Alexander v. Inman

IN THE SUPREME COURT OF TENNESSEE

AT NASHVILLE

DAVID A. ALEXANDER and ) FOR PUBLICATION
MACLIN P. DAVIS, JR., )
) FILED: JUNE 22, 1998
Plaintiffs-Appellees )
) DAVIDSON COUNTY
v. )
) HON. ROBERT S. BRANDT,
JULIA ANN WHITE INMAN ) CHANCELLOR
)
Defendant-Appellant ) NO. 01-S-01-9705-CH-00103

FILED
June 22, 1998
For Appellant: For Appellees:
Cecil W. Crowson
HARLAN DODSON, III Appellate Court Clerk WARD DEWITT, JR.
ANNE C. MARTIN Nashville, TN
Nashville, TN

OPINION

REVERSED BIRCH, J.
 We granted permission to appeal under Tenn. R. App. P. 11

to the appellant, Julia Ann White Inman, in order to determine the

amount of attorneys’ fees, if any, that the appellees, attorneys

David A. Alexander1 and Maclin P. Davis, Jr., are entitled to

recover from Inman, their former client, pursuant to a written fee

agreement.

Under the circumstances presented herein, we conclude

that (1) the agreement is not a contingent fee arrangement; (2) the

attorneys and Inman shared the same understanding of the agreement;

and (3) the fee charged is reasonable. Consequently, we hold that

the attorneys have satisfied their high fiduciary duty of good

faith in the formation of the agreement. We conclude also that the

attorneys did not violate the terms of the agreement. Accordingly,

we hold that the agreement is enforceable, and the attorneys are

entitled to recover the full amount requested. Finally, the

attorneys are not entitled to prejudgment interest.

I

After releasing her first attorneys, Inman engaged Davis

and Alexander on September 6, 1988, to represent her in a fiercely

contested divorce action which had already been set for trial on

October 5, 1988. During the September 6 meeting between Alexander

and Inman, Alexander requested a $10,000 retainer but did not

discuss any other billing arrangements. He also recommended

associating Davis to assist with the representation, and Inman

1
Mr. Alexander died after the first trial of this case.

2
agreed.2 Because the attorneys were engaged only one month before

the trial date, they obtained a continuance, and the trial was

reset for November 15, 1988. Once the trial was reset,

approximately eight weeks were available to prepare for trial.

The parties entered into the fee agreement in dispute on

September 22, 1988. Neither Alexander nor Davis explained the

agreement to Inman, although she admitted at trial to having read

the agreement before signing it. The agreement provides:

The amount of the final fee to
be paid by Client for legal services
of Attorneys and lawyers and clerks
under their supervision shall be a
reasonable amount taking into
consideration the time and labor
required, the novelty and difficulty
of the questions involved, the skill
required to perform the services
properly, the amount involved and
results obtained, and other relevant
factors. Said final fee shall not
exceed 15% of the total sum (in
money and property) awarded to
Client after commencement of the
trial of said action for divorce for
alimony in solido, for five years of
alimony in futuro, and distribution
and division of property, or 10% of
such total sum awarded to Client by
settlement prior to the commencement
of such trial, provided that said
fee shall in no event be less than
(a) $10,000; or (b) the total amount
on a time basis for work of
Attorneys and other attorneys and
clerks under their supervision at
their usual hourly charges for work.

Said retainer feel [sic] shall
be credited toward the total charges
to Client. If the charges for work
exceed $10,000, Attorneys shall bill

2
In addition, Alexander’s partner, attorney Ernest W.
Williams, contributed substantially to the representation.
Williams is not a party to this suit.

3
 Client for said excess charges
within a reasonable time.

In the days before the trial, the attorneys examined the

files from Inman’s previous attorneys, subpoenaed bank records,

amended the pleadings, and assembled the necessary evidence. They

also requested the court to re-open discovery and to order Inman’s

spouse to answer several interrogatories propounded by her previous

attorneys.

