Contingent Fee Agreements Terminate Upon Attorney Death; Estate’s Remedy Sounds in Quantum Meruit, and Interpleader Deposits Do Not Earn Prejudgment Interest

1. Introduction

Groves v. Goodsell & Oviatt, LLP, 2026 S.D. 33, addresses a recurring but previously unresolved issue in South Dakota: what happens to contingent fee and fee-splitting arrangements when one lawyer in a joint representation dies before the matter concludes.

William Jason Groves, a solo practitioner (Groves Law Office), and Goodsell & Oviatt, LLP (“Goodsell”) entered into three separate contingency fee agreements with three workers’ compensation-related clients. Each agreement provided for a “pro rata Fifty/Fifty percent (50%-50%)” split of attorney’s fees between the two firms. After Groves died (October 18, 2021), disputes arose over (i) how much of the resulting contingent fees the Estate was entitled to receive for Client #2 (resolved after Groves’s death), (ii) any future entitlement for Client #3 (still pending), and (iii) prejudgment interest issues relating to delayed payments and deposited funds.

The Supreme Court of South Dakota affirmed that these contingency agreements are personal services contracts that terminate as to the deceased attorney, but held the Estate may still recover the reasonable value of services rendered (quantum meruit) for Client #2—an issue requiring factfinding. The Court also clarified two important prejudgment-interest rules: an interpleader deposit does not entitle the depositor to prejudgment interest, and an unconditional tender can toll interest even if it is less than the amount ultimately determined to be due, so long as it preserves the recipient’s right to litigate the disputed balance.

2. Summary of the Opinion

  • Termination: The contingency fee agreements for Clients #2 and #3 terminated upon Groves’s death as to his performance obligations.
  • Client #2 fees: The circuit court correctly treated the Estate’s potential recovery as quantum meruit, but erred by fixing the value of Groves’s services (10–20%) on summary judgment; factual disputes require remand.
  • Client #3 fees: Any quantum meruit claim is not ripe because the case is pending and no fees have been generated.
  • Interest on interpleader deposit: Goodsell was not entitled to prejudgment interest on funds it voluntarily deposited with the clerk of courts.
  • Interest on Client #1 fees: The Estate was entitled to prejudgment interest beginning when Goodsell paid itself from trust, but interest was tolled as to $425,000 when Goodsell made an unconditional tender; the matter was remanded for recalculation under the Court’s dates and methodology.

3. Analysis

3.1. Precedents Cited

A. Standards governing summary judgment and interest review

  • Rowe v. Rowe, 2025 S.D. 40, ¶ 10, 24 N.W.3d 746, 751: reiterated de novo review of summary judgment.
  • Estate of Olsen v. Agtegra Coop., 2024 S.D. 39, ¶ 12, 9 N.W.3d 763, 768: restated the summary judgment framework, including the requirement to draw reasonable inferences for the non-movant.
  • Pauley v. Simonson, 2006 S.D. 73, ¶ 7, 720 N.W.2d 665, 667: questions of law are reviewed de novo.
  • JAS Enters., Inc. v. BBS Enters., Inc., 2013 S.D. 54, ¶ 44, 835 N.W.2d 117, 129: prejudgment interest calculations are reviewed de novo.

B. Contingent fee agreements as personal service contracts; termination upon death

  • Davenport v. Waggoner, 207 N.W. 972, 974 (S.D. 1926): recognized that “[a] contingent fee contract . . . is a contract for personal services[.]” The Court used this as the key South Dakota anchor for treating the agreements as personal services contracts.
  • Burke v. Foss, 334 N.W.2d 861, 864 (S.D. 1983): identified ways legal services contracts can terminate, including death of a party.
  • Minnehaha Cnty. ex rel. Willadsen v. Willadsen, 11 N.W.2d 55, 59 (S.D. 1943): explained the broader contract principle that personal services obligations generally do not survive death.
  • Restatement (Second) of Conts. § 262: cited for the doctrine that death or incapacity can discharge duties when a particular person’s performance was a basic assumption of the contract.
  • Out-of-state persuasive authority reinforcing the general rule:
    • Wells v. Powell Powell & Powell PA, 711 Fed. Appx. 517, 521 (11th Cir. 2017) (per curiam): referenced for the “longstanding presumption” that attorney-client service contracts dissolve upon death of either party.
    • Estate of Burford v. Freeman, 281 So. 3d 942, 946 (Miss. Ct. App. 2019): cited for the principle that a contract relying on a particular attorney’s skill terminates upon that attorney’s death.
    • In re Estate of Horwitz, 863 N.E.2d 842, 846 (Ill. App. Ct. 2007): cited for the proposition that contingent-fee terms cease to operate once the attorney-client relationship terminates.

