Supreme Court boosts interest calculation on legal-malpractice award

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The trial court ultimately awarded Shoemake interest on the $100,000 that she should have recovered 10 years earlier. But the trial court calculated the interest on the $60,000 net recovery, after deducting the 40-percent contingent fee that Ferrer would have received. Shoemake also was awarded attorney fees for the legal-malpractice case based on Ferrer’s breach of fiduciary duty.

Both sides appealed. Shoemake sought a calculation of interest on the $100,000 gross recovery rather than the $60,000 net amount, and Ferrer appealed the award of attorney fees. The Court of Appeals agreed with Shoemake that the interest should have been calculated on the full $100,000 amount that she could have recovered on the underlying claim. The Court of Appeals reversed the award of fees because Washington did not recognize a breach of fiduciary duty as a basis for awarding fees.

Shoemake sought Supreme Court review, which the Court granted on the issue of the interest award only.

The Supreme Court surveyed the conflicting decisions from other states as to whether a legal-malpractice plaintiff may recover the total value of the underlying case, or only the net value after deducting the fees that the plaintiffs would have paid. The majority view supported Shoemake. As one treatise noted, if plaintiffs recovered only the net amount, “the defendant lawyer would in effect be credited with a fee that the lawyer never earned.”

Based on this reasoning, the Court agreed with the Court of Appeals that the interest calculation should be based on the gross recovery amount to make Shoemake whole for the loss of use of the money during the 10 years of delay.