Munger, Reinschmidt & Denne, L.L.P v. Roseanne M. Lienhard Plante and Chad L. Plante ( 2020 )

IN THE SUPREME COURT OF IOWA
No. 19–0519
Filed March 6, 2020
MUNGER, REINSCHMIDT & DENNE, L.L.P.,
Appellee,
vs.
ROSEANNE M. LIENHARD PLANTE and CHAD L. PLANTE,
Appellants.
Appeal from the Iowa District Court for Woodbury County, Nancy L.
Whittenburg, Judge.
Defendants seek review of the district court’s order granting plaintiff
summary judgment. AFFIRMED.
Bruce Johnson of Cutler Law Firm, P.C., West Des Moines, for
appellants.
Stanley E. Munger of Munger, Reinschmidt & Denne, L.L.P., Sioux
City, for appellee.
Joel E. Fenton of Law Offices of Joel E. Fenton, PLC, West Des
Moines for amicus curiae Iowa Association for Justice.
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CHRISTENSEN, Chief Justice.
The only certainty about litigation is uncertainty. Depending on how
the litigation unfolds, a contingency fee contract is a gamble for both
attorney and client. A contingency fee contract allots to the attorney the
risk of much work with little reward and allots to the client the risk of little
work with substantial fees. The question presented in this case is whether
we will reevaluate the risk of a contingency fee contract from a position of
hindsight.
After a severe car accident with a city bus left a motorist in critical
condition, the motorist’s family sought legal representation. A Sioux City
law firm agreed to represent the motorist’s interests. Pursuant to this
agreement, a contingency fee contract required the motorist to pay one-
third of the recovery, if any, to the law firm for attorney fees. Sixteen
months later, the city suggested mediating the case. The motorist was
offered $7.5 million to settle the case. This offer was accepted.
When the motorist failed to pay the one-third contingency fee, the
law firm filed a petition to enforce its payment under the contingency fee
contract. The motorist argued the one-third contingency fee was in
violation of Iowa Rule of Professional Conduct 32.1.5(a), which prohibits a
lawyer from collecting an unreasonable fee. The district court disagreed
with the motorist, finding the one third-contingency fee was reasonable at
the time of its inception. Judgment was ordered against the motorist for
one-third of the recovery plus interest.
The motorist appealed, and we retained the appeal. On our review,
we conclude the one-third contingency fee contract was reasonable at the
time of its inception. Consistent with our existing caselaw, we will not use
the noncontingency fee factors under rule 32:1.5(a) to reevaluate this
contingency fee contract from a position of hindsight. This case does not
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fall within the narrow exceptions to that general rule. Lastly, the motorist
did not preserve error for appeal on whether the interest rate applicable to
unpaid fees is reasonable. We affirm the judgment of the district court.
I. Background Facts and Proceedings.
We view the record in the light most favorable to the Plantes, against
whom the district court granted summary judgment. Phillips v. Covenant
Clinic, 625 N.W.2d 714, 717 (Iowa 2001) (en banc). On November 15,
2016, Chad Plante’s vehicle collided with a city bus. The collision left Chad
in critical condition. Due to the severity of his injuries, Chad’s wife,
Rosanne, sought legal representation the day after the collision. Rosanne,
a long-time Iowa attorney with twenty years of experience, chose Stanley
Munger of the law firm Munger, Reinschmidt & Denne, L.L.P., (MRD).
Munger verbally accepted Rosanne’s request and immediately began to
work the case.
Iowa State Trooper Olesen led the investigation of Chad’s accident.
Munger, Rosanne, and Trooper Olesen met on December 8 to review
Trooper Olesen’s technical collision investigation report. According to his
report, Chad was traveling southbound through an intersection on
Highway 75 when the northbound Sioux City bus failed to yield the right
of way while attempting to make a left-hand turn, colliding with Chad’s
vehicle. The report indicated Chad did not act improperly, although
Trooper Olesen determined he was traveling approximately 52–53 mph in
a 50 mph zone.
