CBA Record

The trial court should consider a vari- ety of additional factors such as the skill and standing of the attorneys, the nature of the case, the novelty and/or difficulty of the issues and work involved, the importance of the matter, the degree of responsibility required, the usual and customary charges for comparable services, the benefit to the client, and whether there is a reasonable connection between the fees and the amount involved in the litigation. Noting the district court’s acknowledg- ment that the firm did a “terrific job for the client” and the “extensive time spent by plaintiffs’ counsel in the hard-fought battle,” the Seventh Circuit held that the complex issues and the large amount of time and labor expended could not justify the district court’s decreasing the contin- gent fee. After deciding the fee was reasonable, the Seventh Circuit considered public policy for protecting minors’ interests, noting that Illinois courts conceptualize minors’ interests in two ways: (1) the indi- vidual minor’s tangible well-being and (2) the courts’ duty to safeguard the interests of minors as a class. First, the district court failed to determine whether the settlement amount was insufficient to compensate the minor. Instead, the district court criticized the firm for opining that the settlement would provide adequate compensation for the minor’s pain and suffering. The Seventh Circuit found this criticism unwarranted, as the firm was fulfilling its responsibility to advise the court on issues concerning the minor’s interests. Second, the court acknowledged that minors as a class would likely be deprived of quality legal representation if reasonable contingent fee agreements were at risk of retrospective judicial modification in minor-settlements. Consequently, a court should only modify a retainer’s terms if it has good reason to do so. Moreover, the Seventh Circuit found that the district court’s ruling rested on “nothing more than a series of unwar-

ETHICS EXTRA

BY KIMBERLY GLEESON

Abuse of Discretion in Rewriting a Contingent Fee Agreement

I n Goesel v. Boley International (H.K.) LTD. , the United States Court of Appeals for the Seventh Circuit held that the district court abused its discre- tion in rewriting a contingent fee retainer agreement in a minor-settlement case. 806 F.3d 414 (7th Cir. 2015). The Seventh Circuit found that the district court’s belief that “fairness and right” required that the plaintiffs receive a larger share of the settlement than that called for in the retainer agreement did not justify rewriting the fee agreement. Background In 2009, the law firm of William, Bax & Saltzman, P.C. (the William firm) filed a personal injury lawsuit in Illinois state court for plaintiffs Andrew and Christine Goesel on behalf of their son, Cole, a minor whose injury led to the lawsuit. The defendants removed the case to federal court, and after four years of litigation the parties settled on the eve of trial. The products liability case had cer- tain procedural complexities because the complaint alleged that defendant Boley International’s toy robot shattered and punctured 5-year-old Cole’s eye, and the defendant is headquartered in Hong Kong. Discovery focused on experts such as chemists, toy-safety specialists, ophthal- Kimberly Gleeson, a Francis D. Morrissey Scholar at the John Marshall Law School, anticipates receiving her J.D. in May 2017.

mologists, and rehabilitation counselors. Depositions were taken in seven states, and a video conference deposition was taken with the defendant in Hong Kong. Under the Goesels’ retainer agreement, the William firm was to receive one-third of the gross settlement amount and the Goesels were to cover litigation expenses. The court was required to approve the settlement due to Cole’s minor status. Concerned that the Goesels would end up with only 42% of the total recovery, the district court modified the contingent fee, invoking “fairness and right reason.” The judge deducted litigation expenses from the settlement before the William firm was distributed its one-third fee, leaving the Goesels with 51% of the total recovery. The firm appealed in its own right. Appellate Court Reasoning The Seventh Circuit found that Illinois law governed because judicial approval of minor-settlements is a matter of substan- tive law. Although a district court’s award of attorney’s fees is reviewed under a “highly deferential abuse of discretion stan- dard,” its discretion is not without limits. The court used two guidelines in its abuse of discretion analysis: the reasonableness of the fee and the interests of the minor. In assessing the reasonableness of the fee, the court first determined that the fee agreed to by the Goesels was consistent with the prevailing market rate for similar legal services. Next, the court found that the fee was reasonable under Illinois Rule of Professional Conduct 1.5. Illinois courts have incorporated Rule 1.5’s eight enumer- ated factors in their analysis of reasonable- ness, suggesting that:

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