Yesterday, the Tennessee Court of Appeals issued a new opinion on this topic, which is a must read for sessions lawyers.
The case, Mary Bradley v. Catherine A. Pesce, W2023-00583-COA-R3-CV (Tenn. Ct. Ap. Dec. 19, 2023)(full copy here), involves a lawsuit against two defendants, filed in general sessions court in 2020. Plaintiff served one defendant, but never got the other served. After taking a judgment in June 2022 against the served defendant, plaintiff nonsuited the claims against the never-served defendant in January 2023.
Using the date of the dismissal, the judgment defendant filed an appeal of the June 2022 judgment. The issue, of course, was whether her appeal was timely under Tenn. Code. Ann. § 27-5-108, which provides “[a]ny party may appeal from a decision of the general sessions court to the circuit court of the county within a period of ten (10) days.”
Wasn’t the defendant required to appeal within 10 days of the June 2022 judgment?
Looking to Tenn. R. App. P. 3(a), the Court of Appeals first asked whether a ruling in a matter is “final” where other claims (like a cross-claim) are still pending. The Court noted that the “finality rule” is applicable even in general sessions cases, citing other opinions that “the time for filing a notice of appeal [does] not begin to run until every claim raised in the general sessions court [is] adjudicated.” Further, the Court considered the 2018 amendments to Tenn. Code Ann. § 27-5-108, which provide that one party’s timely appeal takes all issues to the circuit court, even when other claims remain pending.
In the end, the Court concluded that because “the general sessions court action …was against two parties: Appellant and Ms. Weaver,” then “[t]he judgment against Appellant was not final and appealable until all the claims of all the parties were adjudicated,” and “[t]his occurred on or about January 5, 2023.” As a result, the appeal of the June 2022 ruling was not a final order until the dismissal order was signed.
In short, the concepts behind Rule 54.02 apply in Tennessee General Sessions Court, and litigants should keep this opinion in their mind any time a case involves multiple claims and parties.
Here, it seems like the judgment debtor acted out of necessity (and not by design). Frankly, the safest course of action would have been to file the appeal in June 2022 and be entirely certain that the appeal was timely (which would have, by operation of Tenn. Code Ann. § 27-5-108, taken the entire matter to circuit court).
On the other side of the aisle, an experienced plaintiff’s lawyer knows the incredible challenges that an evading or difficult-to-serve defendant presents, and that lawyer should take precaution to make any partial judgment final (and executable) as soon as possible.
This could be done in a few easy ways. The plaintiff could ask for text in the sessions judgment that tracks the language of Rule 54.02, making it clear that the order is a final order. The plaintiff could, at the time of the entry of the initial judgment, dismiss the other claims and parties. Or, if the other claims and parties were simply too crucial, the plaintiff could delay all relief or, at worst, live with a bit of ambiguity as to the finality of the partial judgment.
The appellate court’s reasoning is sound, but a savvy plaintiff has a number of ways to protect their client.
A more pressing question is this: If the “partial” sessions judgment isn’t final in a situation like this, then shouldn’t the Court Clerk refuse to issue execution? (Spoiler: Most will issue execution, but, based on this case, they shouldn’t.)
It’s holiday party season for lawyers, and, man-o-man, have I spent a bit too much time around tipsy lawyers over the past few weeks (disclaimer: I’ve been to 2 parties).
It’s also the time of year for: all-nighter transaction work; squeezing files for extra billable hours; year end bonuses; meetings with compensation committees; and polishing up resumes for when all of the above go wrong.
Long story short, these are stressful, uncertain times, and I seem to be answering a lot of the same questions about leaving Big Law and starting a law firm.
So, for those of you who have stressed-out lawyers in your lives, I offer these suggestions as my 2023 Gift Guide for Disgruntled Lawyers.
Want to start your own firm, but have no idea where to start? Buy your lawyer a year subscription to Clio, a comprehensive online practice management platform that offers everything needed to run a law firm: time tracking; billing; online payments; document management; contacts; case and matter management; and everything else. Clio integrates with hundreds of third-party apps, and it’s designed to be the central hub through which all operations run. It’s awesome and costs about $1,000 per year. And, of course, it’s fully online (and secure), so there’s no need for that $25,000 on-site server that makes those strange buzzing noises behind the locked door at the old law firm.
