A legal dispute arose between attorney Hiram Seibers, Jr. and his former client, Jerry A. Jared, concerning fees from a personal injury case. Seibers discharged Jared before the case concluded but agreed to a lien on potential recovery for prior work. After another lawyer settled the case, Seibers sought to collect fees, but Jared claimed Seibers should forfeit the fee due to alleged unethical conduct. A bench trial determined Seibers had technically violated Tennessee Supreme Court Rule 8, DR 5-105(A), but found no prejudice to Jared and that he waived conflict-of-interest claims. Consequently, the court awarded Seibers $69,525.83 in fees and expenses, a decision that was affirmed on appeal.
The case background includes Horace Manning's injury in a collision with Seibers' uninsured vehicle, leading Manning to hire Jared. Jared filed a claim against Seibers during his bankruptcy proceedings but later focused on securing maximum settlement from Manning’s insurance, which paid $25,000. Seibers subsequently sought Jared's representation against the Pepsi-Cola Bottling Company after being injured in a different incident, signing an employment agreement with Jared without consulting Manning. Jared then filed a complaint seeking $2 million in damages on behalf of Seibers.
Mr. Jared largely disregarded Mr. Manning's bankruptcy claim during a period when both he and Mr. Manning claimed to have forgotten about it. Unexpectedly, the bankruptcy court scheduled a hearing on the claim, prompting Mr. Jared to inform Mr. Manning that he could not represent him due to his representation of Mr. Seibers. There were conflicting accounts between Mr. Jared and Mr. Seibers about their discussions regarding the claim; Mr. Seibers claimed they did not discuss it, while Mr. Jared recalled seeking another attorney's opinion on potential conflicts, which concluded that no impermissible conflict existed due to the unliquidated nature of Mr. Manning's claim and the expiration of the statute of limitations. The trial court accepted Mr. Jared's version of events regarding his initial meeting with Mr. Seibers.
The hearing's purpose remains unclear but may have been related to Mr. Seibers’ financial change after winning a lottery in October 1995. In April 1997, Mr. Jared informed the bankruptcy court that he no longer represented Mr. Manning, who would represent himself, a decision agreed upon by both parties. Following this, Mr. Jared continued to represent Mr. Seibers, who rejected a $200,000 settlement offer after two conferences in September and October 1997. Disagreements over the case's value led Mr. Seibers to discharge Mr. Jared on October 22, 1997, hiring John L. Lowery as his new counsel. Subsequently, Mr. Jared agreed to lower his fee and Mr. Seibers signed a release granting Mr. Jared a lien on any potential recovery.
An order was entered by the trial court on October 29, 1997, granting Mr. Jared a lien and substituting Mr. Lowery as counsel. In December 1997, Mr. Seibers expressed dissatisfaction with Mr. Jared for assisting Mr. Manning, claiming a conflict of interest and asserting that Mr. Jared should forfeit his fee for work done from August 1995 to October 1997. On January 9, 1998, Mr. Seibers settled with Pepsi-Cola for $275,000, with $69,524 held in court pending a determination of Mr. Jared's fee. Disagreement over the funds led to a bench trial in 1998.
On July 15, 1999, the trial court issued a memorandum opinion with several key findings: Mr. Seibers' testimony was deemed contradictory and bizarre, leading to the conclusion that he was an untruthful witness. Additionally, Mr. Seibers failed to demonstrate any damages resulting from Mr. Jared's violation of the Code of Professional Responsibility and waived any conflict of interest by not terminating Mr. Jared in a timely manner. Mr. Jared’s only connection to the bankruptcy proceedings occurred in December 1997, when he received and returned a $12,000 check from the bankruptcy court, subsequently informing both the court and Mr. Manning's insurance carrier about the situation. Based on these findings, the trial court awarded Mr. Jared a total of $66,667.67 in fees and $2,858.16 in expenses, a decision which Mr. Seibers has appealed.
The document elaborates on the contractual nature of the lawyer-client relationship, emphasizing that a lawyer is entitled to reasonable compensation for competent legal services rendered, regardless of the client's actual benefit. A client retains the right to discharge a lawyer at any time, but doing so does not negate the lawyer's right to compensation for services already provided. If discharged without cause, a lawyer may recover based on breach of contract or quantum meruit, whichever is greater; if discharged for cause, the recovery is limited to the lesser of the two. Notably, a lawyer guilty of serious ethical violations may forfeit some or all compensation, provided the violation is clear and has harmed the client's interests.
