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D.C. Circuit Enforces Legal Fee Agreement Requiring Client to Pay Lawyer’s Legal Fees

This case is captioned Bode & Grenier, LLC v. Carroll L. Knight.

Carroll Knight retained the law firm, Bode & Grenier, LLC, to assist it with litigation and regulatory matters arising out of an oil spill of 100,000 gallons of oil on Carroll Knight’s property in Toledo, Ohio. The lawyers agreed to represent Carroll Knight on an hourly fee basis. After two years of litigation, Carroll Knight fell behind on its legal bills and entered into an agreement with the law firm. The agreement contained three components: (a) a retention letter; (b) a Promissory Note obligating Carroll Knight to pay $300,00o in past due legal fees; and (c) a Confession of Judgment.

On May 2, 2008, the firm filed an obtained a Confession of Judgment in the amount of $302,500.

In July 2008, the law firm filed a case in federal court in the District of Columbia seeking $75,105.97 in legal fees owed under the Retention Letter.

In September 2011, the district court granted summary judgment to the law firm and rejected Carroll Knight’s motion for summary judgment.

The law firm then added a claim for its attorney’s fees incurred in prosecuting the fee claim.

At trial, the court awarded the law firm $70,000 in unpaid legal fees and $269,585.19 in legal fees incurred in prosecuting the case.

On appeal, Carroll Knight argued that the district court should have granted summary judgment because the confession of judgment barred the later-filed fee claim under res judicata principles. The court agreed that the two cases were different. One sought judgment on a note for past debts the other case attempted to collect under the retention letter.

The court then enforced the fee-shifting clause in the Retention Letter and held that the district court properly awarded $269,585.19 in legal fees to the law firm. The Court construed the agreement based upon the four corners of the Promissory Note and Retention Letter.

The court rejected Carroll Knight’s claims that Michigan law should apply and it refused to review extrinsic evidence because the plain language of the agreement was clear. The court held that the law of the District of Columbia applied, not Michigan law.

In Illinois, a lawyer cannot collect his own legal fees incurred in collecting his legal bill.

In sum, Carroll Knight may have been better off paying the legal fees and not fighting the lawyers, once it signed the agreements at issue.

Edward X. Clinton, Jr.