Because Inman suspected that her spouse had not been

honest about the existence and value of all marital assets, a great

deal of time was devoted to identification and re-evaluation of the

marital estate. The trial court declined to re-open discovery, so

an extensive search of various documents and bank records became

necessary. With Inman’s assistance, they located at least one

undisclosed asset and proved that the value of the marital estate

was approximately $1,666,000 more than Inman’s spouse had

estimated. The attorneys testified that they toiled many evenings

and weekends to prepare for trial and that they devoted

considerable time to meeting or talking with Inman.

The trial was conducted on November 15, 16, and 17, 1988.

In December 1988, the trial court found that the value of the

marital estate was approximately $8,000,000 and entered an order

awarding the divorce to Inman’s spouse on the grounds of cruel and

inhuman treatment. Additionally, the court awarded Inman

$2,300,200 of the marital estate. In January 1989, Inman received

partial payment of the judgment; with it she paid the attorneys

4
$149,000 in fees and approximately $16,000 in expenses. She did

not ask for an explanation of how the fee was calculated or what

services were included.

The attorneys continued to represent Inman on the

appellate level. On October 18, 1989, the Court of Appeals

reversed the trial court’s judgment and held that Inman was

entitled to: (1) the divorce, on grounds of adultery, (2) an

additional $1,043,230 of the marital estate, (3) $5,000 in alimony

per month, and (4) 50% of her attorneys’ fees accruing at trial and

75% of her attorneys’ fees accruing on appeal. The Court of

Appeals also removed $850,000 from her spouse’s separate property

and added it to the marital estate, for a total marital estate of

$8,850,000.

Inman’s spouse then applied for permission to appeal to

this Court, and we granted his application. On April 22, 1991, the

Court reversed the Court of Appeal’s award of alimony and

attorneys’ fees, affirmed the award of the divorce to Inman and the

$1,043,230 increase of her share of the marital property, and

remanded the cause to the trial court for further proceedings. On

July 1, 1991, the Court denied Inman’s petition to rehear.

On remand, the attorneys continued to represent Inman, at

least at first. They requested the trial court to award interest

and income from certain real estate, stocks, bonds, and other

property that had been awarded to Inman yet remained in her

spouse’s possession. On August 16, 1991, the trial court dismissed

the motion, and the attorneys advised Inman to appeal this ruling.

5
 Meanwhile, Davis had written a letter to Inman on July

10, 1991, explaining that the attorneys’ fee would be 15% of her

$3,343,430 award, a total of $501,514.50. Because she had already

paid $159,000,3 the attorneys requested the balance of $342,514.50.

Although Inman was distressed by the amount requested, she waited

until late August 1991 to respond that she was unwilling to pay it.

Consequently, the attorney-client relationship was severed, and

Inman retained other counsel to represent her in all subsequent

proceedings.

The attorneys sued Inman for the unpaid fee on December

13, 1991. Inman, alleging that the fee agreement was unenforceable

and the fee was clearly excessive, counterclaimed for a portion of

the $159,000 she had already paid. On March 3, 1993, following a

three-day trial, the jury returned a verdict for the attorneys in

the amount of $263,985, to be paid in addition to the $159,000

already paid.

Inman appealed the verdict, and on February 8, 1995, the

Court of Appeals reversed and remanded for another trial.

Alexander v. Inman, 903 S.W.2d 686 (Tenn. Ct. App. 1995). The

Court of Appeals opinion provided comprehensive guidance to the

trial court on evidentiary issues, jury instructions, and the law

relating to contingent fees in domestic relations cases. On

remand, the parties agreed to a bench trial on the record of the

original trial.

3
This figure consists of the original $10,000 retainer fee,
plus the $149,000 paid after the divorce trial was concluded.

6
 A bench trial ensued, and on January 29, 1996, the trial

court ruled that the attorneys had violated the fee agreement by

failing to bill Inman within a reasonable time and that $501,514.50

is an unreasonable fee under the circumstances presented. Upon

analyzing the factors determining reasonableness, the trial court

concluded that $300,000 is a reasonable fee and awarded the

attorneys the unpaid portion of this amount--$141,000. The trial

court also denied the attorneys’ request for prejudgment interest.