What about everything else? That’s where an annual subscription to Microsoft365 comes in. For about $150, you get e-mail (Outlook), Word, Excel, Powerpoint, Teams, OneDrive, Sharepoint, and about 25 other programs that you’ve never heard of, but are awesome and useful (Bookings has changed my life). Plus, unless you’ve been living under a rock, you probably know that Microsoft is an industry leader on AI research, and you’ll get to be on the frontlines of Microsoft Copilot. That weird picture at the top of this post? It was AI generated by Microsoft Designer.
I haven’t seen anything about phones yet. Here, you’ve got two good options. The industry standard for video communications, Zoom, is now offering VoIP phone services (with pricing starting at $120 annually). Since you will have to get Zoom (all of the remote court appearances and conferences are on Zoom), this is worth looking into. (I use Ringcentral for phone, fax, and business texting, and it’s a bit wonky, but it works).
What about copies, printing and scanning? Most lawyers probably use some high-capacity printer, which is rented from a third party service (and the firm pays a monthly fee and a per page quota each month). You don’t need that. Find a good, mid-quality print/copy/scan machine from HP, which will cost you about $500.
What about the fancy offices? Don’t sign a 5 or 10 year lease for commercial office space. Instead, call one of the 5-7 fancy coworking spaces that have opened in Nashville. I use WeWork, which has been awesome (and has accommodated me in Austin, Chicago, and Seoul). Other options on Music Row include Ampersand Studios, Industrious, Kennect, and e-spaces. These spaces are all “turn key,” meaning they offer printing, internet, limited staffing, and package handling for a low monthly membership fee, generally ranging from $200 to $350.
What about websites and marketing? Some lawyers do this themselves. I don’t recommend that because branding is too important. For all of my various iterations of my own law firm, I’ve used Huckleberry Branding. They’ve designed my logos, helped with color schemes, designed a custom website, helped with content, and also all the incidentals that come with it all (including letterhead, envelopes, and business cards). While I’m embarrassed to have done this 3 times, I’d hire them again if there were a 4th time. They are awesome, and getting started with good branding is too important to do on your own.
What about staffing? You may wonder about who will do all the “little things” to keep the new firm running. (At my old firm, there was a person dedicated to making sure there were cold Cokes at all the meetings.) At a small firm, the lawyer will do all these little things, as well as the medium and big things. To make it a little easier, I’d recommend hiring a phone answering service. I use Abby Connect, a 24/7 answering service whose goal is serve as an extension of my own firm. I’ve used others (Posh) in the past, and the main differentiating factor tends to be pricing and frequency of use. These services cost range from $200 to $500 per month.
What about everything else? Stamps.com for everyday mail. Simple Certified Mail for certified mail. Simplifile to record documents (state-wide) with Register of Deeds’ offices. Lawpay to accept credit card payments (and, yes, Clio offers Clio Payments). If you’ve got lots of documents and need to super-charge document management, the biggest player in the market is NetDocuments (which I use) and is about $75.00 per user per month. I use Minnesota Lawyers Mutual Insurance as my malpractice carrier, and I can’t tell you if they are any good because I hope to never call them ever (about $150.00 a month for robust coverage).
What if this is still too complicated? Buy them a one-hour “Ask an Expert” call with Adriana Linares, of Law Tech Partners, a lawyer-turned-legal-technology consultant who takes a no-nonsense approach to coaching up entrepreneurs on making the early-firm decisions, as well as the late-firm decisions (I had a call with Adriana a few weeks ago).
It’s wild to think that you can run a fully functioning law firm for under $1,000 a month, but it’s entirely possible. It’s also lots of fun to explore all the innovations in legal technology. It’s an unprecedented time for growth in legal tech, and a lawyer with an entrepreneurial spirit has more options now than ever before in how she can practice law.
If there’s a lawyer in your life who believes her law firm isn’t giving her the freedom to nurture that entrepreneurial spirit, I hope this Gift Guide is the first step to a fruitful and lucrative 2024.
If any of you are thinking about making this jump, reach out with any questions, fears, or complaints. I’m happy to help. If I’ve left anything out or if you have any other questions, let me know, and I’ll respond.
Many collections lawyers handle cases on a contingency basis. They don’t bill by the hour, but, instead, they keep some percentage (usually 33%) of the money they actually collect for the clients. Sounds fair, right?
