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Estate of Mohamed v. Daimler Trucks North America, LLC

United States District Court, W.D. Wisconsin

January 23, 2018

ESTATE OF OMAR F. MOHAMED, and H.R., minor, by her Guardian ad Litem, Plaintiffs,



         Before the court is petitioner's unopposed request for approval of a minor settlement of all claims H.R. may have against the defendants resulting from her father's death following a motor vehicle accident. (Dkt. #60.)[1] Wisconsin law provides that “[a] compromise or settlement of an action or proceeding to which a minor . . . is a party may be made by the . . . guardian ad litem with the approval of the court in which such action or proceeding is pending.” Wis.Stat. § 807.10(1). While the Wisconsin Legislature provides no specific guidance as to what factors should be considered in reviewing a proposed settlement, this court is to determine generally whether “the proposed distribution of settlement proceeds are fair and reasonable and in the best interests of [the minor].” In re Glaser, No. 05CV1319, 2005 WL 2491542, at *1 (Wis. Cir. Ct. Dane Cty. Apr. 25, 2005).

         As proposed, the settlement calls for a total payment of $825, 000, from which 40% ($330, 000) is to be taken off the top for attorneys' fees, which are to be split evenly between the law firms of Bye, Goff & Rohde, Ltd. and Murphy & Practhauser, SC (Dkt. #60 at 2.) From the remaining $495, 000, an additional $68, 534.88 is to be paid to the Murphy law firm to reimburse disbursements made. (Id.) The remaining $426, 465.12 is augmented by the Bye law firm's client trust account balance, creating a subtotal of $479, 657.07.[2] (Id. at 3.) From that total, $84, 518.94 is to be deducted for third parties (the Wisconsin Department of Health Services, Rawlings Company, LLC, and Inclusa, Inc.), leaving $395, 138.13 to be deposited into a structured settlement for H.R. (Id.) The structured settlement is to provide $10, 000 to H.R. the day after her 18th birthday, and monthly payments of $500 for seven years until 2038, followed by guaranteed lump sums ranging from $100, 000 to $393, 500 between April 24, 2038 and April 24, 2058. (Id. at 25.) The guaranteed yield totals $1, 145, 500. (Id. at 26.)

         The guardian ad litem, C.M. Bye, a member of the Bye law firm and one of the plaintiffs' lead counsel, represents that he “thoroughly investigated the question of liability and the advisability of accepting the offer of settlement, ” as well as “the nature of the incident, ” and has concluded that the settlement is in the best interest of his charge. (Id. at 3.) The court does not doubt that the guardian ad litem engaged in just such a thorough investigation and will defer to his legal judgment with respect to the merits, damages and risks associated with the claims against defendants, where the interests of counsel and client are generally aligned. However, the court is to give substantially less deference with respect to fee arrangements in light of the inherent conflict of interest between counsel and a vulnerable client. See Rosquist v. Soo Line R.R., 692 F.2d 1107, 1110-11 (7th Cir. 1982) (recognizing federal courts' oversight responsiblity where “the client is unable to fully protect his own interests, ” such as children, particularly where the court “cannot assume that counsel will necessarily protect those children's interests that are directly in conflict with [the lawyer's] own financial well-being”); see also Id. at 1111 (“Even when the validity of the fee contract itself has not been challenged by the parties, it is within the court's inherent power of supervision over the bar to examine the attorney's fee for conformance with the reasonable standard of the Code of Ethics.”).[3]

         In evaluating a fee contract's reasonableness in particular, a court “is not limited to the face of the contract.” Id. at 1113. Rather, under Wisconsin law, the fee arrangement is “to be used only as a guide [in] calculating reasonable attorneys['] fees.” Anderson v. MSI Preferred Ins. Co., 2005 WI 62, ¶¶ 3, 41, 281 Wis.2d 66, 697 N.W.2d 73. While the court has wide discretion in arriving at a reasonable fee, id., Wisconsin “Supreme Court Rule 20:1.5(a) lists factors [to] help determine” that fee:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
Although each factor need not be examined, the circuit court must consider all the circumstances of the case to determine whether the contingency fee amount ...

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