Mr. St. John executed a single contingent fee agreement with the respective law firms of Ms. Bartels and Mr. Neilan. Like his agreement with Mr. Zimmerman, Mr. St. John agreed to pay Ms. Bartels and Mr. Neilan one-third of any amounts recovered from Gering Public Schools. Paragraph 8 of the agreement, however, also included the following language:

Should CLIENT choose to discharge ATTORNEYS prior to final settlement or judgment, CLIENT agrees to pay ATTORNEYS a fee equal to [one-third] of the “gross amount recovered”, OR on an hourly basis of $175.00 per hour for his/her time and, in addition, $75 per hour for paralegal time from the date of this Agreement to the date of discharge, or the above percentage of ATTORNEYS' fee from any settlement offer made prior to discharge, whichever is greater.

Ms. Bartels and Mr. Neilan thereafter filed a workers' compensation claim against Gering Public Schools on Mr. St. John's behalf. They continued to represent him until Mr. St. John discharged them and again retained Mr. Zimmerman. At that time, Mr. St. John re-signed his original contingent fee agreement with Mr. Zimmerman.

Mr. Zimmerman entered his appearance and Ms. Bartels and Mr. Neilan filed a notice of attorney's lien in the workers' compensation case.

Over two years later, the parties to the workers' compensation claim, with Mr. St. John represented by Mr. Zimmerman, filed an application for approval of a final lump-sum settlement. The parties asked that the compensation court approve a settlement whereby Mr. St. John's claim would be settled for $500,000, with $335,000 being paid to Mr. St. John and the remaining $165,000 being held in trust for subsequent distribution to his attorneys.

The application provided that Ms. Bartels, Mr. Neilan, and Mr. Zimmerman all agreed that the $165,000 satisfied any attorney's liens in the case.

After a hearing, the compensation court approved the lump-sum settlement. The court noted the existence of the dispute involving claimed attorney's liens and ordered that any of the attorneys claiming entitlement to attorneys' fees could petition the court for a hearing to address distribution of the funds placed in trust.

Mr. Zimmerman filed a motion, requesting that the court determine the amount necessary to satisfy the attorney's lien of Ms. Bartels and Mr. Neilan.

The compensation court divided the $165,000 equally between Mr. Zimmerman, on the one hand, and Ms. Bartels and Mr. Neilan on the other.

After Mr. Zimmerman appealed, the court of appeals affirmed.

The dispute reached the Supreme Court of Nebraska.

Mr. Zimmerman contended that to determine the attorneys' entitlement to fees, the compensation court was required to begin with the terms of the respective fee agreements with Mr. St. John. Specifically, Mr. Zimmerman urged that Ms. Bartels and Mr. Neilan's recovery had to be limited to that allowed by the terms of the provision in their fee agreement addressing the amount they were to receive if Mr. St. John discharged them before the case was over.

The Nebraska Supreme Court's Decision

The Nebraska Supreme Court reversed the judgment of the court of appeals.

In its decision, the court explained that where an attorney and client had a valid fee agreement, the terms of that agreement were essential to determining the amount to which the attorney was entitled. However, the court said, in this case, even though the fee agreements with both sets of lawyers were received at the hearing, the compensation court did not analyze them. Rather, the court continued, it focused “solely on the respective value of the services provided by the lawyers.”

The court then ruled that, to determine the amount to which the attorneys were entitled, it had to first determine the amount the attorneys were allowed under their fee agreements and then determine if that amount was reasonable.

Referencing paragraph 8 of Ms. Bartels and Ms. Neilan's fee agreement, the court decided that the term “gross amount recovered” referred to the amount recovered “as of the attorney's discharge.” Because there was no “gross amount recovered” prior to their discharge, the court continued, Ms. Bartels and Mr. Neilan were entitled to a fee based on the hourly calculation set forth in paragraph 8.

The court pointed to evidence in the record showing that Ms. Bartels documented 79.9 hours of work, Mr. Neilan documented 81 hours of work, and paralegals working under their direction recorded 25.6 hours of work. Applying those hours to the rates set forth in the agreement, the court found that Ms. Bartels and Mr. Neilan were entitled to receive $30,077.50 under the terms of their agreement with Mr. St. John. Given the hourly rates and their representation of Mr. St. John in the context of this case, the court also found this amount to be a reasonable fee.

In addition, the court pointed out that there was no dispute that Ms. Bartels and Mr. Neilan had a right to be reimbursed for $2,500 paid in costs on behalf of Mr. St. John. Accordingly, it concluded that Ms. Bartels and Mr. Neilan were entitled to receive $32,577.50 to satisfy their lien.

Applying the same analysis to Mr. Zimmerman's fee, the court pointed to his contingent fee agreement, which entitled him to one-third of any lump-sum settlement, or $166,666.67. The court then ruled that because the attorneys agreed that Mr. St. John would have to pay no more than $165,000 to satisfy the attorneys' liens, and because Ms. Bartels and Mr. Neilan were entitled to receive $32,577.50, Mr. Zimmerman was entitled to receive $132,422.50. The court concluded that this figure was a “reasonable fee.”

The case is St. John v. Gering Public Schools, No. S-17-898 (Neb. Feb. 15, 2019). Attorneys involved include: James L. Zimmerman, of Zimmerman Law Firm, P.C., L.L.O., Pro se. Brenda L. Bartels, of Hanes & Bartels, L.L.C., Pro se.