C. Estate recovery after death: quantum meruit, not the contingent contract (unless substantially performed)

  • The Court relied on treatise authority, 7A C.J.S. Att’y & Client § 442 (2026), which the opinion quotes for two propositions: (1) if an attorney dies before settlement or judgment, the recoverable amount is the reasonable value of services, and (2) an estate may enforce a contingent contract only where it was fully or substantially performed before death; otherwise, recovery is measured by fair value/proportion of services.
  • Persuasive authority illustrating the majority approach:
    • Roe v. Sears, Roebuck & Co., 132 F.2d 829, 832 (7th Cir. 1943): death terminates employment contract, but estate can recover the fair value of services rendered.
    • In re Lake’s Estate, 123 N.Y.S.2d 307, 309 (Sur. 1953): contract ends at death; representative may recover reasonable value of services.
    • Morton v. Forsee, 155 S.W. 765, 769 (Mo. 1913): endorsed recovery based on contract price for services actually performed, where the only consequential harm is hiring successor counsel.
  • South Dakota equitable restitution principle: Werre v. Nw. Thresher Co., 131 N.W. 721, 722 (S.D. 1911): when services are rendered in good faith and the other party knowingly benefits, the law implies a promise to pay reasonable value (quantum meruit).
  • Factfinding on reasonable value: In re Nelson Living Tr., 2013 S.D. 58, ¶ 33, 835 N.W.2d 874, 884: cited for the proposition that reasonable value of services generally involves questions of fact.

D. Distinguishing disbarment/abandonment forfeiture cases

  • Egan v. Waggoner, 170 N.W. 142 (S.D. 1918): disbarred attorney could not recover because contract termination was due to his wrongdoing.
  • Davenport v. Waggoner, 207 N.W. 972 (S.D. 1926): trustee could not recover quantum meruit because disbarment/abandonment (without just cause) forfeited compensation.
  • The Court used these cases to articulate a limiting principle: forfeiture applies when termination results from the lawyer’s wrongful or unjustified conduct, but not when termination is due to death or other “just cause.”

E. Fee-splitting, joint ventures, and professional conduct rules (contextual)

  • Senneff v. Healy, 135 N.W. 27 (Iowa 1912): discussed in a footnote as recognizing estate recovery based on a joint venture; the Court noted its inconsistency with modern Rule 1.5 principles and distinguished it from the parties’ arrangement.
  • A.P. & Sons Const. v. Johnson, 2003 S.D. 13, ¶ 19, 657 N.W.2d 292, 296-97: used to define what does (and does not) constitute a joint venture—particularly the need for a joint pecuniary interest rather than separate earnings.
  • SDCL 16-18 App., Rules of Prof. Conduct, Rule 1.5(e)(1): referenced for proportionality/joint responsibility requirements in fee divisions; the Court earlier noted (consistent with circuit court rulings) that Rule 1.5 does not create a cause of action or defense, but its standards inform factual assessment of joint responsibility and relative contributions.

F. Ripeness

  • Boever v. South Dakota Bd. of Acct., 526 N.W.2d 747, 750 (S.D. 1995): cited to explain ripeness and conserve judicial resources for real, present disputes. This supported dismissing/deferring Client #3 fee questions until there is an outcome and an actual fee fund.