Inman appealed this ruling, and the cause came before the Court of

Appeals for the second time.

The Court of Appeals held that the fee agreement is

contingent and unenforceable. However, because the court found

that the fee requested was not “clearly excessive,” the attorneys

were allowed to recover in quantum meruit for the reasonable value

of their services. The Court of Appeals determined that the

reasonable value of their services was $280,757.25. Since Inman

had already paid $159,000, the attorneys were awarded $121,757.25

plus interest, to begin accruing February 13, 1996, the date of

entry of the trial court’s judgment on remand. Judge Koch

dissented from the Court of Appeals decision, noting that the

appropriate fee as determined by the majority, $280,757.25, was

merely an average of the highest and lowest fees suggested by

expert witnesses. Koch found the value of the attorney’s services

to be $166,252.50, which, after credit for the $159,000 already

paid, would result in a judgment of $7,252.50.

Before this Court, Inman contends that the requested

$501,514.50 fee is a clearly excessive contingent fee and, under

7
White v. McBride, 937 S.W.2d 796 (Tenn. 1996), the attorneys are

not entitled to recover any fee at all. Rather, she insists that

she is entitled to recover the $159,000 already paid.

Alternatively, she urges that a reasonable fee in this case is

$60,000 and that she is entitled to recover $99,000 from the

attorneys. The attorneys assert that the fee agreement is

enforceable, that the fee requested is reasonable, and that they

are entitled to an award of prejudgment interest.

In our view of the cause, we find the dispositive issues

to be: (1) whether the fee provided for in the agreement is a

contingent fee; (2) whether the attorneys satisfied their fiduciary

duty of good faith with respect to the formation of the fee

agreement; (3) whether the attorneys violated the terms of the

agreement; and (4) whether the attorneys are entitled to

prejudgment interest. Our review of all findings of law will be de

novo, with no presumption of correctness. Any findings of fact

will be afforded a presumption of correctness, unless the

preponderance of the evidence is otherwise. Tenn. R. App. P.

13(d); Campbell v. Florida Steel Corp., 919 S.W.2d 26, 35 (Tenn.

1996).

II

As a general rule, contingent fee agreements are

begrudgingly permitted in domestic relations cases. Because public

policy favors marriage and discourages attorneys from promoting

bitter divorce battles for financial gain, contingent fees are

subjected to enhanced scrutiny and rarely are found to be

8
justified. As a matter of fact, so unsavory are contingent fees in

domestic relations cases that a higher quantum of proof is

necessary to enforce a contingent fee. Alexander, 903 S.W.2d at

698-99.4 Thus, our initial task is to determine whether the fee

agreement before us describes a contingent fee. The Court of

Appeals found the fee to be one based upon a contingency. Upon

careful analysis, however, we find otherwise.

In Eckell v. Wilson, 597 A.2d 696 (Pa. Super. Ct. 1991),

appeal denied, 607 A.2d 253 (Pa. 1992), a Pennsylvania court

analyzed whether a fee based upon the “reasonable value” of

attorney services, with a minimum fee calculated at an hourly rate,

was contingent. The court found that the fee was not truly

contingent because the attorneys were guaranteed payment regardless

of the outcome of the litigation. In contrast, “[a] contingency

fee agreement carries a risk that an attorney will not be paid if

the outcome of the litigation is unsuccessful. No such risk is

found here.” Id. at 700-01. Other courts have similarly defined

“contingent fee”:

4
According to the Court of Appeals, the attorney whose fee in
a divorce case is based on a contingency must demonstrate, in
addition to the requirements for all attorney fee agreements:

(1) that the client is currently or will be unable to pay
a reasonable fixed fee, or that the opposing party cannot
pay reasonable pendente lite attorneys’ fees or an award
for attorneys’ fees at the conclusion of the case;

(2) that the attorney has explained all relevant
considerations to the client, including the availability
of other fee or payment arrangements and the client’s
right to seek independent legal advice; and

(3) that the attorney has agreed to credit any court-
awarded fees against his or her final fee.