A lawyer may forfeit a fee if they attempt to collect a 'clearly excessive' amount, as this violates Tenn. S. Ct. R. 8, DR 2-106(A) and harms the client. Forfeiture decisions are discretionary and depend on the specific facts of each case, considering factors such as the severity and willfulness of the violation, its impact on the lawyer's work value, any harm to the client, and the adequacy of alternative remedies. Complete forfeiture of compensation is not always appropriate, particularly if it would benefit the client disproportionately.
In the case of Mr. Seibers against Mr. Jared, Mr. Seibers claims Mr. Jared should forfeit his fee due to a conflict of interest from representing Mr. Manning while also representing Mr. Seibers. To succeed, Mr. Seibers must prove Mr. Jared's actions violated professional conduct codes and caused him harm, which he failed to do by not showing how the alleged conflict affected his settlement negotiations with Pepsi-Cola and others. Mr. Jared's representation of Mr. Seibers in August 1995 constituted a clear conflict of interest, as he did not obtain the required consent from both parties. Lawyers are bound by fiduciary duties to act in good faith, maintain client confidences, exercise independent judgment, and avoid conflicts of interest, as outlined in various legal precedents and the Tennessee Rules of Professional Conduct.
A conflict of interest occurs when a lawyer's representation of a client may be adversely affected by the lawyer's own interests or obligations to another client. In this case, the key issue is whether Mr. Jared represented two clients with conflicting interests simultaneously. Mr. Jared contends he did not represent clients with differing interests because he had stopped representing Mr. Manning prior to accepting Mr. Seibers' case. However, on April 28, 1995, Mr. Jared filed a 'proof of claim' for Mr. Manning in Mr. Seibers' bankruptcy case, thereby becoming Mr. Manning's attorney of record until April 1997.
During this period, Mr. Manning's interests were in direct conflict with those of Mr. Seibers, as Mr. Manning was a creditor of Mr. Seibers and could influence the bankruptcy proceedings. Consequently, Mr. Jared had a conflict of interest in representing Mr. Seibers while still being Mr. Manning's attorney of record. This conflict could have been mitigated had Mr. Jared taken appropriate steps in April 1995, such as formally notifying Mr. Manning of his non-representation, obtaining informed consent from Mr. Manning for his representation of Mr. Seibers, disclosing his role in the bankruptcy, and securing Mr. Seibers' informed waiver regarding any potential conflict.
Lack of evidence hampers understanding of Mr. Seibers' bankruptcy, which was a Chapter 13 reorganization, suggesting he proposed a plan to repay creditors, including Mr. Manning. Mr. Seibers' intention to repay all creditors was confirmed by his testimony. Without a formal agreement to repay Mr. Manning, no legal obligation exists, especially since Mr. Manning allowed the statute of limitations to expire without filing suit. Mr. Seibers was aware of Mr. Jared's involvement in Mr. Manning's claim by April 1997, but uncertainty remains regarding his awareness in April 1995, specifically about Mr. Jared's role in filing the claim. Mr. Jared violated Tennessee Supreme Court Rule 8, DR 5-105(C) due to this oversight from April 1995 to April 1997, although this was remedied when he withdrew from representing Mr. Manning and informed Mr. Seibers of the conflict. The critical issue is whether Mr. Jared should forfeit his fee because of the conflict. The court concluded negatively, citing two reasons: Mr. Seibers waived the conflict claim by not asserting it in April 1997 or during fee negotiations in October 1997, and he presented no evidence that the conflict affected the quality of Mr. Jared's work or harmed his interests. Timely assertion of conflict claims is crucial, as demonstrated in case law. Mr. Seibers only raised the issue after January 1998, despite being aware of it earlier, indicating a tactical delay and questionable motives.
Mr. Seibers chose not to discharge Mr. Jared despite a potential conflict of interest, allowing Mr. Jared to continue his work until October 1997. This decision, along with Mr. Seibers' delay in raising concerns, serves as a basis for denying Mr. Seibers' request to forfeit Mr. Jared's fees. Additionally, Mr. Seibers failed to provide credible evidence demonstrating that Mr. Jared's relationship with Mr. Manning negatively impacted his case against Pepsi-Cola and other defendants. Testimonies from Mr. Lowery, Mr. Jared's successor, and the attorney for Pepsi-Cola indicated that Mr. Jared effectively managed the case and that Mr. Seibers did not suffer any financial loss due to the alleged conflict. Consequently, the trial court found no prejudice against Mr. Seibers and upheld the award of $69,525.83 in fees and expenses to Mr. Jared, remanding the case for any necessary further proceedings. Costs of the appeal are assigned to Hiram Seibers, Jr. and his surety, with execution permitted if necessary.