G. Prejudgment interest and tender

  • Anderson v. Aesoph, 2005 S.D. 56, ¶ 27, 697 N.W.2d 25, 33: prejudgment interest compensates for wrongful detention of money owed.
  • Wright v. Temple, 2023 S.D. 34, ¶ 30, 993 N.W.2d 553, 562: quoted for SDCL 21-1-13.1’s rule and its exceptions (debtor prevented by law or act of creditor).
  • Adrian v. McKinnie, 2004 S.D. 84, ¶ 14, 684 N.W.2d 91, 98: tender must be unconditional to toll interest under SDCL 20-5-18.
  • Stromberger Farms, Inc. v. Johnson, 2020 S.D. 22, ¶¶ 36, 41, 942 N.W.2d 249, 260-61: explained unconditional tender requirements and held that when the amount owed is disputed, a tender of less than the demanded amount can still be “unconditional” if it preserves the creditor’s right to litigate the balance.
  • Am. Fed. Savs. & Loan Ass’n of Madison v. Mid-America Serv. Corp., 329 N.W.2d 124, 127 (S.D. 1983): reinforced that in honest disputes, the tender condition must leave the creditor free to contest and pursue the further claim.

3.2. Legal Reasoning

A. The new South Dakota rule: contingent fee agreements terminate upon the attorney’s death

The Court adopted the mainstream approach: a contingent fee agreement is a personal services contract and therefore terminates when the attorney can no longer perform the services due to death. The reasoning is grounded in South Dakota doctrine (Davenport v. Waggoner; Burke v. Foss; Minnehaha Cnty. ex rel. Willadsen v. Willadsen) and general contract principles reflected in Restatement (Second) of Conts. § 262. Practically, the client’s matter must continue with substitute counsel (or, as here, surviving counsel), which is incompatible with enforcing the deceased attorney’s contingent “contract share” as though performance were completed.

B. Remedy after termination: quantum meruit rather than the contingent contract

For Client #2, the Court held the Estate could not claim the full 50% fee split as a contractual entitlement because the contingency had not matured (no recovery) at Groves’s death and substantial performance was not shown. However, the Court also rejected the harsh forfeiture logic of the disbarment/abandonment line (Egan v. Waggoner; Davenport v. Waggoner) because death is not “wrongdoing” or unjustified abandonment. Instead, consistent with 7A C.J.S. Att’y & Client § 442 (2026) and authorities like Roe v. Sears, Roebuck & Co. and In re Lake’s Estate, the Estate may recover the reasonable value of Groves’s services (quantum meruit), preventing unjust enrichment while preserving the personal-service nature of contingent contracts.

C. Why summary judgment was improper on Client #2 valuation

The circuit court attempted to value Groves’s services by treating deposition “estimates” (10–20% contribution) as undisputed and then concluding Goodsell’s $1.5 million payment exceeded that percentage. The Supreme Court found genuine disputes remained: time was not tracked; evidence suggested Groves “assumed joint responsibility” and materially contributed to strategy, pleadings, hearings, depositions, correspondence, and mediation. Under In re Nelson Living Tr., the reasonable value of services is typically fact-dependent and not suited for summary disposition on this record.

D. Client #3: termination yes, compensation question not yet justiciable

The agreement terminated upon death, but whether a quantum meruit recovery will ever exist depends on whether Client #3 ultimately generates a recovery and fees. Under Boever v. South Dakota Bd. of Acct., the Court deemed the issue unripe: there is no fee fund and no concrete dispute over entitlement.

E. Prejudgment interest: no “damages” to the interpleader depositor

The Court reversed the award of prejudgment interest to Goodsell on the $2.34 million it deposited with the clerk of courts. Under SDCL 21-1-13.1, interest is tied to compensating a party “entitled to recover damages,” and Anderson v. Aesoph frames prejudgment interest as compensation for “wrongful detention of money owed.” Goodsell’s deposit under SDCL 15-6-67(a) was voluntary; it did not reflect a loss caused by an unlawful act or wrongful detention by the Estate, and the summary judgment order did not award Goodsell “damages” on the deposit. Thus, the statutory predicate for prejudgment interest was absent.

