A sizable contingency fee owed to a Spokane attorney who represented a woman here who obtained a $5 million settlement in an employment-discrimination lawsuit should be based on that amount rather than a larger satisfaction-of-judgment sum, the Washington state Supreme Court has ruled.

The settlement stems from what was said to be, until recently, the state's largest employment-discrimination jury award.

The state high court's decision offered a behind-the-scenes look into how plaintiffs' attorneys can garner substantial fees in such big-dollar civil cases and also how attorney-client relationships can go awry. It reversed a ruling by a Spokane-based appellate court panel and, thereby, reduced the total fee amount that the attorney, Mary Schultz, otherwise might have received.

The court affirmed, though, a lower-court determination that Schultz also was entitled to substantial interest that accrued on her portion of the award during the acrimonious and lengthy fee dispute between her and her former client, Cheryl Forbes.

"That is really the big issue that comes out of this case," Schultz says, adding that she generally was satisfied with the outcome.

The court remanded the case back to Spokane County Superior Court for disbursement of any remaining funds, consistent with that court's original finding there that Schultz was entitled to 40 percent of the $5 million judgment, plus fees and costs, including 12 percent interest on the contingent fee amount. Schultz says, though, that all or most of the money from the original Superior Court judgment already has been distributed.

In a notice of lien filed with the trial court, she had argued she was owed about $2.9 million under an arrangement with Forbes that included an upward-adjusted 44 percent contingency fee, and she later amended that to just under $3.6 million. The trial court arrived at the lower 40 percent contingency fee determination, plus interest.

In the underlying case that led to the fee dispute, Forbes had filed a gender-discrimination suit against American Building Maintenance Co. and ABM Industries Inc. after being fired from her job as a branch manager here with ABM in February 1999.

Unsatisfied with her original attorney's performance, Forbes asked Schultz to take over the case, and in February 2001, the two reached an agreement under which Schultz would receive a contingency fee plus an hourly rate, plus "prevailing party" fees and outstanding costs. The contingency fee was to be 33 percent of any settlement amount and 40 percent of any post-trial judgment, plus Forbes was to pay costs as they occurred.

As the case proceeded, though, Forbes became delinquent on costs and fees, court documents say. That led to a new fee arrangement under which Schultz would advance her the funds to pay for costs, though Forbes would be expected to use her best efforts to pay for costs as they accrued. Schultz also waived past defaults on the hourly fees owed.

In exchange for Schultz's concessions, Forbes and Schultz agreed that Schultz could increase her contingency fee to 40 percent of any settlement and 44 percent of any post-trial or post-appeal judgment.

At trial, Schultz won a jury verdict of $4 million for Forbes, though the judgment totaled more than $5.6 million when interest and other costs were included. Schultz then successfully defended the judgment against ABM's post-trial motions and also successfully argued the case on appeal.

The matter became more complicated when ABM, while petitioning the state Supreme Court to review the case, offered Forbes $5 million to settle. By that time, the value of the judgment had grown to nearly $7 million. Also by that time, Forbes and Schultz were in dispute over Schultz's fees, and Forbes had been in contact with another law firm, and the two also disagreed on how to respond to the settlement offer, documents indicate.

On Aug. 1, 2005, Forbes fired Schultz as her attorney, retained Spokane law firm Lukins & Annis PS as her new legal counsel, and—without further negotiation—accepted the $5 million settlement offer. Schultz filed her notice of lien shortly thereafter, leading to the hearing on her attorney fees and to $3.6 million in disputed funds being placed in the Superior Court registry. Forbes later instructed the court clerk to place the funds in an investment account of a bank that she chose.

Forbes and Schultz both then appealed the Superior Court ruling that 40 percent of the $5 million settlement amount was an appropriate contingency fee. The appellate court affirmed the decision, but said the contingency fee should be based on the more than the $5.6 million sum listed in the formal satisfaction of judgment. The Supreme Court found that change to be improper.