After the December 8 meeting, Rosanne was offered and signed a
contingency fee contract with MRD for the “[p]ersonal injury suit against
the City of Sioux City.” Paragraph 3 detailed the contingency fee terms.
3. CONTINGENT FEE. In the event of recovery, Client(s) shall
pay Attorney the following fee based on the amount of the
recovery: a fee equal to 33 1/3% of the recovery regardless of
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whether a case is filed; a fee equal to 40% after notice of appeal
and before the case is sent back down for re-trial; a fee equal
to 45% if the case is re-tried; and a fee equal to 45% if there
is a notice of appeal after the re-trial. IN THE EVENT NO
RECOVERY IS MADE, ATTORNEY SHALL RECEIVE NO FEE
FOR SERVICES PERFORMED UNDER THIS CONTRACT. In the
event of a “structured settlement” Attorneys shall receive the
above percentage of the present day value of the settlement on
the date of the payment of the first installment. In the event
the court awards attorney fees, the Attorneys shall recover the
greater of: the above percentages applied to the total recovery
(which is award plus attorneys fees awarded) or the amount
of the court-ordered attorneys fees, whichever is greater.
EXPENSES ARE ALL PAID BY CLIENT AND ARE NOT
DEDUCTED IN ANY WAY IN FIGURING RECOVERY.
Fees more than thirty days past due were subject to simple interest.
15. INTEREST. Attorney charges simple interest on all past
due amounts for fee, expenses and/or advances more than
thirty (30) days past due. This is 1% interest per month on all
unpaid amounts due, including interest due (12.683% A.P.R.).
Client(s) agrees to pay this interest and understands that this
paragraph is a vital part of this Attorney Fee Contract.
Prior to filing a suit, Sioux City suggested mediating the case.
Mediation took place on May 7, 2018, approximately eighteen months after
Chad’s accident and the execution of the contingency fee contract. For the
purposes of mediation only, Sioux City accepted fault and offered the
Plantes $7.5 million on the first day of mediation. The Plantes accepted
the offer from Sioux City and a final agreement was subsequently
executed.
Munger’s representation of the Plantes in the underlying case led to
the present suit for attorney fees. MRD filed a petition on September 4,
2018, seeking one-third of the Plantes’ recovery in attorney fees and
interest owed pursuant to the contingency fee contract. The Plantes
counterclaimed, seeking declaratory judgment that the contingency fee
contract was unreasonable within the meaning of Iowa Rule of Professional
Conduct 32:1.5(a). On March 4, 2019, the district court granted MRD’s
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motion for summary judgment, finding the contingency fee contract was
reasonable at the time of its inception. The district court ordered judgment
against the Plantes for $2,179,456.66, together with interest at a rate of
1 % per month or 12 % per annum from October 6, 2018. 1
The Plantes appealed the district court’s grant of summary
judgment, and we retained their appeal.
II. Standard of Review.
A ruling on summary judgment is reviewed for correction of errors
at law. Slaughter v. Des Moines Univ., 925 N.W.2d 793, 800 (Iowa 2019).
Summary judgment is appropriate when the record shows no genuine
issues of material fact and the moving party is entitled to judgment as a
matter of law. Iowa R. Civ. P. 1.981(3). The moving party has the burden
of proof. Thompson v. Kaczinski, 774 N.W.2d 829, 832 (Iowa 2009).
III. Analysis.
Iowa Rule of Professional Conduct 32:1.5(a) prohibits a lawyer from
collecting an “unreasonable fee or an unreasonable amount for expenses.”
