Background
William Jason Groves, a solo practitioner, and the firm Goodsell & Oviatt, LLP jointly represented three clients in workers’ compensation-related matters under contingency fee agreements providing for a 50/50 split of any fees recovered. Groves died on October 18, 2021. At the time of his death, Client #1’s case had already settled (though Goodsell had not yet paid Groves his share), Client #2’s case was in the middle of protracted bad-faith litigation that would not resolve until a May 2022 settlement, and Client #3’s case remained pending with no fees yet earned.
Groves’s widow, Elizabeth Groves, as personal representative of his estate, filed suit seeking 50% of fees collected from all three clients. Goodsell counterclaimed, arguing the fee agreements were personal services contracts that terminated upon Groves’s death and that the $1,500,000 it voluntarily paid the Estate for Client #2’s case already exceeded the value of Groves’s pre-death contributions, which Goodsell placed at 10–20% of the total work. The circuit court agreed that the Client #2 and Client #3 agreements terminated at Groves’s death, found as a matter of law that the $1,500,000 payment to the Estate exceeded 20% of the Client #2 fees, awarded the Estate prejudgment interest on the belatedly paid Client #1 fees, and separately awarded Goodsell prejudgment interest on funds it had deposited with the clerk of courts during an interpleader proceeding over the disputed Client #2 fees.
Both sides appealed. The Estate challenged the termination ruling and the court’s valuation of Groves’s Client #2 services as a matter of law. Goodsell cross-appealed the prejudgment interest award on Client #1.
The Court’s Holding
The South Dakota Supreme Court affirmed that contingency fee agreements are personal services contracts that terminate upon the death of the attorney. Applying longstanding South Dakota precedent and the majority rule from other jurisdictions, the court held that once Groves could no longer personally perform legal services for Clients #2 and #3, those agreements terminated as to him. However, the court drew a critical distinction between voluntary or wrongful abandonment — which, under Davenport v. Waggoner and Egan v. Waggoner, forfeits all right to compensation — and termination caused by death or other just cause, which does not. Because Groves’s death was neither voluntary nor wrongful, his estate is entitled to pursue quantum meruit recovery for the reasonable value of the services he rendered before he died.
The court reversed the circuit court’s grant of summary judgment on the Client #2 fee valuation, holding that genuine issues of material fact remained. The record showed that no one at either firm tracked their time on Client #2’s case, that the 10–20% estimate came from a single attorney’s rough deposition testimony, and that Groves actively participated in drafting legal strategy — including for the second trial — reviewing pleadings, attending depositions, and assisting with mediation. On these facts, the reasonable value of Groves’s pre-death services could not be resolved as a matter of law. As to Client #3, whose case remains pending with no fees paid, the court held any quantum meruit claim is not yet ripe.
The court also reversed the award of prejudgment interest to Goodsell on the funds deposited with the clerk of courts in the interpleader proceeding. Because Goodsell voluntarily initiated the deposit under SDCL 15-6-67(a), it did not suffer “detriment from the unlawful act or omission” of the Estate, nor was there any “wrongful detention of money owed” — the prerequisites for prejudgment interest under SDCL 21-1-13.1. The case was remanded for further proceedings, including a factual determination of the reasonable value of Groves’s services to Client #2.
Key Takeaways
- Contingency fee agreements are personal services contracts under South Dakota law and terminate automatically upon the death of the attorney — the surviving firm cannot be required to pay the contractual fee split to the deceased attorney’s estate.
- Death is “just cause” for contract termination, distinguishing it from disbarment or voluntary abandonment; accordingly, the deceased attorney’s estate may recover the reasonable value of pre-death services in quantum meruit even without having pleaded quantum meruit at the outset, provided the court permits the claim on remand.
- Summary judgment on the quantum meruit value of an attorney’s services is inappropriate where time was never tracked and the only evidence of percentage contribution is a deponent’s rough estimate contradicted by other record evidence of active involvement.
- A party that voluntarily deposits disputed funds with the clerk of courts through an interpleader proceeding has not suffered a “wrongful detention” of money and cannot recover prejudgment interest on those funds under SDCL 21-1-13.1.
- A quantum meruit claim by a deceased attorney’s estate for fees in a still-pending, unresolved case is not ripe until the client’s matter concludes and fees are actually owed.
Why It Matters
This decision is the first time the South Dakota Supreme Court has squarely addressed what happens to a contingency fee agreement — and the fees already earned — when one of the attorneys dies before the case concludes. By adopting the majority rule and grounding quantum meruit recovery in the equitable principle that an involuntary termination should not forfeit earned compensation, the court provides a clear framework for solo practitioners, small-firm attorneys, and their estates planning around this risk. Attorneys entering joint contingency fee arrangements should consider whether their agreements expressly address what happens upon the death of a co-counsel.
The decision also has practical significance for interpleader practice: a party that deposits disputed funds with the court to trigger judicial resolution cannot later claim prejudgment interest on those funds simply because it ultimately prevails. The voluntary nature of the deposit breaks the causal link between any alleged wrongful act by the opposing party and the loss of use of the money. Litigants using interpleader as a litigation tool rather than a remedy of last resort should be aware they are forfeiting any prejudgment interest claim on the deposited sums.