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Wainger v. Glasser & Glasser9/15/1995
Opinion BY JUSTICE ROSCOE B. STEPHENSON, JR.
In this litigation between a law firm and one of its former partners, we determine when contingent legal fees have been "fully earned" within the meaning of the firm's partnership agreement.
On June 24, 1992, Stephen Wainger filed a declaratory judgment proceeding against Glasser & Glasser, a law firm in the City of Norfolk, seeking an accounting to establish the balances of his capital account and undivided profits account and a judgment for any amounts due him as a result of his withdrawal from the firm. Wainger also sought a construction of the partnership agreement declaring that he is entitled to a 6/91 share of the undivided profits from final, nonappealable consent judgments and final settlements obtained against The Manville Corporation Asbestos Disease Compensation Fund (the Manville Trust) prior to his withdrawal (the Manville Trust fees). In addition, Wainger claims a right to a 10% bonus for those cases against the Manville Trust that he handled personally.
On the same date, Glasser & Glasser filed a declaratory judgment proceeding against Wainger, asking the trial court to determine that Wainger was not entitled to the Manville Trust fees or to any other fees not fully earned prior to his withdrawal from the firm. Glasser & Glasser also sought a judgment against Wainger in the amount of $188,580.10, claiming that Wainger had been paid in excess of his agreed annual maximum draw.
The trial court consolidated the two actions, and, because no material facts were genuinely in dispute, each party moved for partial summary judgment. The trial court entered summary judgment in favor of Glasser & Glasser, holding that Wainger was not entitled to share in the Manville Trust fees because the fees had not been "fully earned" at the time of his withdrawal. Additionally, the trial court ruled, in the alternative, that Wainger was barred from collecting any such fees, even if fully earned, by the provision in the partnership agreement that limited his share of the firm's profits. Wainger appeals.
The relevant facts are undisputed. In May 1987, Wainger was employed by Glasser & Glasser as an associate attorney, and, on January 1, 1990, he became a partner in the firm, subject to the written partnership agreement.
Wainger voluntarily withdrew from the firm, effective January 21, 1992. Pursuant to Article IX of the partnership agreement, a withdrawing partner was to be paid for his interest in the partnership on the following basis:
Item A. Any unpaid monthly draw, and additional compensation (as described in Paragraph 3 of Section B, Article IV).
Item B. His Capital Account.
Item C. His Undivided Profits Account, plus his share, if any, of any undivided profits of the firm with respect to uncollected fees which were fully earned by the firm prior to the . . . effective date of his . . . withdrawal . . ., but which fees are received by the firm subsequent to such date.
(Emphasis in original.)
Since 1976, Glasser & Glasser has represented clients with claims against various asbestos manufacturers, including The Manville Corporation. All these clients employed Glasser & Glasser on a contingent fee basis, evidenced by written agreements. Generally, these agreements provided that Glasser & Glasser would receive a fee of one-third of the gross amount recovered for the client. The agreements further provided the following:
It is understood and agreed that this employment is upon a contingent fee basis, and, if no recovery is made, [the client] will not be indebt
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