See Alexander, 903 S.W.2d at 699.

9
 A contingent fee contract by
definition is one that provides that
a fee is to be paid to the attorney
for his services only in case he
wins, that is, a fee which is made
to depend upon the success or
failure to enforce a supposed right,
and which fee is generally paid out
of the recovery for the client.

Pocius v. Halvorsen, 195 N.E. 137, 139 (Ill. 1964) (emphasis

added). “The usual meaning of ‘contingent fee’ is that the

attorney will be paid only if the case is won.” V.W. v. J.B., 629

N.Y.S.2d 971, 973 (N.Y. Sup. Ct. 1995)(emphasis added).5

The fee agreement in the instant case closely parallels

the agreement in Eckell, in that both use the term “reasonable” in

describing the fee, and both state a minimum fee to be charged. In

addition to these common elements, the agreement in the instant

case states a maximum fee to be charged. This addition, however,

does not alter our analysis, for under the terms of the agreement

between Inman and the attorneys, there is no question that they

would be paid regardless of the outcome of the case. Payment

itself is certain; only the exact amount of payment is uncertain.

The percentage of the total award merely marks the upward limit for

the fee to be charged, and it is not the sole basis for the fee.

Therefore, we find that this arrangement is not a contingent one,

and any enhanced considerations applicable to contingent fees are

5
But see State ex rel. Oklahoma Bar Assn, v. Fagin, 848 P.2d
11 (Okla. 1992) (because state rules prohibit any fee which has
some aspect of a contingency involved, any enhancement of a fee
based on a favorable result is contingent); Salerno v. Salerno, 575
A.2d 532, 533 (N.J. Super. Ct. Ch. Div. 1990) (an agreement for an
hourly rate plus a bonus based on a percentage of the award is a
contingent fee).

10
not relevant here.6 Rather, the criteria generally applicable to

attorney fee agreements must be employed.

III

We move now to the second issue: whether the attorneys

satisfied their duty of good faith when they entered into the

agreement in dispute. The relationship of attorney and client is

“extremely delicate and fiduciary”; therefore, attorneys must deal

with their clients in utmost good faith. This level of good faith

is significantly higher than that required in other business

transactions where the parties are dealing at arm’s length. Cooper

& Keys v. Bell, 127 Tenn. 142, 150, 153 S.W. 844, 846 (1913);

Alexander, 903 S.W.2d at 693. The client must be able to trust the

attorney to deal fairly at all times, including during the

negotiation of the attorney’s terms of employment. Cummings v.

Patterson, 59 Tenn. App. 536, 541, 442 S.W.2d 640, 643 (1968).

In this context, this Court has long held that an

attorney is entitled to compensation in the amount agreed upon by

contract, provided that the contract is fair at its inception and

entered into in good faith. Peoples Nat’l Bank of Washington v.

King, 697 S.W.2d 344, 346 (Tenn. 1985). In order to prove such

good faith and fairness, an attorney seeking to enforce a contract

for attorney’s fees must show:

6
In addition, because we find that the fee is not contingent,
the recent case White v. McBride, 937 S.W.2d at 803, is
inapplicable to this case.

11
 (1) the client fully understood the
contract’s meaning and effect,

(2) the attorney and client shared
the same understanding of the
contract, and

(3) the terms of the contract are
just and reasonable.

Cooper & Keys, 153 S.W. at 846 (citing Planters’ Bank of Tennessee

v. Hornberger, 44 Tenn. 531, 573 (1867)).

We will analyze the first two criteria together. Our

analysis begins with the inescapable and obvious conclusion that

the attorneys, as authors of the agreement, understood it to allow

them to charge up to fifteen percent of Inman’s total award. The

dispositive question, then, is whether Inman had the same

understanding of the agreement’s meaning and effect. In her

testimony, Inman admitted that she read the agreement before

signing it. She testified also that she was unable to recall

whether she understood it at that time. Yet, the language of the

agreement plainly stated that the fee could be as much as fifteen

percent of the total award.

