The Utah Supreme Court has rebuked the Salt Lake law firm of Jones, Waldo, Holbrook & McDonough for its handling of a fee dispute with a client.
The firm sued Jerilyn Dawson, withheld her file, filed a lien against her home and held up her alimony payments after she balked at paying part of the $46,000 she was billed for her divorce case, according to an opinion released Friday.The 62-attorney firm also demanded $17,000 in fees for its efforts in collecting from Dawson.
That demand was rejected by 5th District Judge J. Philip Eves.
The lower court upheld the divorce fee of $34,000 for services leading up to the 1992 divorce trial and $12,000 to defend a subsequent appeal.
The state's highest court, however, nearly halved the trial fee after ruling Dawson's attorney, Michael Shaw of Jones, Waldo's St. George office, had established an $18,000 cap on fees during a conversation with his client.
In the 4-0 opinion, Supreme Court Justice Richard Howe faulted the firm's billing and collection practices.
"Fees should not be driven by billable-hour requirements imposed by lawyers on themselves and by their firms," Howe wrote. "When disputes do arise, attorneys should settle them without resorting to tying up rehabilitative alimony and retaining files to coerce payment."
Jones, Waldo attorney Bill Ronnow denied the firm withheld Dawson's file.
"We dispute the facts as the Supreme Court has laid them out, but they are the final authority," Ronnow said.
Dawson and Gary Shelton were married in 1985 and the couple moved to St. George from California three years later. The wife hired attorney Shaw in May 1991 when Shelton sued for divorce. The retainer agreement called for a $500 fee upfront and monthly billings at $100 an hour, but the document did not address a fee cap, according to court filings.
After an initial court appearance in St. George, Dawson asked Shaw how much his services would ultimately cost. She gasped when he estimated $5,000 to $10,000, testified her friend Alta Graham. The friend and Shaw later discussed the unemployed Dawson's inability to pay a large legal bill.
Shaw recalled giving Dawson a top-end estimate of $12,000 and up to $18,000 if she claimed an interest in her husband's business. The later figure is the one Howe cited in ruling in Dawson's favor.
Shelton came into the 1985 marriage owning SVS Development Corp., a business Dawson promised not to attack when she signed a prenuptial agreement. During the divorce, the wife honored this promise, but disputes over the couple's joint and premarital real-estate holdings generated much work for Shaw, the firm contends in its filings.
Dawson eventually was awarded the couple's home in the Bloomington area of St. George and $1,400 in monthly alimony for two years. The husband also was ordered to pay $18,500 of Dawson's $34,000 legal bill.
The divorce decree prompted an appeal from Shelton, whose legal bill was just under $20,000. His appeal then drove up his ex-wife's bill from Jones, Waldo by another $12,000. The firm then quit representing Dawson after she refused to turn over her alimony checks.
Particularly disturbing to the Supreme Court was the firm's alleged refusal to hand over Dawson's file to her new attorney, Joseph Harlan Burns, who successfully defended the appeal without the material. Howe considered the tactic a violation of professional conduct rules that require attorneys to surrender former clients' papers and property.