This prohibitive rule lists nonexclusive factors “to be considered” in
determining the reasonableness of a fee. Iowa R. Prof’l Conduct 32:1.5(a)
& cmt. [1]. Because we presume parties contract in reference to the
existing law, see United Suppliers, Inc. v. Hanson, 876 N.W.2d 765, 780
(Iowa 2016), the Plantes’ primary argument is that their contingency fee
contract is “unreasonable” and therefore prohibited by rule 32:1.5(a). The
1The district court’s order was amended on March 7 to render moot the Plantes’
counterclaim for declaratory judgment and to assess court costs.
On March 12, MRD filed an unresisted motion to amend the March 7 order, which
set the per annum interest at 12.683 %. According to MRD, the contingency fee contract
incorrectly stated the annual percentage rate was 12.683 %. For simple interest at 1 %
per month, the correct annual percentage rate in the contingency fee contract should
have been 12 %. The district court granted the unresisted motion, providing that the
interest on unpaid attorney fees be paid at 1 % with an annual percentage rate of 12 %.
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Plantes, however, take their argument one step further. They suggest rule
32:1.5(a) and its factors mandate a hindsight evaluation of a contingency
fee contract for reasonableness. We disagree. The Plantes overlook the
risk allotted to both parties by the contingency fee contract. Instead, we
conclude the contingency fee contract at issue was reasonable at the time
of its inception. Consistent with our existing caselaw, we will not use rule
32:1.5(a)’s noncontingency fee factors to reevaluate this contingency fee
contract from a position of hindsight. This case does not fall within the
narrow exceptions to that general rule.
This court has long recognized the validity of a contingency fee
contract generally. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Hoffman, 572 N.W.2d 904, 908 (Iowa 1997) (“[C]ontingent fee contracts are
an accepted and enforceable manner of charging and determining attorney
fees.”); Wunschel Law Firm, P.C. v. Clabaugh, 291 N.W.2d 331, 333 (Iowa
1980) (“We have long recognized the validity of contingent fee contracts
generally.”); Stoebe v. Kitley, 249 N.W.2d 667, 669 (Iowa 1977) (“Ordinarily
a contract between attorney and client, providing for the payment of a fee
for legal services contingent upon the results obtained by the attorney,
without more, is not an illegal contract, but one that is enforceable.”
(quoting In re Sylvester’s Estate, 195 Iowa 1329, 1332–33, 192 N.W. 442,
443 (1923)); Wallace v. Chi., Milwaukee & St. Paul Ry., 112 Iowa 565, 567–
68, 84 N.W. 662, 663 (1900) (holding a contingency fee contract for “one-
half of the amount recovered” was not illegal or void).
A contingency fee contract performs three valuable functions. The
Restatement of the Law explains it best.
First, they enable persons who could not otherwise afford
counsel to assert their rights, paying their lawyers only if the
assertion succeeds. Second, contingent fees give lawyers an
additional incentive to seek their clients’ success and to
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encourage only those clients with claims having a substantial
likelihood of succeeding. Third, such fees enable a client to
share the risk of losing with a lawyer, who is usually better
able to assess the risk and to bear it by undertraining similar
arrangements in other cases.
Restatement (Third) of the Law Governing Lawyers § 35 cmt. b, at 257 (Am.
Law Inst. 2000). The amicus brief filed by the Iowa Association for Justice
cites further authority supporting the value of a contingency fee contract.
See In re Abrams & Abrams, P.A., 605 F.3d 238, 245 (4th Cir. 2010)
(“[C]ontingency fees provide access to counsel for individuals who would
otherwise have difficulty obtaining representation.”); Wells v. Sullivan, 907
F.2d 367, 371 (2d Cir. 1990) (“Many claimants . . . cannot afford to retain
counsel at fixed hourly rates, yet they are willing to pay a portion of any
recovery they may receive in return for successful representation.”
(Citation omitted.)); Kirchoff v. Flynn, 786 F.2d 320, 325 (7th Cir. 1986)
(“The contingent fee uses private incentives rather than careful monitoring
[of an attorney’s input of time] to align the interests of lawyer and client.