Additionally, the record reveals that Inman is an

experienced realtor, well-acquainted with contracts of varying

complexity and their interpretation. Indeed, from the record

before us we easily conclude that she is a highly intelligent,

self-reliant person who possesses acumen and tenacity in such

measure as to enable her to succeed in the extraordinarily

competitive field of real estate. As an example of her financial

sophistication, Inman refused, on at least one occasion, to follow

12
her attorneys’ advice that she accept cash equivalents in lieu of

property. She was also actively involved in the management of her

divorce case, helping the attorneys to uncover valuable assets

belonging to the marital estate. Moreover, the record contains no

suggestion of undue influence or fraud. Thus, we discern no

plausible basis for concluding that Inman did not understand the

words “Said final fee shall not exceed 15% of the total sum (in

money and property) awarded to Client” when she read them.

Inman places a great deal of reliance upon the fact that

the attorneys did not “walk her through” the fee agreement in

detail and explain its terms and conditions to her. This omission,

Inman argues, prevents the attorneys from demonstrating that she

understood the agreement. However, this position is not well-

taken. If we were to accept her argument, then nothing would be

gained by reducing fee agreements to writing. This is true because

a client could make a prima facie case of breach of fiduciary duty

by simply denying that the attorney explained the agreement before

the client signed it. See Maksym v. Loesch, 937 F.2d 1237, 1243

(7th Cir. 1991).

In Maksym, a client attempted to defend against her

attorney’s claim for fees by alleging fraud in the inducement.

Because her claim of fraud was not supported by the proof, the

client argued that all contracts between lawyers and clients are

presumptively fraudulent if the lawyer benefits from the contract.

Id. at 1241. While Inman has not resorted to the use of the term

“fraud,” her argument is strikingly similar. Because the attorneys

did not explain the fee agreement to her, Inman claims that they

13
cannot prove she understood it, which under applicable case law

would mean that the attorneys violated their fiduciary duty of good

faith towards their client. See Cooper & Keys, 127 Tenn. at 150-

51, 153 S.W. at 846.

Yet, the failure of one party to explain the terms of a

written contract to the other is not alone a violation of the

fiduciary obligation of good faith, even if the contract is between

attorney and client. The argument that a fee agreement is

unenforceable unless verbally explained to the client would

effectively create a presumption that all attorney’s fee contracts

are unenforceable. See Maksym, 937 F.2d at 1241-43. We do not

find such a presumption appropriate.

Certainly, an attorney should reach a clear agreement

about fees with the client and should explain the reasons for

preferring one arrangement over another. Ethical Consideration 2-

19, Tenn. S. Ct. R. 8. Nothing, however, suggests that a written

retainer agreement cannot satisfy this ethical consideration. In

fact, reducing the agreement to writing is ideal. Here, the

attorneys amply demonstrated that Inman understood the agreement

she signed and that the attorneys shared the same understanding;

Inman adduced no evidence to suggest otherwise. Therefore, we find

that the attorneys have satisfied the first and second criteria of

Cooper & Keys for showing good faith in dealings between attorney

and client.

Under the third and last criterion for an attorney

seeking to enforce a contract for fees, the terms of the contract

14
must be just and reasonable. Cooper & Keys, 127 Tenn. at 150, 153

S.W. at 846. On its face, the agreement between Inman and the

attorneys requires a reasonable fee, based upon expressed factors.

In general, an agreement which utilizes broad terms and does not

fix an exact fee is still acceptable. This Court has allowed a law

firm to enforce a promissory note created pursuant to a similarly

worded fee agreement. See Waller, Lansden, Dortch, & Davis v.

Haney, 851 S.W.2d 131, 132 (Tenn. 1992) (the retainer agreement

provided that the firm be paid a reasonable fee based on the amount

involved, the time expended, the novelty of the transaction, and

the deadlines imposed upon counsel). Moreover, the agreement here

is just and reasonable because it provides for a minimum and

maximum fee to be charged. Indeed, the maximum fee provided a

protection to Inman by defining the limit beyond which the fee

could not rise.