A recent study showed that a Nashville lawyer’s average rate exceeds $500 per hour, and that adds up pretty quick. With lawyers being so expensive, it makes sense that some clients would ask their attorney to share in the success (or, maybe, frustration) of the collection process.
(As a quick disclaimer, I rarely take collections cases on a contingency and, when I do, I’ve done my advance homework and am confident that, candidly, we’re all going to make a lot of money.)
Because the contingency fee attorney is not sending bills that track every minute of his time, a down-side is that he may not have a clear measure of how much in fees he has expended on a case. This is important in breach of contract cases, when the lawyer asks the judge to add an award of attorney fees to the creditor’s judgment. Under Tennessee law, a trial court must consider whether the fees requested are “reasonable,” using very specific guidelines established by the Tennessee Supreme Court.
If the lawyer hasn’t kept track of her work, then what amount does the attorney ask for? Generally, contingency-fee lawyers simply ask for their contingency-fee amount to be added to the judgment. That is generally allowed.
In that case, after they were awarded $50,000 on their breach of contract claim, the plaintiffs asked for attorney’s fees “in the amount of one-third of the total Judgment, or sixteen thousand six hundred and sixty-six dollars and sixty-six cents ($16,666.66).” See Fulmer v. SARCO, GP, No. M202201479COAR3CV, 2023 WL 5787082, at *2 (Tenn. Ct. App. Sept. 7, 2023).
In questioning the attorney fees, the Court of Appeals wrote that “[w]hile a one-third fee may have been what [plaintiffs] agreed to pay their counsel, it is not what [defendants] agreed to pay in the Note” (which only referenced “reasonable attorney fees”). Id. The defendants were not party to the contingency fee agreement, and “what [plaintiffs] agreed to pay their own attorney is not dispositive of what constitutes a reasonable fee under the circumstances of this case.” Id.
Instead, the trial court must have some proof substantiating the fees and services provided, consistent with the factors listed in Tennessee Supreme Court Rule 8, RPC 1.5. Id.
I understand the reasoning here, but I disagree with the general premise that a contingency fee is, per se, not reasonable.
As an example, consider my practice. If I accept one of my no-brainer, “we’re all going to make a lot of money” contingency fee cases mentioned above (and my homework is correct), I could possibly make a $333,333.33 fee on a lawsuit that lasts two months. Does that the fact that I got the matter resolved quickly and efficiently necessarily mean that my fee violates the Tennessee standards for reasonableness? This opinion suggests it might.
In my limited contingency practice, I lean really heavily on my skills, expertise, and homework (i.e. the “novelty and difficulty” referenced in the Rule) in picking my cases. In short, on those cases where I hit a grand slam, it can occasionally look easy, but a lot goes into that. It’s like the ship repairman, who charged $2.00 for tapping the engine with a hammer one time and $9,998.00 for knowing where to tap. He is worth every penny.
In the end, the Court of Appeals remanded the question back to the trial court, and there’s some chance that the plaintiffs make these same arguments in defense of their contingency fee.
Today (August 8) is my birthday, and it’s also the three-year anniversary of when I started my own firm (well, August 7). With this post, I’ll ask you to indulge me a bit.
It’s a happy birthday toast to my law firm.
It hasn’t been a straight line, but it’s always been onward and upward. I cringe a little bit re-reading my August 2020 post announcing the move. My mission statement still rings true, but, in retrospect, I hadn’t quite run my “big plans” past the other firm (or the other other firm). I was just so excited to be building something new:
I tend to wake up, involuntarily, at 4:45 a.m. or so, to worry about whether it was the right choice and about all the work to be done to build something. Opening bank accounts. Picking office space. Hiring staff. Hiring lawyers. And, of course, doing the legal work for all the clients. And by “wake up, involuntarily,” I really mean “freak out” about what’s next.
My mistake was that I had no idea what I was looking for, until I happened to find it. It’s crazy that, 3 years ago, I typed out the above words, but it never once crossed my mind to actually start my own firm. Instead, I had spent the prior 3 years looking for, simply, a different Big Law Firm. /s/ Because everybody knows that the best way to have a voice in the big firm decisions and autonomy in your law practice is to move to a Big Law Firm./end sarcastic voice/
Fail fast. So, I had all these big plans for an innovative way to run a law firm, and then somehow decided that I should definitely open an office for a 100 year old law firm based in a city 300 miles away. Reading that last sentence, I totally see the red flag. In reality, it took about 2 weeks. One more (brief) false start later, I decided to go Solo.