The lawyer gains only to the extent his client gains.”); Ga. Dep’t of Corrs.
v. Couch, 759 S.E.2d 804, 816 (Ga. 2014) (“Entering such a contract is a
gamble for both the lawyer and the client, because the value of the
professional services actually rendered by the lawyer may be considerably
higher or lower than the agreed-upon amount, depending on how the
litigation proceeds.”); see also 28 U.S.C. § 2678 (2018) (allowing
contingency fees for claims against the United States under the Federal
Tort Claims Act).
A contingency fee contract allots to the attorney “the risk that the
case will require much time and produce no recovery,” and it allots to the
client “the risk that the case will require little time and produce a
substantial fee.” Restatement (Third) of the Law Governing Lawyers § 34
cmt. c, at 250. “Events within that range of risk, such as a high recovery,
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do not make unreasonable a contract that was reasonable when made.”
Id.
There are, of course, exceptions. The Restatement indicates that
“large fees unearned by either effort or a significant period of risk are
unreasonable.” Id. § 35 cmt. c, at 258. Courts have the ability to “monitor
and determine the reasonableness” of a contingency fee contract because
of their inherent power to regulate the bar. Wunschel, 291 N.W.2d at 334.
The authority to determine the reasonableness of a contingency fee
contract was implemented in Iowa by the standards promulgated in Iowa
Code of Professional Responsibility for Lawyers DR 2–106, see id., and we
considered a number of cases under that standard, see e.g., Comm. on
Prof’l Ethics & Conduct v. McCullough, 468 N.W.2d 458, 460 (Iowa 1991).
In 2005, the Iowa Code of Professional Responsibility for Lawyers
was replaced by the Iowa Rules of Professional Conduct. Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Wagner, 768 N.W.2d 279, 281 n.1 (Iowa 2009)
(per curiam). Relevant here, current rule 32:1.5(a) replaced former rule
DR 2–106(A) and (B). We have not addressed the reasonableness of a
contingency fee contract under the standards of Iowa Rule of Professional
Conduct 32:1.5(a) and its factors. The Plantes urge this court to adopt a
different analytical approach to current rule 32:1.5(a) than what we used
under former rule DR 2–106. We decline to do so.
Former rule DR 2–106(A) prohibited a lawyer from collecting “an
illegal or clearly excessive fee.” Iowa Code of Prof’l Responsibility for
Lawyers DR 2–106(A). The prohibitive rule also provided a list of factors
to be considered as guides in determining the reasonableness of a fee.
(1) The time and labor required, the novelty and
difficulty of the questions involved, and the skill requisite to
perform the legal service properly.
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(2) The likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude other
employment by the lawyer.
(3) The fee customarily charged in the locality for
similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the
circumstances.
(6) The nature and length of the professional
relationship with the client.
(7) The experience, reputation, and ability of the lawyer
or lawyers performing the services.
(8) Whether the fee is fixed or contingent.
Id. DR 2–106(B). It is significant that the factors listed in former rule
DR 2–106(B) remain unchanged and are identical to the factors listed in
current rule 32:1.5(a). Compare id. (listing eight factors to consider in
determining reasonableness), with Iowa R. Prof’l Conduct 32:1.5(a) (listing
the same eight factors to consider in determining reasonableness). Former
rule DR 2–106(B) did not mandate application of all the reasonableness
factors to contingency fee contracts in hindsight, and current rule
32:1.5(a) does not change that scheme. In fact, current rule 32:1.5(a)’s
comments make it clear that each reasonableness factor may not be
“relevant in each instance” and that only “factors that are relevant under
the circumstances” are to be considered when determining whether a
particular contingency fee is reasonable. Iowa R. Prof’l Conduct 32:1.5(a)
cmts. [1], [3].
We also concluded the thrust of the reasonableness standard under
current rule 32:1.5(a) remains the same. Although current rule 32:1.5(a)
prohibits an “unreasonable fee,” former rule DR 2–106(B) prohibited a
clearly excessive fee, which was defined as a fee “in excess of a reasonable
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fee.” Iowa Code of Prof’l Responsibility for Lawyers DR 2–106(B).