Of course, the use of the word “reasonable” and the

provision of a minimum and maximum fee will not alone make the

agreement enforceable. We must also determine whether the fee

ultimately charged was a reasonable fee, as is required by the

terms of the agreement and by case law. We begin by noting that,

as a practical matter, no court can divine from the range of

reasonable fees the one that is “most reasonable.” Indeed, those

who have already opined a reasonable fee in this case have arrived

at different figures. There is no need to second-guess the

reasonable fees proposed because we hold that, under the

circumstances, $501,514.50 is within the range of reasonableness.

We reach this conclusion upon a careful analysis of the factors

determining the reasonableness of an attorney’s fee.

15
 Pursuant to the fee agreement, the factors to be

considered in determining the reasonableness of a fee are “the time

and labor required, the novelty and difficulty of the questions

involved, the skill required to perform the services properly, the

amount involved and results obtained, and other relevant factors.”

These factors essentially mirror those enumerated by this Court in

Connors v. Connors, 594 S.W.2d 672, 676 (Tenn. 1980). Additional

factors relevant to reasonableness of a fee include: the time

limitations imposed by the circumstances, the fee customarily

charged in the locality for similar legal services, and the

experience, reputation, and ability of the lawyer performing the

legal service. Id.

In our consideration of what is a “reasonable fee,” we

have relied on the trial court’s findings of fact. First, with

respect to time and labor devoted to Inman’s representation, we

agree with the trial court that considerable amounts of each were

expended. While divorce cases are more often disposed of without

a contested trial, Inman’s case required a three-day trial, an

appeal to the intermediate court, and an appeal to this Court. The

appeal to the intermediate court was based on factual issues, and

the preparation of a brief in such a case is a time-consuming task,

in that bits and pieces of evidence adduced during the three-day

trial had to be organized and restated understandably and

persuasively. In sum, this was no ordinary divorce case in terms

of the time required of the attorneys.7

7
With respect to time and labor, we disregard the attempted
reconstruction of the attorneys’ time records and the allegations
of over-staffing and duplicative services. There is no need to
reconstruct the exact hours spent on the case, because the fee was

16
 As an added consideration, the fact that Inman retained

the attorneys a scant month before the initial trial court date

imposed a severe burden on them. They were able to obtain a

continuance to November 15, 1988, but even so, they had precious

little time--two months--to prepare for trial. Because the

attorneys came into the case so late, they had to prepare more

intensely than they would have, had they been representing her from

the beginning.

We move now to a consideration of the novelty and

difficulty of the questions involved and the skill required to

render effective representation. According to the trial court,

there was nothing novel or difficult about the issues raised in

this divorce case. The trial court further explained that divorce

cases are not particularly difficult compared to other types of

cases, because they usually involve factual situations with which

the trier of fact is familiar. Yet, the time constraints, the

number of issues, and the value of the marital estate significantly

increased the difficulty of this case. Based upon a consideration

of those factors, it is clear to us that only those attorneys with

extraordinary skill and specialized experience would have been able

to properly represent Inman and manage her case.

not controlled by the attorneys’ hourly rates. Rather, the parties
clearly intended some leeway beyond the hourly rates. The time
devoted to the case is but one of several factors determining the
overall reasonableness of the fee charged. Because it is clear
that the attorneys put innumerable hours into Inman’s case, the
time and labor factor suggests that the $501,514.50 fee is
reasonable. Of course, as this case illustrates, it is preferable
for an attorney to maintain reliable time records, regardless of
the kind of fee arrangement the attorney has with the client.

17
 Furthermore, considering the criteria of experience,

reputation, and ability of the attorneys, we do not hesitate to

conclude that these attorneys were exceptionally well-qualified to

handle such a difficult case. The quality of their representation

is evidenced by their unflagging persistence and consummate skill.