Trial and Error is sometimes the best teacher. I won’t recount the mistakes I made in the first 15 months running my own firm, but I’ll tell you that, by November 2021, I was annoyed, fed up, and ready to find the biggest law firm that needed a creditor rights expert. To that end, I met with a legal recruiter, Tara Boosey (who had an office in my building), and told her that I was sick of it, described what my dream job looked like, and told her to find it for me. Her advice? “It sounds like you already have the perfect job for you.” Not what I wanted to hear at that moment, but such great advice.
Just focus on the firm I have.Then it clicked. The work and referrals had always been there, but the unlikely encouragement really focused me on my path. A past obstacle was that clients tend to call me whenever something comes up, and I fretted about the client who maybe calls once a year for an IP referral or the other who sends me 1-2 complex commercial transactions that are way over my head. How could I help them, if I wasn’t at a huge law firm? Simple: I wouldn’t. I’d focus on exactly what I do (and do best), I’d build a network of small-law experts who I trusted, and the smart clients would appreciate a thoughtful referral to another awesome attorney.
And, then, focus even more. Even though the phone never stops ringing, I bill less hours than I used to at the big law firm. That’s because I also spend so much more doing everything else: marketing, IT, accounting, you name it. There are only so many hours in the day. If I couldn’t accept every new case, then I’d have to decide which of the clients I could help. I began to ask things like: Which clients are jerks? Which ones take forever to pay? Which ones are unreasonable? Which ones don’t listen to me? Those were the first ones to go. I call it the Client Decision Tree.
The good clients sustained the firm. Three years ago, when I announced that I was leaving my old firm, one client lost his mind, thinking he didn’t have the option to go with me. In a frantic email, he wrote “Wherever you are, that’s where I want my cases.” Needless to say, that client made the cut and has followed me through every step, through 4 different email addresses (ugh). Since August 7, 2020, I’ve opened 517 new client matters1. Maybe I’m not as low volume as I thought; that number is surprisingly high. A large part of that (maybe 200) were old matters that followed me when my bank clients said “take everything.” (It turns out that my fears that I wouldn’t have any clients unless I stayed in a Big Law Firm were incorrect.)
Working less is a good thing. Once upon a time, no matter what the old firm’s billable minimum was, I exceeded it. Obsessively. It was unhealthy, and maybe bad lawyering. The law should be thoughtful, strategic work, and “high volume” anything does not create the best product. I had a crushing workload. Billable hour mandates are driven by expenses and overhead, and, if those could be kept in check, I believed that my new model could produce high quality work, balanced with a healthy lifestyle. So far, so good: Last year, my hours hit an all-time low, but my net income hit an all-career high.
The mission statement wasn’t entirely crazy, either. Since opening my own firm, I’ve been recognized as an Attorney for Justice by the Tennessee Supreme Court every year. I have helped a Nashville group distribute more than a million dollars in property tax protection and racial justice reparation funds. I’ve started a charitable program, Lawyers Give Back, that has supported 17 different area charities. And, yes, the firm works really hard in service of our clients. I still lose sleep worrying about my cases–there are just intentionally less of those cases to worry about.
In the end, I discovered that I had my dream job. At the old firm, I took my kids to school maybe 10 times over the course of 5 years. In the last 3 years, I bet I’ve done 300 drop-offs and pick-ups. I’m a better lawyer, and I’m also a more engaged husband and father. (After a “law firm divorce,” I can assure you that your law partners don’t actually love you like family.)
Byeonhosa Noraebang! I never took real vacations; instead, I’d tack a few extra days onto 3 day weekends here and there. This year, my family took a dream vacation, spending 3 weeks in South Korea. Our trip culminated with a great dinner with two Korean banking lawyers (and friends), who took our family to noraebang afterwards (on the 10th anniversary of BTS’s debut).
If you’ve made it this far, you may be wondering what my point is, other than a bit of bragging. That’s fair, but we should be able to authentically celebrate all sorts of successes and not just brag on LinkedIn about being a Super Lawyer.
