Raphael Glapion v. John Mashburn

Case Type:
Case Status:
WO-19-030 (10th Circuit, Jan 30,2020) Not Published
Legal fees in a contingent fee case are earned over the duration of that case, not upon merely receipt of funds; therefore, an Oklahoma state law exemption protecting 75% of professional service fees earned in the 90 days before bankruptcy extended only to that portion of the contingent fee attributable to services rendered in the 90-day period.
Procedural context:
Attorney Glapion filed chapter 7 shortly after receiving payment of a contingent fee in a recently settled civil suit. Debtor Glapion moved to exempt 75% of the entire contingent fee, which had been received in the 90 days prior to his chapter 7 filing. The trustee objected to the exemption. The bankruptcy court concluded that the contingency fee was earned over the life of the underlying case, and awarded the debtor an exemption equal to 75% of that portion of the fee attributable to services rendered in the 90 days before filing. The Debtor appealed.
The court’s analysis turned entirely on the question whether, under Oklahoma law, a contingent fee is earned only when it is received or instead is earned over time as the corresponding services are performed. Examining Oklahoma law, the BAP concluded that “earned wages” and “received wages” are not equivalent, but that the latter is only a subset of the former (i.e., wages can be earned but not yet received). Finding that the Oklahoma courts had not addressed how this would apply in the context of a contingent fee payment, the BAP observed that—outside the exemption context—attorneys are typically entitled to some payment upon successful completion of a contingent fee case even where their services is terminated prior to the resolution of the dispute. Thus, the BAP concluded, an attorney has an interest in contingent fee cases before the occurrence of the contingency that is “earned” even before it is received. On this analysis, the court concluded that the bankruptcy court’s analysis was proper, and that there was no error in the bankruptcy court’s allocation of only a portion of the fee to the exemption.
Nugent, Michael, and Mosier

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