Fees and fairness

Goesel v. Boley Int’l (H.K.) Ltd., No. 13-2434 (7th Cir. Nov. 5, 2015).

A toy robot shattered, puncturing five-year-old Cole Goesel’s right eye. Goesel’s parents retained a law firm to sue for Cole’s injury. After four years of litigation, the parties settled just before trial for about two-thirds of a million dollars.

Because Goesel was a minor, the district court was required to approve the settlement. Under the retainer agreement, the law firm would receive a third of the settlement and the Goesels would cover all litigation expenses. The district court refused to approve the settlement, believing that it left the Goesels with too small a cut. The court modified the settlement to reduce the firm’s fees and expenses.

The firm appealed. Perhaps tellingly, the Goesels have not sought to defend the district court—so the Seventh Circuit appointed an amicus to do just that. But the Seventh Circuit still reverses, holding that the firm’s fee was within market rates and fairly compensated the firm for what even the district court acknowledged was a good result. Even where a minor is concerned, the court holds, a court should depart from the terms of a retainer agreement only for a good reason. And here, there wasn’t a good reason: the firm provided conscientious and successful representation, and the district court provided no reason to think that the settlement was inadequate.

One observation: the district court was concerned that forcing the Goesels to bear the costs of litigation cut too far into their recovery. Here in Washington, Rule of Professional Conduct 1.8(e) generally requires the client to bear the costs of litigation, win or lose—presumably in the belief that litigants should have some skin in the game before they decide to sue.