After a motor vehicle accident in North Dakota, a Watertown, SD personal injury attorney was retained by the client on a 1/3 contingent fee arrangement.  Working together with a North Dakota attorney, they obtain an offer of $500,000, but client wanted a higher amount.  SD Attorney, acting pursuant to language so permitting in the fee contract, withdrew from case and next asserted a lien for 1/3 in ongoing negotiations. Client eventually accepted $500,000 offer.  SD attorney filed this lawsuit to collect his fee.  Client counterclaimed, “alleging fraud, recission, breach of fiduciary duty, breach of contract, and deceit, relying in part on North Dakota law,” 

Is the attorney fee agreement for 1/3 of the recovery enforceable under these facts?  

The trial court said yes, awarding attorney $170,049.81 plus attorney fees plus costs plus $31,303.59 in prejudgment interest.  The trial court applied SD law and ruled against client on his counterclaims.  On appeal, all five (5) Justices agree that SD law applies and all five (5) agree that the client’s counterclaims were properly dismissed by summary judgment.  

But, how much is attorney entitled to recover?  By a vote of 3-2, the Court holds that the attorney is not automatically entitled to 1/3 but that his recovery is to be governed by the rule of quantum meruit  — “[attorney] fees valued both in light of the amount of work he has done, and also by the results accomplished.” The Court’s opinion is authored by Retired Justice Kern, with Justice DeVaney fully concurring.  Chief Justice Jensen filed a special concurrence.  

Justice Myren dissented, expressing the view that: 

[¶97.] This is not a situation of a lawyer taking advantage of a client unfamiliar with legal processes. The record establishes that [client] is a sophisticated businessman with significant prior experience with legal representation and the legal process. He and [attorney] meticulously negotiated the contingent fee agreement. While such a withdrawal provision negotiated with a less sophisticated client may raise public policy concerns in other cases, the unique facts of this relationship do not. We do not need to explore those considerations to resolve this case. I would hold that Section 8 of the contingent fee agreement is enforceable and that [attorney] is entitled to the compensation he and [client] negotiated.

Justice Salter fully concurred with Justice Myren’s view.  

It is noteworthy that, in support of its holding regarding quantum meruit, the Court’s opinion cited a federal decision from the 11^th Circuit Court of Appeals which affirmed the award of a 45% contingent fee under the quantum meruit principle.

Handling this appeal:  The Watertown personal injury attorney was represented by Nancy Turbak of Watertown, SD, and Chris Angell and Richard J. Thomas of Arden Hills, Minnesota.  The Client was represented by Michael L. Gust of Fargo, North Dakota and Mark A. Schwab of West Fargo, North Dakota.

Newly-appointed Justice Gusinsky did not participate in this decision. NOTE: One cannot help but wonder where he would have cast his vote.This decision was made public this morning, April 16, in CULHANE v. THOVSON, 2026 S.D. 23.  A copy of the opinion may be obtained by sending an e-mail request to rogermbaron@gmail.com .