Ross v.

Scannell

Lawrence Ross is a lawyer practicing in Tacoma while William Scannell, a former

business partner and client of Ross, is a real estate broker in Pierce County.

Scannell entered into negotiations with Wayne Knight and others for the purchase of a
1,410 acres of land in Klickitat County and deposited $2500 as earnest money.

Scannell then contacted Ross and inquired if he knew of any investors who might be
interested in the property. Two of Ross' clients, Mr. Topel and Mr. Campbell, his law
partner, Mr. Griffies, a Mr. McKinney, and Ross decided to become partners in the joint
venture for the purchase of the land.

The land purchase was not completed due to the sellers’ refusal and/or inability to clear
title and sell to the joint venture, thus ending the joint venture. Acting upon Ross’ advice,
Scannell commenced an action against sellers in which Scannell sought specific
performance and damages. Scannell and Ross orally agreed at the outset of the action that
Ross would receive a contingent fee, which was later reduced in writing.

Early in the Knight litigation, Ross assured his client that he could serve as both witness
and attorney and continued work on the case. Finally, just prior to trial Ross retained the
services of Mr. Warren Peterson on an hourly basis to try the case.

The trial court ruled in favor of Scannell, ordered specific performance for 960 acres of
the 1,410 originally contracted for, awarded $32,000 damages plus return of the $2,500
earnest money.

When Scannell entered into negotiations for the sale of a portion of the property obtained
in the Knight litigation, Ross informed Scannell that he was entitled to one-third of the
profits that Scannell might derive from the sale, as well as one-third of the damages. Ross
continued to insist upon these profits even though, as he admitted, the contingency fee
agreement letter that he drafted made absolutely no mention of profits.

Scannell experienced difficulty in obtaining a contract for the conveyance of the

property. In view of their dispute over fees, Ross did not represent Scannell in clearing up
this matter. Thus, in December 1978 Scannell had still not obtained title to the property.

Scannell reluctantly paid Ross' unreimbursed costs and retained the services of another
law firm.

Shortly after Scannell refused to agree to give Ross one-third of any profits from the
future sale of the property, Ross filed a claim of attorney's lien which included the legal
*603 description of the disputed. Then, with the admitted purpose of clouding title to the
property, Ross mailed a copy of the claim of lien and property description to the title
company in Klickitat County and filed the lien with the Klickitat County Superior Court
after obtaining a new cause number in Klickitat County and filing an abstract of the
Pierce County judgment.

At that time Scannell had entered into an agreement with prospective purchasers to sell
790 of the 960 acres at a price of $456 per acre. However, due solely to the cloud on the
title caused by Ross' unadjudicated claim of attorney lien, Scannell was unable to deliver
marketable title and the purchasers canceled the transaction.

Ross sued Scannell in Klickitat County to collect the contingent fee and foreclose the
attorney's lien. Scannell counterclaimed for damages resulting from the loss of sale and
for slander of title. The property had not sold at the time of trial, and due to economic
conditions and local governmental restrictions, the land had a reduced value of $400 per
acre.

The trial court found in favor of Ross attaching the lien and clouding title to the real
property. The court, however, did not uphold Ross' percentage-of-profits theory of
attorneys fees for $92,551.61, and instead awarded him $21,443 pursuant to the
contingent fee agreement. The court accordingly denied Scannell's counterclaim. This
appeal by both parties followed.

Issues:
1. Does Washington's attorney lien statute allow an attorney to file a lien on the real
property of his client?

2. Can an attorney recover fees, based on a contingency fee agreement if, prior to full
completion of the contingency, the attorney ceases to render the required legal services
for his client?

3. Can an attorney recover any fees if the attorney has acted unethically in the course of
providing the services for which the fees are claimed due?

Ruling:

1. No. An attorney has a lien for his compensation, whether specially agreed upon or
implied, as hereinafter provided: (1) Upon the papers of his client, which have
come into his possession in the course of his professional employment; (2) upon
money in his hands belonging to his client; (3) upon money in the hands of the
adverse party in an action or proceeding, in which the attorney was employed,
from the time of giving notice of the lien to that party; (4) upon a judgment to the
extent of the value of any services performed by him in the action, or if the
services were rendered under a special agreement, for the sum due under such
agreement, from the time of filing notice of such lien or claim with the clerk of
the court in which such judgment is entered, which notice must be filed with the
papers in the action in which such judgment was rendered, and an entry made in
the execution docket, showing name of claimant, amount claimed and date of
filing notice.
 The statute in part is merely declaratory of the general or retaining lien recognized
at common law. This possessory and passive lien gives an attorney the right to
retain papers and documents which come into the attorney's possession during the
course of his professional employment. It is a possessory and passive lien and is
not enforceable by foreclosure and sale.

