MONTGOMERY, Ala. (Legal Newsline) - An attorney hoping to extend contingency-fee agreements to areas of the law they aren't allowed has received an adverse ruling from the Alabama Supreme Court.
Justices on Nov. 8 ruled against John Daugherty, who was taking a percentage of alimony he secured from a friend's ex-husband. They said he can't recover a contingency fee from a domestic relations case.
Daugherty's friend Molly had told him her ex-husband wasn't complying with their divorce agreement and that she could no longer pay her lawyer $400 an hour to enforce it. So he came up with the contingency fee as a solution.
He was to recover 25% percent of whatever her ex-husband paid her as a result of his efforts in Jefferson County Domestic Relations Court.
In 2021, the woman told Daugherty she no longer wished to have him represent her. He said sure, but he would need time to figure out the fees he was due and he wouldn't hand over documents until he was paid.
He even tried to intervene in the case to protect his interest in the alimony payments but his claim was rejected. He eventually sued Molly in 2022 for breach of contract. She responded with a legal malpractice counterclaim and argued her contract with Daugherty, which included an arbitration provision, violated Rules of Professional Conduct because it allowed a contingency fee in a domestic-relations case.
That rule says a lawyer can't charge "any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce of upon the amount of alimony..."
Daugherty argued an exception applied and pointed at an ethics opinion from the State Bar that said a lawyer could represent a spouse on a contingency fee for "breach of an antenuptial contract."
"But even if Daugherty had provided sufficient legal authority for his position, the exception upon which he relies would not apply in this instance," Justice Brady Mendheim wrote.
"As Molly observes, Daugherty did not just represent her with respect to her petition for a rule nisi; he also willingly represented Molly with respect to (the ex-husband's) petition to modify his monthly alimony payments.
"Despite that change in the status of his representation, Daugherty did not change the terms of the contract with Molly. Consequently, Daugherty had contracted for a contingency fee not just with respect to the collection of an alimony arrearage, but also with respect to 'the amount of alimony' due to Molly on an ongoing basis."