There’s a stigma attached to being a solo lawyer, which isn’t fair. A lawyer doesn’t have to work at a big law firm to be successful or to produce sophisticated work. Three years ago, I couldn’t comprehend that, a result of years of false messaging from law schools and bar associations. Even 20 years into my own legal career, I fell for that BS, and my ignorance wasted a lot of my time.
Don’t get me wrong. Running a small firm is hard and can be a complete pain in the neck (feel free to read some of my other blog posts on that topic). I often tell people “It’s the best job on earth, and it’s the worst job on earth, but it’s never in the middle. I used to spend a lot of time in the middle.”
I also used to tell my kids that they were forbidden from ever becoming lawyers, because it was such an awful job. Not anymore. Now, for the first time, I can picture a day when one of my kids might take over the little firm.
What a three years it’s been. I’ll conclude this post with a celebratory link to BTS’s Mic Drop (a song in which South Korea’s greatest boy band encourages you to relish your successes and also to tell your haters to annyeonghi gaseyo).
Now, I’ll turn off the work email early and go enjoy a birthday dinner with my family.
A prior version of this post said 549, which is what my billing software shows and sounded bizarrely high. On further research, that included a few adminstrative / pro bono / conflict type file assignments, so I reduced the number. ↩︎
If I won the billion dollar Powerball, I’d live a life free of interrogatories and argumentative lawyers. As a billionaire, I’d only employ lawyers who tell me “yes.”
The legal industry is different. Most law firms–big, medium, small, and tiny–follow the same general business model: billable hours. A lawyer’s salary usually comes down to: (1) How many hours are you billing? and (2) How much are you charging for that hour?
There’s a little bit of discretion this way or that way, but, in the end, a lawyer’s salary is a matter of math.
When a new firm offers a raise, a lawyer will probably be expected to “earn it back” (by multiples) by billing more hours and charging higher rates. Law firms don’t give money away.
It’s not a terrible list. The “big picture” concepts are fine, but there are about 5 items of specific advice that make me cringe.
My own list would add: (4) Are you growing as an attorney, either via general learning (Are they mentoring you?) or developing a niche practice (Are they exposing you to a practice area or client base that you can grow into and develop?) (5) Do you like the people there and their working style (i.e. the vibe)? (6) Does your law firm value your contributions to the firm? (7) What are the future prospects for growth (i.e is the firm managed by old white guys on their way out, without any transition plan) and how could you fit into that future (i.e. is the leadership team inclusive, a small clique, or, worse, located 2-3 states away)? (8) What level of autonomy do (or would) they allow for you to grow your practice?
As you consider all of these questions, always ask yourself: Ignoring the potential raise, would things be better if I just stayed put?
Before I left my old law firm in 2020, I had spent about 2 years seriously listening to recruiters’ and law firms’ offers, and I realized that every law firm was basically the same. A little bit more money, but more hours and my rate would increase to a level that would chase off most of my clients. I’d be a stranger, though, who didn’t know how the document management system worked or where the snacks were hidden. The money wasn’t worth the hassle and couldn’t overcome my other concerns.
I declined all offers, mainly because I cherished my “F You Capital,” hard earned after nearly 13 years of high performance at the same firm. Even though I didn’t agree with the firm on many administrative things, my past success and client base had earned me a level of autonomy that was valuable to me. I had very little interest in being the “new lawyer.”
I understand that some lawyers are drastically underpaid, and many people don’t have the luxury of turning down a raise. What I’m recommending, though, is that money shouldn’t serve as a wildcard, to solve the red flag answers to the other questions.
You’ll have lots of jobs and will make good money as a lawyer, but you only have one career. Be deliberate when making the jump.
At the time, Tennessee creditor rights attorneys complained both about the decrease in the interest rate (at the time, it dropped from 10% to 5.25%) and also the confusion related to tracking a variable rate (it changes every 6 months). Back then, none of us envisioned a world where the rate would exceed Tennessee’s old rate.
When the Legislature made these changes during the Great Recession, it was designed to provide relief to judgment debtors. That the rate has reached an all-time high is good for creditors, of course, but also indicative that interest rates are pushing the economy toward a tipping point.
If a creditor client has a claim that is close to $25,000, I’ll reccomend that the lawsuit be filed in General Sessions Court. To do that, a creditor owed $33,000 must shave its claim to fit the $25,000 limit, as a trade off for the fast pace and reduced costs.
