A recent NLJ story, “Law Firm Can Keep $270K Fee Award for $70K Judgement, D.C. Circuit Says,” reports that a boutique law firm in Washington can keep nearly $270,000 in legal fees after winning a $70,000 judgment against a former client, a federal appeals court in Washington ruled.
Bode & Fierberg—referred to in court paper by its former name, Bode & Grenier—represented Carroll Knight, who owned several companies in Michigan, for more than a decade. When Knight failed to pay the firm, Bode successfully sued for breach of contract in federal district court in Washington a won a $70,000 judgment.
U.S. Magistrate Judge Deborah Robinson in Washington ruled that the firm was entitled to legal fees for its work on the breach-of-contract case under the retention letter it signed with Knight. The U.S. Court of the Appeals for the D.C. Circuit agreed, saying Robinson was correct to apply the terms of the retention letter, and not a separate agreement between Bode and Knight, to the fee issue.
The retention letter included a requirement that Knight pay Bode’s fees for the cost of collecting overdue money from Knight and his companies, and didn’t specify which law the court should apply—D.C. law or Michigan law—in deciding a fight over fees, Brown wrote. That meant Knight couldn’t argue Robinson should have applied Michigan law and limited Bode’s recovery. The court reject Knight’s argument that, under Michigan law, Bode couldn’t collect legal fees for representing itself in the litigation against Knight.
Randell Ogg, a Washington solo practitioner who argued for Bode, said the D.C. Circuit’s decision “reaffirms the principle that’s established in the District that law firms can seek fee for representing themselves if there’s a basis to do so in their agreement with the client.”
Between December 2005 and January 2007, Bode accused Knight’s companies of failing to pay the full amount of legal fees they owed. In summer 2007, the firm and Knight signed three agreements: a retention letter spelling out the terms of their future relationship; a promissory note for Knight to pay $300,00 in past fee; and a “confession of judgment” that said Bode would immediately win a judgment if Knight failed to pay the $300,00 by May 2008.
When Knight didn’t pay by May 2008, Bode secured a judgment in Michigan state court. The firm then filed a civil lawsuit in Washington seeking $75,000 in legal fees under the retention letter. Knight countered that it shouldn't pay any fee because Bode allegedly revealed confidential client information and the firm’s fees were unreasonable.
Robinson ruled in favor of Bode on its breach-of-contact claim after a one-day bench trial in November 2012. She awarded the firm $70,000. She granted Bode’s request to request to recover legal fees from Knight as the winning party in the breach-of-contract case.