By David Majchrzak and Edward McIntyre
19.4.3 O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546 – Court of Appeal of California, First Appellate District, Division Four (November 25, 2019)
Issue:
Does a lawyer’s failure to sign a contingency fee engagement agreement nullify a lawyer’s charging lien on the proceeds of a settlement?
Analysis:
Yes. Amidst a convoluted factual scenario—involving a deceased lawyer, a bankruptcy, another lawyer’s purchase of a contingent fee claim in the bankruptcy case, complex anti-SLAPP analysis, disbursement of settlement proceeds in the face of a lien claim and more—was that the original lawyer’s failure to sign the written contingency fee agreement, notwithstanding the fact that the client signed it, knew and agreed to the terms of the contingent fee, allowed an insurance company to void the agreement, with its lien provision. Business and Professions Code section 6147, subdivision (a), provides that a written fee agreement must be “signed by both the attorney and the client.” The lawyer’s failure to sign, therefore, renders the agreement voidable for “failure to comply with any provision of [that] section.”
The Court of Appeal held that it was required to presume that a statute says what the legislature means and “means in a statute what it says there.” The Court held that “signed by both” made clear that a single signature was insufficient.
Notes:
The dissent—which concurred on a most of the issues addressed in the opinion—focused on the insurance company’s disbursement of settlement proceeds in the face of an attorney-lien claim. It concluded this should have given rise to a cause of action that should have prevented application of the anti-SLAPP statute, the mechanism used to defeat the claim for unpaid fees.
David Majchrzak and Edward McIntyre are co-editors of Ethics Quarterly.