In an adversary proceeding involving the Bankruptcy of McClenny Moseley & Associates, a Houston-based law firm that entered contingent fee contracts with thousands of Louisiana residents in the wake of Hurricane Ida, the U.S. District Court in the Southern District of Texas certified a number of questions to the Louisiana Supreme Court.

Who Can Assert Absolute Nullity of a Contract?  Specifically: Can a successor law firm, in a lawsuit filed against it by a predecessor law firm seeking fees and costs, who either no longer could continue the representation and withdrew or was discharged by the client or the court, raise the defense that the predecessor law firm’s earlier misconduct renders the predecessor’s contingent fee contract an absolute nullity?

Yes. Under Louisiana Civil Code article 2030, an absolute nullity may be invoked by any person or may be declared by the court on its own initiative….

Does Attorney Misconduct Render Contract an Absolute Nullity? Specifically: If an attorney-client contingent fee contract was entered into as the result of either unethical or illegal means implemented by an attorney or someone acting on his or her behalf, or during the representation of the client the attorney practiced in an unethical or illegal manner, is that contingent fee contract a nullity?

A contingent fee contract entered as the result of unethical or illegal conduct is absolutely null.

If the misconduct occurs after the parties have entered into a valid contract, the agreement may terminate by dissolution, but is not absolutely null.

Personal solicitation of clients, particularly paid solicitation, is generally prohibited, and an attorney is barred from entering an agreement obtained as a result thereof. See Rules 7.2(c)(13), 7.4(a). Prohibited fee sharing and the unauthorized practice of law are also proscribed. See Rules 5.4(a), 5.5(a), 7.2(c)(13); see also La. R.S. 37:213A(1), (4). As an adjunct to the Rules of Professional Conduct, Louisiana Revised Statute 37:219A declares it to be unlawful for any attorney to pay money or give any other thing of value to any person for the purpose of obtaining representation of any client. These regulatory and statutory provisions embody the state’s strong public policy against paid, personal solicitations of clients….

If the Contingency Fee Contract is a Nullity, Can the Attorney Still Recover Fees and Costs?  Specifically: Can that attorney still seek attorneys’ fees and costs on any basis, including a non-contractual (be it quasi-contract or quantum meruit) basis? And/or: Assuming an attorney with a contingent fee contract was found to have participated in illegal conduct or conduct in violation of the Louisiana Rules of Professional Conduct, as opposed to mere neglect or negligence, can that attorney subsequently recover his or her fees and/or costs on any basis from the successor law firm who takes up the case and represents the client from the point of withdrawal to conclusion?

Attorneys who engage in improper solicitation cannot be permitted to reap the rewards by collecting their fees and costs on any basis.

If a valid contract is entered, but misconduct occurs thereafter, the attorney’s ability to recover fees is best handled through the framework established in Saucier and O’Rourke. The client owes only one contingency fee, (i.e. the highest ethical percentage to which the client contractually agreed), which is then allocated between the attorneys based on the Rule 1.5(a) factors. If the prior attorney was discharged for cause, his share of the contingency fee is reduced based on the nature and gravity of the cause contributing to his dismissal.

Recover against whom: Former Client, Successor Attorney, or Both?

Subject to certain requirements, the discharged attorney has a right of action to recover fees and costs against the former client and the successor law firm….

Recordation of the contract under La. R.S. 37:218 is necessary to impose an obligation on the defendant(s) to retain settlement funds until determination of the discharged attorney’s fee entitlement.

However, with respect to a claim against the client, the Court need not decide whether the contract must be recorded to assert a claim against a successor law firm in this case. “As Saucier made clear, a client is obligated to pay only one contingency fee. MMA seeks recovery only against successor attorneys, not former clients. Whether recordation of the contract is essential to maintain a claim against a former client is not determinative of the cause in this proceeding and thus inappropriate for certification.”

With respect to a claim against a successor attorney, both parties are asserting rights to the same corpus of money based on a privilege or security interest. “Under those circumstances, the recordation of the contract is not necessary to effectuate the privilege…. The defendant is the client’s obligor, not a competing claimant Once the settlement is paid, the privilege attaches and is effective against other claimants….  However, while recordation is not necessary, the discharged attorney must assert his claim by intervention or other legal proceedings prior to disbursement of the proceeds to a third party. In this context, the successor attorney is the third party, and the discharged attorney must provide him the required notice before the contingent fee is paid, meaning the funds have been received, are no longer held in trust for the client, and have become the property of the successor attorney. Once commingled with the successor attorney’s funds, the contingent fee — the thing subject to the privilege — has lost its identity, and, absent notice, the privilege is extinguished.”

Can Attorney Recover Fees and Costs if He Withdraws?  Specifically: Does the Saucier/O’Rourke framework apply to a case in which a law firm is not discharged but instead withdraws from representation because it was no longer able to represent the client, or would the withdrawal from such cases render the withdrawing firm ineligible for the collection of attorneys’ fees and costs? And/or: Assuming an attorney with a contingent fee contract withdraws from the representation of a client in an attempt to either avoid an adverse ruling by a court or to avoid sanctions or accusations due to some form of misconduct by the attorney or his or her employees or agents, can that attorney subsequently recover his or her fees and/or costs on any basis from the successor law firm who takes up the case and represents the client from the point of withdrawal to conclusion?

“Yes, in a case involving multiple contingent fee contracts, the Saucier/O’Rourke fee-allocation framework applies to any termination of an attorney’s representation, whether by discharge or withdrawal. The Rules of Professional Conduct contain both mandatory and permissive grounds for an attorney to withdraw from representing a client. Similar to when an attorney is discharged, a withdrawal can occur due to no fault of the attorney, such as an unexpected health issue, or, on the other extreme, may involve unethical or illegal conduct. Where the attorney bears some culpability, an O’Rourke reduction or denial based on the nature and gravity of the misconduct is appropriate, particularly where the withdrawal had a material adverse effect on the client’s interests.”

Does the Judge or Jury Make the O’Rourke Adjustment?

“Louisiana law does not determine whether the court or the jury should decide the O’Rourke adjustment. The U.S. Supreme Court has long held that the right to a jury trial in federal court, including diversity cases applying state substantive law, is to be determined as a matter of federal law…. Although the subject certified question focuses on one issue—the O’Rourke reduction — federal law still governs whether that issue will be submitted to the jury in a federal proceeding…. For this reason, we decline to answer this certified question.”

 

In re MMA Law Firm, No.2026-00161 (La. 6/29.2026), 2026 WL 1862008.