(emphasis added). The reasonableness standard has been followed in this
court’s DR 2–106 analysis. See Walker v. Gribble, 689 N.W.2d 104, 116
(Iowa 2004) (“The purpose of [rule DR 2–106(A)] is to ensure that the client
is not charged an excessive fee. If the total fee is reasonable, a lawyer may
not use such a rule to upend a settlement agreement that later became a
bad bargain.” (Emphasis added.)); Hoffman, 572 N.W.2d at 908
(“[C]hanges in the attending circumstances . . . rendered the thirty-three
percent contingent fee unreasonable and excessive.” (Emphasis added.));
King v. Armstrong, 518 N.W.2d 336, 338 (Iowa 1994) (per curiam) (“[T]he
district court ruled that the contingency fee agreement was reasonable
under the facts. We hold that the district court was properly guided by
rule . . . DR 2–106(B) . . . .” (Emphasis added.)); McCullough, 468 N.W.2d
at 461 (“We do not find the one-third contingent fee to be unreasonable.”
(Emphasis added.)); Wunschel, 291 N.W.2d at 337 (“[A] contingent fee
contract is unreasonable when it provides for determination of the fee by
factors having no logical relationship to the value of services.” (Emphasis
added.)).
Two of our cases, McCullough and Hoffman, provide the best
precedential review on how this court has determined whether a
contingency fee is reasonable under former rule DR 2–106, and by
extension, how we will proceed to determine whether a contingency fee is
reasonable under current rule 32:1.5(a). In McCullough, the grievance
commission found an Iowa lawyer’s one-third contingency fee excessive
and in violation of DR 2–106(A). 468 N.W.2d at 459–60. We reversed the
decision, concluding the “well-recognized reasons” for a contingency fee
contract existed at the time of its inception for the “litigation to be
pursued.” Id. (emphasis added). The well-recognized reasons for the
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contingency fee were (1) the client had no other practical way to afford the
attorney’s services, (2) the success in the litigation would produce an
object that could pay the fees, and (3) the chances of successful litigation
were very uncertain. Id. at 461. The commission, “arguing from a position
of hindsight,” suggested the opposite—that the litigation was simple and
chances for success were good. Id.
We rejected the commission’s approach. Id. The lawyer’s success
in the claim “was far from a sure thing,” and we could not find the one-
third contingency fee to be unreasonable. Id. The McCullough court
expressly reiterated that the factors under DR 2–106(B) applicable to
noncontingent fees could not be used to reexamine the contingency fee
contract “at the conclusion of successful litigation.” Id.
Six years after McCullough, we came to a different conclusion in
Hoffman. It was Hoffman’s failure to perform any work relevant to the
claim that rendered his one-third contingency fee “unreasonable and
excessive” in violation of DR 2–106. Hoffman, 572 N.W.2d at 908. The
contingency fee contract provided Hoffman with 25 % of the recovery if
made without filing a suit, but the contingency fee increased to one-third
if Hoffman recovered after filing a suit. Id. at 905. Hoffman sent a workers’
compensation petition and proof of service to the industrial commissioner
after the insurance provider advised him that his client’s claim was
covered by the workers’ compensation policy. Id. The insurance provider
later submitted a written admission of liability, which it filed with the
deputy industrial commissioner. Id.
A month after the insurance provider admitted liability, Hoffman
and his client filed a petition for partial commutation of the workers’
compensation benefits. Id. The client stated the partial commutation of
$62,446 was needed because “[she] ha[d] agreed to pay attorney fees equal
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to 33 % of the total settlement proceeds in this case [and] . . . [did] not
otherwise have resources sufficient to pay attorney fees in this case.” Id.