F. Prejudgment interest: unconditional tender tolls interest even in a dispute

For Client #1, the Court largely affirmed the Estate’s right to prejudgment interest from September 15, 2021 (when Goodsell paid itself from trust) because Goodsell was not prevented “by law” or “by act of the creditor” from paying earlier under SDCL 21-1-13.1 (as explained in Wright v. Temple).

But the Court held interest was tolled as to $425,000 on August 1, 2022, when Goodsell tendered that amount by check with a letter stating it was for fees and that payment would not waive claims/defenses. Applying SDCL 20-5-18 and Adrian v. McKinnie, the Court found the tender “unconditional” for tolling purposes, relying on Stromberger Farms, Inc. v. Johnson and Am. Fed. Savs. & Loan Ass’n of Madison v. Mid-America Serv. Corp.: where amounts are honestly disputed, a tender that preserves the recipient’s right to litigate the balance may still be unconditional. The case was remanded for recalculation using the Court’s specified accrual periods and principal amounts.

3.3. Impact

  • Estate claims to contingent fees: South Dakota estates of deceased attorneys cannot assume the deceased lawyer’s contractual share of a contingent fee unless substantial performance is shown; instead, they should expect a quantum meruit valuation process.
  • Fee-splitting agreements between firms: Even where agreements say “50/50,” death can convert the dispute from contract enforcement into value-of-services litigation. Firms should consider drafting provisions addressing death/disability (e.g., valuation mechanism, successor responsibility, file transfer duties, and how costs/overhead are treated).
  • Litigation practice: The decision signals that “percentage contribution” estimates unsupported by time records may be insufficient to win summary judgment on reasonable value; contemporaneous documentation and evidence of “joint responsibility” will matter.
  • Prejudgment interest strategy: Parties can mitigate interest exposure via unconditional tender that preserves the other side’s right to sue for the balance. Conversely, voluntarily depositing disputed funds via interpleader will not generate prejudgment interest for the depositor absent a true damages entitlement.
  • Ripeness discipline: Courts should avoid advisory rulings on contingent fee entitlements in ongoing matters where no fee fund exists.

4. Complex Concepts Simplified

Personal services contract
A contract built around a particular person’s unique skills or judgment (here, the attorney’s services). If that person dies, performance is no longer possible in the expected way, so the contract ends.
Contingent fee
A fee payable only if the client recovers (settlement/judgment), typically calculated as a percentage of the recovery.
Quantum meruit
A restitution remedy meaning “as much as deserved.” Instead of enforcing the original contract price, the law awards the reasonable value of services actually provided to prevent unjust enrichment.
Substantial performance
Performance so nearly complete that the law may allow contract-based recovery despite minor remaining work. The Court indicated this can matter for whether a contingent contract may be enforced by an estate.
Interpleader deposit
A procedure allowing a party holding disputed funds to deposit them with the court to avoid paying the wrong claimant. Here, the depositor could not then claim prejudgment interest because it did not suffer compensable “damages.”
Prejudgment interest
Interest awarded for the period before judgment to compensate a party for being deprived of money that should have been paid earlier.
Unconditional tender
A payment offer that does not force the recipient to give up legal rights (like suing for the remaining disputed amount). If unconditional, it can stop (toll) the running of interest on the amount tendered.
Ripeness
A doctrine preventing courts from deciding issues that are premature or hypothetical—such as fee entitlement in a case with no recovery and no fees yet.

5. Conclusion

Groves v. Goodsell & Oviatt, LLP, 2026 S.D. 33, establishes that contingent fee agreements in South Dakota are personal services contracts that terminate upon an attorney’s death as to that attorney’s performance, converting the deceased attorney’s compensation claim—absent substantial performance—into a quantum meruit claim for the reasonable value of services rendered. It further holds that a voluntary interpleader deposit does not entitle the depositor to prejudgment interest under SDCL 21-1-13.1, and it refines prejudgment interest practice by confirming that an unconditional tender can toll interest even in a bona fide dispute, so long as it preserves the right to litigate the balance.