Goesel v. Boley Intern. (H.K.) Ltd.

806 F.3d 414 (7th Cir. 2015)

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Nature of the Case

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Facts

In 2007, five-year-old P was injured when a toy robot shattered and punctured the lens of his right eye. P's parents retained attorney. The retainer agreement stipulated that the firm would receive one-third off the top of any gross settlement or judgment and Ps would be responsible for litigation expenses; but in the event of no recovery, Ps were off the hook for both expenses and attorney's fees. The litigation was contentious litigation, and the issues necessitated the retention of multiple expert witnesses, including chemists, toy-safety specialists, ophthalmologists, and rehabilitation counselors. The litigants also conducted extensive discovery, including depositions in seven states and a video conference with deponents in Hong Kong. The parties settled on the eve of trial. Ds agreed to pay $687,500. Under the retainer agreement, the firm's one-third of the gross settlement amount was $229,166.67, and litigation expenses totaled $172,949.19, leaving P with $285,384.14, or roughly 42% of the total recovery. P was a minor and local rules, and the Illinois Probate Act required court approval before the settlement could be finalized. The district judge sua sponte objected to the child getting 42% of the recovery. The judge also acknowledged that the firm had done 'a terrific job for the client.' The judge noted that Rule 1.5(c) of the Illinois Rules of Professional Conduct expressly permits 'litigation and other expenses to be deducted from the recovery' and expenses may be 'deducted before or after the contingent fee is calculated.' The judge concluded that the agreement cannot be characterized as per se unreasonable. Under the principles of 'fairness and right reason,' the judge modified the fee structure so that the litigation expenses were deducted off the top. The judge accordingly authorized fees in the amount of $174,730.47; reimbursement of litigation expenses in the amount of $163,308.59; and disbursement of $349,460.94 to P. Attorneys appealed.