The deputy industrial commissioner determined that because “the
workers’ compensation recovery was obtained independent from any
action taken by [Hoffman], a contingent fee was ‘unreasonable and
unwarranted.’ ” Id. at 906. It limited Hoffman’s recovery only to fees at
an hourly rate for the amount attributed to the workers’ compensation
proceeding prior to the time his client was notified “that benefits were going
to be voluntarily provided to her.” Id. The deputy commissioner sent its
commutation decision to the grievance commission, which determined
Hoffman attempted to collect an excessive fee in violation of DR 2–106. Id.
at 907.
On review, the Hoffman court again “recognized that contingent fee
contracts are an accepted and enforceable manner of charging and
determining attorney fees” and acknowledged the one-third contingency
fee contract in McCullough was not an unreasonable fee. Id. at 908. The
Plantes zero in on one statement in the Hoffman court’s analysis to support
their position that contingency fee contracts must be evaluated for
reasonableness from a position of hindsight under rule 32:1.5(a). After
stating DR 2–106 was not intended to require reevaluation of contingency
fee contracts at the conclusion of successful litigation, the Hoffman court
stated,
While the fee agreement entered into by [Hoffman] and [his
client] may have been reasonable at the time of its inception,
changes in the attending circumstances by the time the
petition for partial commutation was filed rendered the thirty-
three percent contingency fee unreasonable and excessive.
Id.
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We do not read the Hoffman court’s statement as wholesale
endorsement for mandating a reasonableness review in hindsight under
every contingency fee contract. The court explained that the recovery of
the workers’ compensation claim “was in no manner due to [Hoffman’s]
work as [the client’s] lawyer.” Id. Because “none of his work affected at
all the decision by [the insurance provider] to pay the workers’
compensation claim,” Hoffman could not rely on a successful prosecution
of the claim to pay his fee as a basis for the contingency fee’s acceptance.
Id. Although the contingency fee contract was reasonable at the time of
its inception, we determined Hoffman’s attempt to collect a fee, to which
he was not entitled, was excessive and in violation of DR 2–106. Id. at
909. The holding specifically noted it was “particularly important” that
nothing Hoffman did prompted the insurance provider “to voluntarily
admit compensability and begin payment.” Id. Hoffman is a narrow
exception to the general rule that we evaluate the reasonableness of a
contingency fee contract at the time of its inception.
The Plantes rely on a recent New Jersey superior court case that
decided a fee contract was unenforceable under New Jersey’s rule
32:1.5(a). See Balducci v. Cige, 192 A.3d 1064, 1077 (N.J. Super. Ct. App.
Div. 2018). The court in Balducci, however, did not throw out the fee
contract as unreasonable because of its contingency fee terms. Rather, it
was held to be unreasonable because the attorney failed to adequately
inform the client about the ramifications of the fee contract. Id. 2 The
Balducci court labeled the fee agreement, which required the client to pay
the greater of the attorney’s hourly provision, contingent fee provision, or
2The fee contract provided that the client agreed “to pay the Law Firm for legal
services the greater of” an hourly rate, a 37 % contingency, or statutory attorney fees.
Balducci, 192 A.3d at 1067–68.
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the statutory fee provision, “problematic if not misleading.” Id. at 1075.
The court concluded the attorney was ethically obligated to inform his
client that the hourly rate-based fee may approach or even exceed the
client’s recovery. Id. at 1078. The Balducci court even offered its support
in favor of contingency fee contracts: “[T]he attorney must inform the client
[that] other competent counsel represent clients in similar cases solely on
a contingency basis, without an hourly component, and might also
advance costs.” Id. at 1077–78.