No matter the outcome, you can always appeal the decision for “de novo” review in Circuit Court. In fact, under Tenn. Code Ann. § 27-5-108(a)(1), “[a]ny party may appeal from a decision of the general sessions court…”
If you lose? Appeal. If you win, but thought you should have won more? You can also appeal. “Any party ” means any party.
This broad right has resulted in some plaintiffs not even bringing witnesses to court. In the event that a defendant shows up with exhibits and wants a trial, the plaintiff will voluntarily dismiss the case and, then, just appeal the order of dismissal.
A new Tennessee Court of Appeals case casts this strategy in serious doubt. The Court noted that a nonsuit is a voluntary dismissal by right, at the request of the plaintiff. Walker v. Shelby Cnty. Sheriff Dep’t, No. W202200466COAR3CV, 2023 WL 3000875, at *7 (Tenn. Ct. App. Apr. 19, 2023). As a result, the trial court exercises no discretion and the nonsuit order is not a “decision,” as used in Tenn. Code Ann. § 27-5-108(a)(1), and is not appealable. Id.
Lawyers who represent creditors in general sessions need to take note of this. If faced with this difficult situation, voluntary dismissal remains an option, but the plaintiff must refile a new action after that voluntary dismissal.
That may not be a good option, though, for a few reasons.
Under Tenn. R. Civ. P. 41(2) limits who many times a plaintiff can voluntarily dismiss claims before losing them. Also, a plaintiff may be dealing with potentially time-barred claims, meaning that the filing date of new case would not satisfy the Tennessee statute of limitations. Finally, as a practical matter, the plaintiff may be concerned that it will never get service of process on the defendant in a later case, and plaintiff may want to get the current action pending.
In any of those situations, the creditor’s lawyer has only once good choice under Tennessee law: Try the case and force the judge to issue a ruling on the merits, which can be appealed.
Sure, you could, but the current version created a process that was three times more complicated than just printing it and mailing the pleading. Long story short, the existing Rule 5.02 wasn’t quite as simple as “service by email is allowed.”
The new Rule 5.02(a) makes it that simple: “Service on any attorney or on a party may also be made by emailing the person the document in Adobe PDF to the recipient’s email address, which shall be promptly furnished on request. The sender shall include language in the subject line designed to alert the recipient that a document is being served under this rule.”
Old habits are hard to break, and there’s not much that lawyers love more than old habits. To that end, all you non-e-mailers will be happy to know that Rule 5.02 still provides three acceptable means of service of process, with service by mail remaining an option. See Tenn. R. Civ. P. 5.02(1).
I tend to assume that lawyers who send me pleadings the mail are either being sneaky (why not waste 3 days or so of the other party’s review and response time) or trying to avoid confrontation (worrying that an emailed pleading will open the door to a snarky response).
Not me. I’ll be saving some trees and sending e-mails.
As a matter of practice, I plan to continue to send full copies of pleadings via US Mail to pro se parties, even though the rule conspicuously doesn’t require different service for pro se parties.
It’s a smart amendment, which reflects how lawyers practice law in 2023.
Much to my former law partners and book-keepers’ chagrin, I often apply courtesy discounts to my clients’ legal invoices.
It’s counter-productive to my business model. But, as a kid raised by a mom who worked at the local Piggly Wiggly and a dad who worked on an assembly line, sometimes I look at a bill, am reminded of how expensive lawyers are, and apply a small discount.
Don’t get me wrong: All my billable entries are wonderful and worth every penny. In fact, I tend to win many of my cases, including an award of attorney fees, and, when I do, I sometimes wonder whether the defendant have to pay the full amount (and not the discounted amount)?
A recent Tennessee Court of Appeals says that a court can only award what the prevailing party actually pays (or is obligated to pay). It’s at St. Paul Cmty. Ltd. P’ship v. St. Paul Cmty. Church, No. M202101548COAR3CV, 2023 WL 1860692(Tenn. Ct. App. Feb. 9, 2023).
In the case, the trial court originally awarded the Church $343,535.07 in attorney fees and expenses, which were computed at the rate of $295.00 per hour. In later proceedings (after an earlier remand), the Church attorneys asked for $515,655 in attorney fees, which appeared to retroactively calculate all entries at $450 per hour.
