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MATTER OF FOX9/2/1997
ties made part of the settlement), and how they collected their fee out of it. When they were calculating the settlement, they did not discount the annuities to present value. Instead, they added up the guaranteed payments as they would be paid in the future. See supra note 4 (detailing the annuity payments). Therefore, they valued the entire settlement at $371,340. From this, they calculated their attorneys' fee at $123,255.
It is now well-settled that in valuing structured settlements like the one here, the cost method should be used. See Tubbs v. Bowie, 308 S.C. 155, 417 S.E.2d 550 (1992). The premium paid to purchase the annuity contracts here was $110,818. When added to the initial $175,000 cash payment, the settlement would be valued at $285,818. Thus, using this figure, a one-third contingency fee would be approximately $95,000. If the settlement's value had been appropriately discounted, it is obvious the fees paid here were excessive (approximately fifty-three percent of settlement's value).
Indeed, Respondent has not argued otherwise. He instead argues he should not be disciplined for collection of the excessive fee because (1) in 1987 the law was not settled in South Carolina regarding how to correctly value a structured settlement, and (2) he did not actually calculate or disburse the money but relied on Screen to do it. We find neither argument absolves Respondent from responsibility in this matter.
Respondent is correct that until Tubbs was decided in 1992, South Carolina had not directly addressed the issue of structured settlement valuation. 308 S.C. 155, 417 S.E.2d 550. Tubbs involved a claim by one joint tortfeasor that a jury verdict rendered against her should be offset by the amount paid by another tortfeasor, that amount being paid partly in annuities. The issue then became how to value the annuities for the purpose of determining the amount of offset. We held the present value of the annuities as determined by their actual cost was the appropriate method of valuation. In doing so, we noted in dicta this was the method "widely used in determining the amount of contingent attorney fees in structured settlements involving annuities." 308 S.C. at 159, 417 S.E.2d at 553.
The problem in this case is not so much the valuation of the structured settlement in itself but the combination of the
In Schneider v. Kaiser Foundation Hospitals. the California Court of Appeals construed a statute mandating that in cases where plaintiffs are awarded periodic payments, courts must determine the "total value" of the payments and use this figure in awarding contingency attorneys' fees. The issue was whether "total value" meant the "arithmetic sum of all payments required by the award, i.e. the award's face value or the present value of the stream of future payments." Id. 264
Regarding Respondent's second argument, the Attorney General correctly points out he and Screen were joint venturers in their representation. "Where an attorney retained on a contingent fee to prosecute a claim engages another lawyer to assist in the litigation, upon an agreement to share the fee in case of success, otherwise to receive nothing, they become joint venturers." 46 Am. Jur. 2d Joint Ventures ยง 54 (1994). Furthermore, " elations among joint venturers are governed by partnership law." Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229, 238, 391 S.E.2d 538, 543 (1989). From this, the Attorney General seeks to establish that any misconduct on Screen's part automatically renders his "partner," Respondent, guilty of misconduct based on principles of joint and several liability. We disagree with this proposition. As a general rule, a lawyer is not subject to discipline because
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