Clark v. General Motors, LLC, 161 F. Supp. 3d 752 (W.D. Mo. 2015),
is another case the Plantes cite in support of their claim that a contingency
fee contract, as applied to the recovery, is unreasonable and in violation of
rule 32:1.5(a). But the Clark case missteps from the start. Under
Missouri’s equivalent rule 32:1.5(a), the federal district court embraced a
“reasonable in operation” analysis to examine the fee “at the conclusion of
the case when the fee is quantified.” Id. at 759–60. At odds with Iowa’s
existing caselaw, the court in Clark used all eight factors listed under rule
32:1.5(a) to reevaluate the 40 % contingency fee contract in hindsight. Id.
at 762–67. The Missouri federal district court found the 40 % contingency
fee was unreasonable at its inception because it was likely the case could
be quickly resolved through a nonadversarial compensation fund
established by the defendant “to settle defective ignition switches.” Id. at
755, 762. In fact, the Clark court noted the attorney’s risk of loss was
reduced so much that the risk profile more closely resembled an ordinary
automotive car crash case, “where a thirty-three percent contingency is
typical.” Id. at 762 (emphasis added).
Some states, such as New York, narrowly apply a hindsight review
where the contingency fee standing alone and unexplained may show an
unfair advantage was taken of the client. See In re Lawrence, 23 N.E.3d
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965, 978 (N.Y. 2014). Yet, “[a]bsent incompetence, deception or
overreaching, contingent fee agreements that are not void at the time of
inception should be enforced as written.” Id. In New York, the power to
invalidate contingency fee contracts in hindsight is exercised with great
caution because it is not unconscionable for a lawyer to recover more than
what could have possibly been earned on an hourly basis. Id. Regardless,
the Plantes make no claim that an unfair advantage was taken of them.
Our caselaw cautions against the reevaluation of a contingency fee
contract from a position of hindsight, which suggests the litigation was
simple and the success was easy. See e.g., McCullough, 468 N.W.2d at
461. Instead, a contingency fee contract will be evaluated for
reasonableness at the time of its inception. Noncontingency fee factors
under rule 32:1.5(a) will not be used to reexamine a contingency fee
contract at the “conclusion of successful litigation.” See id. We therefore
decline the Plantes’ invitation to compare the ratio of hours worked to the
results obtained.
A typical one-third contingency fee contract, when the success of
litigation to be pursued is very uncertain or far from a sure thing, is
presumptively reasonable. See id. A contingency fee contract up to 50 %
will be reasonable when the chance of success is little and the complexity
of the case is great. King, 518 N.W.2d at 338 (“The district court noted the
complexity of the case, especially the coordination necessary between the
district court and the bankruptcy court, and the large size of the class.”).
But, as demonstrated in Hoffman, an attorney may not simply collect a
contingency fee where the resulting award is in no manner attributed to
his or her work. 572 N.W.2d at 908–09.
We will not, in this case, review the Plantes’ one-third contingency
contract from a position of hindsight under rule 32:1.5(a). Unlike
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Hoffman, it is reasonable to assume Munger’s appearance as the attorney
of record, effort, work, and negotiating skills greatly contributed to Sioux
City’s settlement offer and the Plantes’ ultimate $7.5 million recovery. The
district court found Munger is a highly rated attorney and is very
knowledgeable regarding personal injury. There is no doubt that Munger’s
reputation and knowledge played a crucial role in Sioux City’s offer.
Expert witness testimony indicated Munger’s “reputation is that of an
experienced, talented and aggressive trial lawyer with a lengthy and varied
track record of winning cases.” Three other witnesses described Munger’s
reputation as being “a very tenacious advocate for plaintiffs.”
Munger’s work on Plantes’ case was no different. The day after
Chad’s accident, Munger hired a private investigator to immediately
investigate the case, and Munger himself inspected the scene of the
accident and communicated with a driver of the tow truck company.
Munger communicated with Sioux City about obtaining videos,
photographs, and 911 recordings.
