hybrid-contingency fee if it turned out to be strong case.  As they went through the pre-suit process, the case turned out to be weak, and the employer refused to negotiate.  The client at that point owed the attorney some money and could not get another attorney to take the case on contingency.  In what was likely a pre-emptive suit, the client sued the attorney for fraud and breach of fiduciary duty.

The client claimed that the fraud was based primarily on the allegation that the attorney fraudulently induced the client into the attorney-client relationship by exaggerating the value of the case and by promising to reconsider the denial of the contingency fee agreement.  The law firm counterclaimed for its unpaid attorney fees.

The trial and the Court of Appeals disagreed as a matter of law.  The Court held that the evaluation was properly couched in conditional language and was not a “statement of fact” that could be the subject of fraud claim.   The Court also held that the fee agreement clearly called for an hourly fee agreement and placed no obligations on the attorney to take the case in the future under a different arrangement.

The Court of Appeals also affirmed the trial court’s order granting the law firm summary judgment on its attorney fee claim.

This case illustrates two points I have advised attorneys about in the past.  First, always put the major terms of your fee agreements in writing.  Second, do not over promise or predict the outcome of cases without including appropriate conditional language in the event the facts or law are not as you expected.  My client in this case did both of these things very well, and as a result a meritless claim was capable of swift summary judgment.

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