Untiedt v. Grand Laboratories, Inc.

Brief Fact Summary. A term in a contingency fee agreement was ambiguous.  The court had to determine which party had the responsibility to clarify ambiguities.

Synopsis of Rule of Law. If a term in a contingency agreement is ambiguous, the burden of "identifying and clarifying ambiguities [is] on the attorney, whose experience places him or her in a better position to discharge the task at the least cost."

Facts. Untiedt retained an attorney named Schmidt to represent them in a consumer fraud matter.  The parties agreed that Schmidt's firm would earn a 40% contingent fee.  The jury awarded Untiedt $1,038,725 in damages and an additional $366,584.24 in costs and attorneys' fees.  A paragraph in the agreement stated "In the event of a cash settlement or jury verdict, I agree to pay said attorneys from any money and or [sic] property paid, received, or collected by action, compromise, or otherwise, 40 percent of any recovery for attorney fees for handling my case to settlement or suit including appeal."

Issue. Pursuant to the retainer agreement, does the 40% contingency fee include 40% of the attorneys' fees awarded?

Held. The court noted that the word "recover" in paragraph 3 was ambiguous.  Since an attorney was involved in this matter, the court found it proper to put the burden of "identifying and clarifying ambiguities on the attorney, whose experience places him or her in a better position to discharge the task at the least cost."  Furthermore, the duties of an attorney as a fiduciary compelled the court to place the burden on him to "exercise great caution in the adverse process of selecting the terms that will govern a contingent fee arrangement."

Discussion. This case concerns a heightened obligation bestowed on attorneys by courts.