Due v. Due - 342 So. 2d 161 (La. 1977)

Rule:

A contingent fee contract creates in the husband a patrimonial asset, i.e. property, which is acquired by him during the marriage, La. Civ. Code Ann. art. 2334, and which (to the extent that his labor and industry contribute during the marriage, La. Civ. Code Ann. art. 2402 is an asset of the community existing between his wife and himself at the time of its dissolution, La. Civ. Code Ann. art. 2405. A contingent fee contract executed between a client and his attorney is legislatively recognized as creating in the attorney an enforceable right to share in the proceeds eventually recovered. La. Rev. Stat. Ann. § 37:218. The obligation in his favor is, of course, subject to the suspensive condition that the outcome will be favorable, La. Civ. Code Ann. arts. 2021, 2043, and to the implied resolutory condition his interest may be divested if he does not perform the contractual services expected of him, La. Civ. Code Ann. art. 2021, 2046. 

Facts:

A wife here sues her former husband, an attorney, to set aside a community property settlement on the ground of fraud and lesion. She also prays that the court order an inventory of the assets of the former community, in order to partition it between the spouses. Her discovery interrogatories included inquiries as to contingent fee contracts entered into by her husband in his law practice for a period during the marriage preceding the date of dissolution of the community. The defendant husband objected to these interrogatories. He contends that contingent fee contracts which were not consummated when the community dissolved did not fall within the community of acquets and gains. The trial court sustained the husband's contention. It concluded that such contracts do not form part of the community because no interest is vested in the attorney until the contract is completed by successful disposition of the case. The court of appeal granted supervisory writs and reversed. It reasoned that a contingent fee contract from the date of its execution creates a right to share in the eventual proceeds (albeit subject to successful conclusion of the litigation), and that this right constitutes a property right which falls into the community, although its value can be determined only when the proceeds are realized. When realized, the interest in the community is determined in the proportion that the value of the husband's services rendered at the date of the community's dissolution bears to the total services performed by the husband in earning the fee.

Issue:

Are a lawyer husband's contingent fee contracts pending as of the date of the dissolution of the marital community to be included in the accounting of the community assets as between the husband and his wife?

Answer:

Yes.

Conclusion:

The court concluded that, whatever the theoretical nature of the right, a contingent fee contract created in the husband a patrimonial asset, which was acquired by him during the marriage, pursuant to La. Civ. Code Ann. art. 2334, and which was an asset of the community existing between his wife and himself at the time of its dissolution, pursuant to La. Civ. Code Ann. art. 2405. The court found that the husband's characterization of the contingent fee contract as aleatory or as involving a revocable mandate by the client for the attorney to render legal services for him did not convert the husband's property interest in the contract into a non-asset. The court found that an attorney's rights under a contingent contract, whatever their nature, clearly had pecuniary value. Therefore, the court held that the husband's interest in pending contingent fee contracts constituted a patrimonial asset which, if acquired during the marriage, formed part of the community insofar as its value was based upon the attorney's services performed during the marriage.