South Dakota Supreme Court Reverses $202K Attorney Fee Award in Thovson Wrongful Death Dispute

Northeast Radio SD News – Watertown, SD - In a decision that clarifies the boundaries of attorney-client fee agreements, the South Dakota Supreme Court has ruled that lawyers cannot enforce contingency fee clauses that financially penalize clients for refusing to accept a settlement offer. The comprehensive opinion stems from a fee dispute following a tragic fatal car accident in 2020.

The Court’s April 15, 2026, ruling reversed a lower court’s award of over $202,000 to two attorneys, holding that their employment contract impermissibly infringed on their client’s fundamental right to decide whether to settle a legal matter. However, the legal professionals involved, the Court determined they could still recover reasonable fees under the equitable principle of quantum meruit because they possessed “good cause” to withdraw from the case.

The origins trace back to the afternoon of July 28, 2020, in North Dakota. Paula Thovson was driving southbound when she was struck and killed by a truck pulling a gooseneck trailer loaded with construction materials.

According to investigative findings detailed in the court record, the at-fault driver, Dean Johs, was texting and operating the vehicle under the influence of painkillers. Johs sped through a stop sign and drove into the intersection immediately in front of Paula Thovson. The forceful impact of the T-bone collision crushed her vehicle and caused the truck’s trailer to separate. Paula was transported by air to Avera St. Luke’s Hospital in Aberdeen, South Dakota, where she died from her injuries. Tragically, she was on the phone with her husband, Bill Thovson, at the exact moment of the collision.

Just one day after his wife’s funeral, Bill Thovson contacted Seamus Culhane, a South Dakota attorney with Turbak Law Offices, expressing urgent concerns about preserving evidence. Culhane immediately began an investigation, securing police reports, dispatching anti-spoliation letters to preserve the vehicles, and tracking down video footage of the collision from a nearby convenience store.

On August 7, 2020, Thovson met with Culhane in person to sign a Legal Services Agreement. Culhane also recruited Thomas Dickson, a North Dakota trial attorney, to assist with the anticipated wrongful death action. A revised agreement was signed on August 27, establishing a standard 33.33% contingency fee to be split evenly between Culhane and Dickson, calculated from the net recovery after advanced costs were deducted.

A critical clause in the contract stated:

“It is the right and responsibility of the client to decide whether or not to accept any settlement offer. If the client refuses to accept an offer that is, in the opinion of Turbak Law Office, P.C., fair and reasonable, Turbak Law Office, P.C. has the right to withdraw from representation of the client on the matter and retain a lien against the claim for costs incurred... and for fees equal to 33.33% (1/3) of that offer, less costs”.

The Settlement Dispute

The attorneys’ investigation yielded immediate results from the at-fault driver’s insurance provider, National Farmers Union Property and Casualty Company. Within weeks of the accident, the insurer tendered the absolute policy limits available: $250,000 from the driver’s policy and $250,000 from the commercial policy of the truck’s owner, Charles Johs (Dean’s father).

This $500,000 total became a point of contention. After a thorough investigation, Culhane and Dickson concluded that the Johs family lacked sufficient free and clear personal assets to justify further litigation. Culhane advised Thovson that the $500,000 was realistically the maximum recovery they could achieve.

Thovson firmly disagreed. Seeking personal accountability, he argued for a much larger civil claim against the Johs family for loss of companionship, emotional distress, and the instrumental business role his wife played. When Charles Johs formally refused to contribute any personal funds toward a settlement, Thovson refused to sign a release of claims to accept the $500,000.

Citing the fee agreement, the attorneys informed Thovson they considered the $500,000 offer fair and that his refusal to accept it triggered their right to withdraw. On January 15, 2021, they formally announced their withdrawal and filed an attorney’s lien against the claim for $170,049.81—exactly one-third of the $500,000 offer, plus costs.

Eighteen months passed. On July 19, 2022, as the two-year North Dakota statute of limitations for wrongful death loomed, Thovson independently accepted the very same $500,000 settlement offer from Farmers Union that his attorneys had originally negotiated.

When Thovson refused to endorse the settlement check over to the attorneys to satisfy their lien, Culhane and Dickson sued him for a declaratory judgment and breach of contract. Thovson fired back with counterclaims, alleging fraud, deceit, and breach of fiduciary duty, arguing the attorneys had misled him. The Codington County Circuit Court sided completely with the attorneys, granting summary judgment, dismissing Thovson’s counterclaims, and ordering him to pay $202,314.52.

The Supreme Court

Thovson appealed to the South Dakota Supreme Court, setting the stage for a review of legal ethics and contract law.

Writing for the majority, Retired Justice Kern addressed the core tension between the written contract and the rules of professional ethics. While the contract clearly gave the attorneys the right to withdraw and demand their fee if Thovson rejected a “reasonable” offer, the Court found this provision fundamentally flawed.

The Court pointed to Rule 1.2 of the South Dakota Rules of Professional Conduct, which mandates that a lawyer “shall abide by a client’s decision whether to settle a matter”. By giving the attorney the unilateral power to decide if an offer is “reasonable” and punishing the client with a massive fee if they disagree, the contract “impermissibly abrogates the client’s right to accept or reject a settlement,” the Court ruled.

Because the attorneys withdrew before the case was actually settled, the contingency (the successful recovery of funds) had not occurred during their representation. Therefore, the attorneys were not entitled to the strict 33.33% contractual fee.

Despite striking down the contract fee, the Court did not leave the attorneys empty-handed. The Court recognized that contingency fee agreements carry inherent risks for both sides, including the risk that a client makes a disappointing settlement decision.

Because the attorneys had diligently investigated the case, secured co-counsel, negotiated maximum policy limits, and realistically assessed the unlikelihood of recovering personal assets, the Court found they had “good cause” to withdraw when the attorney-client relationship broke down over the settlement disagreement. Because their withdrawal was justified, the attorneys are legally permitted to recover compensation based on quantum meruit—a legal principle granting compensation for the reasonable value of services rendered. The Court remanded the case back to the trial level to calculate this reasonable value.

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The Court also wholly affirmed the dismissal of Thovson’s counterclaims. Claims that the attorneys committed fraud or deceit were dismissed, as evidence showed Thovson sought out Culhane independently and fully understood the fee structure before signing.

The decision was not unanimous regarding the fee contract. Justice Myren, joined by Justice Salter, dissented on the enforceability of the withdrawal clause. Myren noted that the contract explicitly stated it was the client’s right to decide on settlements. He argued that because Thovson is a “sophisticated businessman with significant prior experience with legal representation,” and because he carefully negotiated the contract terms, the withdrawal clause did not violate public policy in this specific instance.

In a special concurrence, Chief Justice Jensen agreed with the majority but emphasized the plain text of the contract. Jensen pointed out that under the agreement, “no attorneys’ fees whatsoever will be charged” if no recovery is obtained while they are retained. An attorney’s lien, he noted, secures compensation owed, but “does not create a right to attorney’s fees which were never earned” prior to withdrawal.