Expert witnesses testified that each of Inman’s attorneys possessed

an extraordinary degree of expertise and enjoyed an excellent

reputation in the area of domestic relations. The trial judge, on

remand, agreed that Inman’s attorneys were “veteran trial lawyers

with reputations for tenacity and competence.” Furthermore, there

is an abundance of proof in the record that the attorneys

represented Inman to the best of their skills and abilities. This

was what she expected of them, and, indeed, this is what she

received.

With respect to the results obtained by the attorneys,

the trial court concluded that the results were not particularly

good. On this point, we differ. Admittedly, Inman’s objection to

the fee charged stems from a dissatisfaction with the results. She

insists that the results obtained were not favorable because she

was awarded much less than fifty percent of the marital estate, the

amount to which she considered herself entitled. Yet, the

attorneys managed to convince the Court of Appeals to reverse the

trial court ruling which awarded the divorce to her spouse--no

small feat. Even more important, the Court of Appeals

substantially increased the amount awarded to Inman by the trial

court. In addition to having been advanced to the position of the

prevailing party in this bitter divorce action, Inman was also

awarded an additional $1,043,230 of the marital estate, increasing

18
her total award to $3,343,430--approximately thirty-eight percent

of the marital estate. This increase is particularly impressive in

light of the fact that she was not shown by the evidence to be the

primary wage-earner.8 See Inman v. Inman, 811 S.W.2d 870, 870-71

(Tenn. 1991). Moreover, the dollar amount of marital assets is

also a significant factor in the fee-determination process.

Because the essence of the dispute concerned the distribution of an

almost nine million dollar estate, Inman’s attorneys are entitled

to a proportionally larger fee.

There is countervailing proof regarding the

reasonableness of the fee. Evidence of the smaller fee charged by

the attorney for Inman’s spouse and the expert testimony of one

witness, taken together, permit the inference that for similar

services other attorneys have charged or may charge less. That

inference notwithstanding, just as no two cases are the same, no

two lawyers are the same, and unless the legal profession decides

to operate under a “uniform fee” system, no two fees will be the

same. Thus, the fact that other lawyers may have performed similar

services for less does not undermine the reasonableness of the fee

charged by Inman’s attorneys.

While no single factor determines reasonableness, on

balance we conclude that the fee of $501,514.50 is reasonable. In

sum, because the fee agreement provided both a minimum fee and a

8
In the instant case, Inman’s own expert, Rose Palermo, a
lawyer who handles divorce cases involving large estates, testified
that in such cases the spouse who was not the primary wage-earner
typically receives approximately thirty-five to forty percent of
the marital estate.

19
protective cap on the fee, and because the fee ultimately charged

was based on the reasonable value of services rendered, the

attorneys have satisfied the third criterion of Cooper & Keys, that

the terms of the agreement be just and reasonable. The fee

agreement thus conforms to case law and the code of professional

responsibility. To conclude, with all three Cooper & Keys criteria

satisfied, the attorneys have shown that they fulfilled their high

fiduciary duty of good faith toward Inman in the formation of the

fee agreement between them.

IV

We need not dwell at length on the third issue: whether

the attorneys violated the terms of the fee agreement. The

attorneys waited until the entry of the final judgment of this

Court, in July 1991, to send Inman the bill. According to the

trial court, this delay violated the fee agreement, which required

“If the charges for the work exceed $10,000, Attorneys shall bill

Client for said excess charges within a reasonable time.”

Clearly, this agreement does not require periodic or

interim billing, which is the customary method when the fee is

calculated solely on a per-hour basis. Further, Inman never

inquired about the lack of billing during the three years the

appellees represented her. Even when the attorneys requested a

payment of $149,000 in attorneys’ fees after the trial, she did not

request an accounting or explanation of the fees. Because neither

the language of the agreement nor the conduct of the parties

indicated a need for interim billing, we conclude that no such

20
requirement existed. The fee was ultimately based upon Inman’s

total award. This amount could not be ascertained before final

judgment. Because the bill was sent promptly upon entry of the

final judgment of this Court, we conclude that such billing was

accomplished within a reasonable time. Thus, the attorneys

fulfilled their obligations under the agreement.

