The long legal battle over franchise fees charged by the city of Des Moines isn’t over just yet, as a new legal issue was raised in a ruling Wednesday by the Iowa Court of Appeals.
The court turned down the appeal of the lawyers who represented Des Moines residents which sought to overturn the 18-percent limit on their fees from the $40 million awarded in the case.
Attorney Brad Schroeder says they will ask the Iowa Supreme Court to review the decision as the amount is well below the agreement they made when they took the case.
“That provided of a one-third recovery in the event that we were successful, zero if there was no recovery, and we had to advance all the expenses of the case obviously as we proceeded,” Schroeder says. “It allowed for 45-percent recovery on appeal, which is also not uncommon. In this case we had not one, not two, but three appeals — one to the U.S. Supreme Court — which we had to defend against.”
The appeals court ruled 2-1 in upholding a district court ruling that said the award in this case should be looked at differently because the city gets its funding from residents, the very people who are supposed to benefit from the settlement. So, increasing the award to the lawyers effectively costs more for the clients that Schroeder’s firm represents.
“I understand that argument. I didn’t create the situation, the city of Des Moines did when it decided not once, but twice to raise this legal fee after this lawsuit was already on file. That was 10 years ago, and they have taken every opportunity since then to make this problem worse and worse and worse,” Schroeder says.
As the city continued to appeal, the interest and legal costs continued to climb. “That’s what created the 40 million dollar fund that we recovered ultimately that’s the subject of the dispute. All they had to do was stop and there would have been no 40 million dollars, no attorney’s fees. Just stop, and they wouldn’t do it,” according to Schroeder. A Sioux City Judge awarded a 33-percent fee to lawyers in a settlement brought on by the original Des Moines ruling. That amounted to $2.1 million as the settlement process did not drag out and the settlement was $6.5 million.
Schroeder says while the 15 million dollars they are asking for seems like a lot of money, they took a risk on accepting the case and deserve to be compensated based on the agreement they made at the start. “I don’t know that anybody was going to be willing if we were not successful to say ‘we’re going to go ahead and pay you anyway’,” Schroeder says.
He says the ruling could hurt future cases. “I think if this case stands, it will have a chilling impact on a citizens ability to get wrongdoing by their governments redressed. I don’t think there is any doubt about that,” Schroeder says. “Your are not going to get qualified council to stand up and help you when you could get paid a reasonable fee on other cases as opposed to this one where you go through all the work, take on all the risk, and at the end you are paid half of what you agreed to.”
Schroeder says they will ask the Iowa Supreme Court the review the ruling on fees. He says it is something they don’t do very often, but he believes the new aspect of the ruling compel them to look at the issue. “There was a factor that the district court applied in deciding this opinion that hasn’t been expressed before in Iowa law, and that is mainly this distinction that been’s created between attorney fees in cases against private wrongdoers and attorney fees in cases against public wrongdoers,” Schroeder says. Some states do cap attorney fees in cases involving cities, but Iowa does not.
Schroeder says the split decision from the appeals court is another reason he thinks the Iowa Supreme Court might take up the review.
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