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settlementattorney
settlementattorneyworkers' compensation

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Gagnon v. Shoblom, 409 Mass. 63, 565 N.E.2d 775

Facts

On June 9, 1988, Donald Gagnon was severely injured when a truck crashed into a parked trailer while he was assisting a driver. Gagnon retained Attorney Alan R. Goodman, signing a contingent fee agreement for 33 ⅓% of any recovery. After extensive negotiations, a structured settlement of $2,925,000 was reached, but the Superior Court judge deemed the fee of $975,000 unconscionable and reduced it, despite evidence supporting the reasonableness of the fee.

On June 9, 1988, at 1 p.m., a truck operated by Donald Shoblom crashed into a parked trailer, killing Susan J. Thompson and severely injuring Donald Gagnon. Gagnon retained Attorney Alan R. Goodman in pursuit of his claim against Shoblom and Shoblom's employer, and for his workers' compensation claim. Gagnon and Mr. Goodman signed a contingent fee agreement in which Gagnon agreed that Mr. Goodman's compensation would amount to 33 ⅓% of the recovery in his personal injury claim.

Issue

Did the Superior Court judge have the authority to reduce the attorney's contingent fee in the settlement of a personal injury action?

Did the Superior Court judge have the authority to reduce the attorney's contingent fee in the settlement of a personal injury action?

Rule

The court examined G.L. c. 152, § 15, and S.J.C. Rule 3:05, determining that a judge cannot substitute their evaluation of legal services rendered under a contingent fee agreement when the fee is not challenged by any party.

In reaching this conclusion, we have examined G.L. c. 152, § 15, set forth in full in the margin, and S.J.C. Rule 3:05, as appearing in 382 Mass. 762 (1981).

Analysis

The Supreme Judicial Court found that the judge's reduction of the attorney's fee was erroneous because there was no challenge to the fee agreement from Gagnon, the client, who expressed satisfaction with the fee. The court emphasized that the judge's role was to ensure the protection of the employee's interests in the settlement, not to evaluate the reasonableness of the agreed fee when it was not contested.

In reaching this conclusion, we have examined G.L. c. 152, § 15, set forth in full in the margin, and S.J.C. Rule 3:05, as appearing in 382 Mass. 762 (1981). We need not dwell on the validity of the contingent fee agreement per se. It is not an issue; only the amount of the fee is before us and more especially, the authority of the judge in the circumstances of this case to nullify the amount of the fee.

Conclusion

The court concluded that the judge erred in disapproving the agreed fee and ordered that the entire settlement, including the original fee, be approved.

We hold that it was error for the judge to disapprove the agreed fee.

Who won?

Donald Gagnon prevailed in the case because the Supreme Judicial Court ruled that the attorney's fee should not have been reduced, affirming the validity of the contingent fee agreement.

Accordingly, an order shall enter approving the entire settlement, including the amount of compensation due to Mr. Goodman under the contingent fee agreement.

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