V

The final issue is whether the attorneys are entitled to

prejudgment interest. The attorneys insist that interest should

begin accruing on the date they first requested payment of their

fees, July 10, 1991. The trial court declined to award prejudgment

interest in this case, reasoning that

Alexander and Davis seem to have
been the major cause for their
failure to be timely paid. Their
contract is vague and, most
importantly, they did not follow it
themselves, particularly the part
that required them to bill Inman
within a reasonable time.

The Court of Appeals did not disturb this ruling, but allowed

interest to begin accruing from the date the judgment of the trial

court was entered on remand, February 13, 1996.

Pursuant to Tenn. Code Ann. § 47-14-123, prejudgment

interest may be awarded in accordance with the principles of

equity.9 In reaching an equitable decision, a court must keep in

9
Tennessee Code Annotated § 47-14-123 (1988) provides:

21
mind that the purpose of prejudgment interest is to fully

compensate a plaintiff for the loss of the use of funds, not to

penalize a defendant. Moreover, if a plaintiff’s right to recovery

and the amount of such recovery are not disputed on reasonable

grounds, an award of prejudgment interest is more likely to be

equitable. Myint v. Allstate Insurance Co., ___ S.W.2d ____ (Tenn.

1998), 1998 W.L. 276184.

The trial court’s decision to award or deny prejudgment

interest may be overturned only upon a finding of a “manifest and

palpable abuse of discretion.” Under this deferential standard, an

appellate court may not substitute its judgment for that of the

trial court. Rather, an abuse of discretion occurs only when the

evidence does not support the trial court’s decision. Id.

We have concluded, contrary to the trial court’s ruling,

that Inman’s refusal to pay the attorneys’ fees is not attributable

to the attorneys’ conduct. Nevertheless, the trial court’s denial

of prejudgment interest is not a manifest and palpable abuse of

discretion. We reach this conclusion because an additional factor

supports the trial court’s decision: both the right to recover the

fees and the amount of such fees were quite reasonably disputed.

This fact is amply demonstrated by the sound, yet widely differing,

conclusions reached by the several jurists who have analyzed this

Pre-judgment interest, i.e., interest as an element
of, or in the nature of, damages, as permitted by the
statutory and common laws of the state as of April 1,
1979, may be awarded by courts or juries in accordance
with the principles of equity at any rate not in excess
of a maximum effective rate of ten percent (10%) per
annum; . . . .

22
case. In light of the extreme uncertainty of the final disposition

of this case, we conclude that an award of prejudgment interest

would not serve to compensate the attorneys for loss of the use of

funds. Rather, such an award would amount to a windfall.

Accordingly, the attorneys’ request for prejudgment interest is

denied.

VI

In conclusion, we recognize that the agreement at issue

could have been more clearly drafted. Although language of the

agreement is not ambiguous, a more carefully crafted document may

have spared the parties protracted litigation. Yet, under the

facts and circumstances presented, we find that Inman nevertheless

fully understood the agreement and had the same understanding as

the appellees. Further, the agreement was fair and reasonable, as

was the fee ultimately charged. Inman does not allege fraud or

undue influence in the formation of the fee agreement, and there is

no evidence of such bad faith conduct. Therefore, the attorneys

satisfied their high fiduciary duty of good faith towards Inman in

the formation of the fee agreement. Further, the attorneys did not

violate the terms of the agreement by postponing the billing until

the case was concluded. Finally, the attorneys are not entitled to

an award of prejudgment interest.

Accordingly, the judgment of the Court of Appeals is

reversed. The fee agreement is enforceable, and the appellees are

entitled to the full amount requested, $501,514.50. Because Inman

has already paid $159,000 in attorneys’ fees, judgment for the

23
appellees is hereby entered in the amount of $342,514.50, with

interest accruing on and after February 13, 1996, pursuant to the

opinion of the Court of Appeals. Costs of the appeal are taxed to

the appellant, for which execution may issue if necessary.

__________________________________
ADOLPHO A. BIRCH, JR., Justice

CONCUR:

Anderson, C.J.
Drowota, Holder, JJ.
Reid, S.J.

24