One of the states with a statute similar to ours has held that the attorney lien
statute must be strictly followed and not judicially expanded to reach real property
as fruits of a judgment. Keehn v. Keehn, 115 Iowa 467, 88 N.W. 957 (1902). We
agree with this analysis. If the Legislature had intended attorneys' liens to
attach to real property as proceeds of a judgment, it would have included a
provision to that effect as other states have done. We note that the Legislature
has not left an attorney remediless in collecting fees after the attorney-client
relationship has been terminated. He has, among other remedies afforded general
creditors, the ability to reduce his fees to judgment and thus subject his client's
real property to a judgment lien pursuant to RCW 4.56. If additional measures are
necessary, the attorney may post a bond and proceed with a writ of attachment
pursuant to RCW 7.12.

The attorney must, of course, balance these rights with the Code of Professional
Responsibility EC 2-23:

A lawyer should be zealous in his efforts to avoid controversies over fees with
clients and should attempt to resolve amicably any differences on the subject. He
should not sue a client for a fee unless necessary to prevent fraud or gross
imposition by the client.

The dangers of allowing attorneys to file liens for unadjudicated, unliquidated

claims thus clouding title are especially clear in the instant case. The contingent
fee contract relied upon is ambiguous. Ross did not try the action due to a conflict
of interest which he should have been aware of before accepting the case.

In an age when the ethics of the bar are scrutinized in every quarter, we must hold
that the result reached by the trial court is one neither contemplated by the
attorney lien statute nor in accord with the public interest.

2. No. We hold that under the circumstances of this case an attorney may not
recover on the contract but must seek recovery of fees on the theory of quantum
meruit.

The settled law in this state is expressed in Ramey v. Graves, 112 Wash. 88, 91,
191 P. 801 (1920):

The rule is that, where the compensation of an attorney is to be paid to him

contingently on the successful prosecution of a suit and he is discharged or
 prevented from performing the service, the measure of damages is not the
contingent fee agreed upon, but reasonable compensation for the services actually
rendered.

Thus, we conclude that if Ross is entitled to attorney fees, the measure of those
fees is not the contingent fee agreed upon but the reasonable value of the services
rendered. We cannot determine the value of the services from the record and
remand this matter to the trial court.

3. We are unable to determine from the record that any of the questions of unethical
conduct raised in Scannell's brief were presented to the trial court.

The charges of unethical conduct herein are grave. Scannell asserts that Ross
violated: CPR DR 2-106 prohibiting an attorney from collecting an illegal or
clearly excessive fee; CPR DR 5-103 prohibiting an attorney from acquiring a
proprietary interest in the client's cause of action; CPR DR 5-102(A) requiring an
attorney to withdraw from the conduct of the trial if the lawyer learns or it is
obvious that he ought to be called as a witness on behalf of his client unless such
testimony falls within the exceptions listed in CPR DR 5-101(B); CPR DR 5-105
restricting an attorney from representing multiple clients if his independent
professional judgment is impaired; and CPR DR 5-107 requiring an attorney to
avoid influence by others than his client. Such charges are normally heard by a
disciplinary committee of the Washington State Bar Association. However, a trial
court may consider such allegations in determining attorneys fees.

Accordingly, on remand we instruct the trial court to consider the charges of

unethical conduct in relation to several principles enunciated by this court in
determining the amount of fees due Ross. Professional misconduct may be
grounds for denying an attorney his fees.

When an attorney is guilty of fraudulent acts or gross misconduct in violation of a

statute or against public policy, the client may have a complete defense to the
attorney's action for fees.

In sum, we reverse and remand this action to the trial court to determine whether
Ross' actions constituted slander of title and what, if any, damages Scannell is
entitled to receive. Upon remand we also instruct the trial court to determine
what, if any, fees are owed Ross upon a theory of quantum meruit, and not on the
ambiguous, uncompleted contingent fee agreement.