Why? The attorney and client had a unique “side” agreement to the engagement letter, that, even though the hourly rate was $295, if they won, the attorney would ask the Court to reimburse the fees “at a higher rate than the $295/hour I’m billing the church.” There was no agreement that the Church would ever actually have to pay that higher rate.
In light of the Tennessee’s application of the “American Rule” on attorney fees, the Court of Appeals focused on the text of the underlying agreement, which required the reimbursement of attorneys fees “incurred” by the Church. “Incur,” the Court noted, means “to become liable for” or “to be legally obligated to pay.”
Here, the lawyer’s engagement letter clearly said that the Church would never be expected to actually pay that higher rate. The trial court, then, was correct in awarding the attorney fees at the $295 rate, “which were charged and paid at the $295 rate pursuant to the written engagement letter” and denying any requests that the higher rate. Id. *6.
It’s an interesting opinion, with some fairly unique facts that would never come up in most cases.
But, in the context of long-standing litigation, a few $300 or $500 “courtesy discounts” here and there over the course of a case could add up to a few thousand (or more) dollars. After a long fought legal battle, it’d be natural to have your billing software show your cumulative legal fees for your Affidavit (which would naturally output only logged time entries and not paid bills) and forget to give your adversary the benefit of those discounts.
Under this new opinion, you may be legally obliged to. So, maybe my book-keeper is right.
All the good Nashville lawyers I know are so busy right now. This is a good problem to have, but, nevertheless, it is a problem. There’s simply too much demand right now.
I overheard one local lawyer telling a story about a frantic call he received from a client, who was freaking out because they hadn’t filed an Answer to a lawsuit, and it had been more than 30 days after service.
“Have they filed a Motion for Default yet? If not, then it’s not late.”
I’m sure the lawyer was more tactful in the actual conversation, but the reasoning has some basis in local custom. Often, in Davidson County courts, if a defendant files an Answer before the hearing on a Motion for Default Judgment and pleads a tenable defense, a court will not grant a judgment under Tenn. R. Civ. P. 55, under the theory that the justice system prefers that “matters be decided on the merits” not a technicality. (See, generally, Discover Bank v. Morgan, 363 S.W.3d 479, 491 (Tenn. 2012)).
A recent opinion from the Tennessee Court of Appeals shows that there are risks in waiting to file an Answer.
That case is Conserv Equip. Leasing, LLC v. Schubert Enterprises, LLC, No. E2022-00535-COA-R3-CV, 2023 WL 1489768 (Tenn. Ct. App. Feb. 3, 2023). There, the creditor filed a motion for default, and, a few days later, received a phone call from an attorney who “expected to be retained” by the defendants and asked for a 3 week continuance on the motion hearing. After the hearing was so continued, that defense attorney “fax-filed” an Answer at 3:59pm on the Friday before the Monday morning default hearing, with an original copy filed with the Clerk about 33 minutes before the hearing.
Defendant appeared at the hearing, objecting to the relief and presumably with filed Answer in hand, but the default judgment was nevertheless granted. At the trial court level, Defendants later tried to set aside the ruling on excusable neglect grounds and Tenn. R. C. P. 60.02.
The Court of Appeals noted that “[a]lthough courts construe Rule 60.02 ‘with liberality to afford relief from a default judgment,’ the movant bears the burden of showing ‘why the movant was justified in failing to avoid the … neglect’.” Id. at *2. The Court wrote that “[i]f the court finds that the defaulting party has acted willfully, the judgment cannot be set aside on ‘excusable neglect’ grounds…” and “[m]aking ‘deliberate choices’ amounts to willful conduct. Id.
In the end, the issue was remanded back to the trial court, whose order denying the Rule 60 motion failed to include findings of act and conclusions of law (per Tenn. R. Civ. P. 52.01). In short, the trial court didn’t provide any explanation for its ruling.
To be clear, though, the Court of Appeals didn’t say the trial court was wrong; instead, it sent it back down for the trial court to provide more explanation for its refusal to set aside the judgment. The most likely outcome, of course, is that the plaintiff will prepare a properly supported proposed order, the judge will sign it, and, then, that order will be appealed.
It’ll be an interesting case to watch, but, procedurally, it’s also a reminder: Don’t delay when dealing with court deadlines.
Creditors Rights 101 