Court of Appeals Underscores Significance of Written Fee Agreement

A man and female attorney signing a document

A recent decision by Division I of the Washington Court of Appeals highlights the importance of a written fee agreement. Davis Wright Tremaine LLP v. Peterson, 2017 WL 1593009 (Wn. App. May 1, 2017) (unpublished), was a fee collection case by a law firm against a client. The law firm had represented the client in commercial litigation before withdrawing. After the underlying case resolved, the law firm sued the client for unpaid fees and related expenses that the law firm had advanced.

The client argued that the fees sought were unreasonable and the fee agreement involved was “void as against public policy.” The trial court awarded the firm both a significant portion of the unpaid receivable remaining from the underlying litigation and $90,000 in fees and costs as the prevailing party in the subsequent collection case. The client appealed. The Court of Appeals affirmed.

The Court of Appeals’ decision focuses on two primary areas. First, it concluded that there was substantial evidence in the record to support the trial court’s findings on the nature and reasonableness of the fees awarded in the underlying litigation. This portion of the opinion necessarily involved a very fact-specific review of the services provided, the rates charged and the results obtained. The Court of Appeals affirmed the fees awarded on the receivable as reasonable under the circumstances.

Second, the Court of Appeals reviewed the fee agreement involved and concluded that it provided the client with adequate notice of the terms involved—including an attorney fee provision in the event of collection. The fee agreement at issue had two components: a letter tailored to the specific representation and a standard-form supplement outlining general terms that was incorporated into the letter. Both were provided to the client at the outset of the representation and the Court of Appeals noted that the client had not objected to either one. Having concluded that the client was appropriately advised in advance of the law firm’s terms, the Court of Appeals affirmed the award of fees in the collection case based on the collection provision.

RPC 1.5(c)(1) only requires that contingent fee agreements be in writing. Comment 2 to RPC 1.5 recommends—but does not require—that fee agreements be in writing outside the contingent fee context. Peterson, however, is a good illustration of the practical utility of written fee agreements. A thorough written fee agreement makes it very difficult for a client to claim later that he or she did not understand the financial aspects of the representation. Similarly, if a firm wishes to at least retain the option of seeking fees under RCW 4.84.330 in a subsequent collection case, the written fee agreement will provide the necessary contractual predicate.