During this time, Munger and his paralegal put forth significant time
and effort in negotiating three separate Payment Assistance Agreements
between Rosanne and Sioux City, which resulted in substantial
presettlement payments to the Plantes. Munger continued to counsel
Rosanne, coordinate and prepare a video of Chad’s daily life, gather
witness statements, and perform legal research. After Sioux City agreed
to mediate, Munger performed extensive premediation work, and he
ensured all postmediation matters were properly handled following the
proposed settlement. Simply put, the Plantes’ case does not resemble
Hoffman where there was a complete lack of work that had no effect on
recovery.
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The Plantes’ case is more akin to McCullough. All of the “well-
recognized reasons” for a contingency fee contract existed at the time the
Plantes and MRD entered into the contract. McCullough, 468 N.W.2d at
460. Rosanne, a long-time Iowa attorney with twenty years of experience,
admitted that the one-third contingency was reasonable at the time of its
inception. It was not until after Sioux City offered to settle the case for
$7.5 million—nearly a year and a half after Rosanne signed the contract
with MRD—that the Plantes raised concerns with the one-third
contingency fee contract. Candidly, the Plantes acknowledged at oral
arguments that their position is a one-way street and they do not support
a claim for attorney fees above what was provided in the contingency fee
contract. We also do not overlook the fact that MRD offered the Plantes
three different fee options. The Plantes declined to hire MRD on an hourly
fee basis and declined a 35 % contingency fee with MRD advancing
expenses. Instead, the Plantes chose to enter into the one-third
contingency fee contract and agreed to pay expenses.
MRD’s expert witness also testified that the one-third contingency
fee contract, together with the 1 % per month interest, is common and
routinely approved. Furthermore, at the inception of the contingency fee
contract, the chances of the Plantes success in litigation against Sioux City
was far from a sure thing. MRD’s expert witness testified that Chad’s
recovery was uncertain; proof of damages was difficult to assess depending
on whether he died, recovered, or lived with brain injuries. Sioux City
never admitted fault in the matter, and Trooper Olesen’s technical collision
investigation report calculated that Chad was traveling over the posted
speed limit at the time of his accident. In order to prevail, the Plantes were
required to establish maximum fault on Sioux City greater than the fault
attributed to Chad. See Iowa Code § 668.3(1)(a) (2016) (“Contributory fault
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shall not bar recovery in an action by a claimant to recover
damages . . . unless the claimant bears a greater percentage of fault than
the combined percentage of fault attributed to the defendants . . . but any
damages allowed shall be diminished in proportion to the amount of fault
attributable to the claimant.”). Like in McCullough, the Plantes’ chances
of success were far from certain. See 468 N.W.2d at 461.
The Plantes also challenge the reasonableness of the 1 % per month
interest rate applied to unpaid fees; however, this issue is not preserved
for appellate review. The Plantes did not challenge the reasonableness of
the interest rate in their resistance to MRD’s summary judgment motion,
the district court did not rule on the interest rate issue, and the Plantes
did not file a motion requesting the district court rule on the interest rate
issue. Moreover, the Plantes provided no resistance to MRD’s March 12
motion, which corrected the interest rate applicable to unpaid fees. A
fundamental doctrine of appellate review is that issues “be both raised and
decided by the district court before we will decide them on appeal.” Meier
v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002). In this case, we do not
have the benefit of a full record or a lower court ruling on whether the
interest rate is reasonable. See id. Accordingly, the issue is waived.
IV. Conclusion.
The one-third contingency fee agreement entered into by the Plantes
and MRD was reasonable at the time of its inception. Consistent with our
existing caselaw, we will not use the noncontingency fee factors under rule
32:1.5(a) to reevaluate this contingency fee contract from a position of
hindsight. This case does not fall within the narrow exceptions to that
general rule. The contingency fee contract was a gamble for both MRD
and the Plantes. Lastly, the Plantes did not preserve error for appeal on
whether the interest rate applicable to unpaid fees is reasonable. For these
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reasons, we affirm the district court’s judgment stated in its March 4, 2019
order as amended.
AFFIRMED.
All justices concur except Wiggins and Oxley, JJ., who take no part.