## Facts

- An attorney represented a client in a divorce action and related property-settlement matters and performed substantial work as co-counsel.
- During the representation, the client executed seven promissory notes to the attorney totaling $2,000: one $500 demand note and six $250 notes maturing at three-month intervals.
- The $500 demand note was paid; the next $250 note (note no. 2) was not paid when due.
- The attorney sued on note no. 2 in the Municipal Court for the District of Columbia; the client defended on grounds that the attorney’s fee was excessive and that she had already paid more than the reasonable value of services, and she asserted a counterclaim.
- After a trial on the merits, the Municipal Court entered judgment for the attorney on note no. 2 and rejected the client’s counterclaim.
- After notes 3–7 matured, the attorney filed a second Municipal Court action on five of the remaining notes; the client asserted defenses including misrepresentation in procuring the notes and, in substance, that the fee arrangement was improper or excessive and already satisfied.
- The attorney sought summary judgment in the second action, arguing the first judgment was res judicata on liability for the remaining notes; the Municipal Court denied summary judgment, and a jury returned a verdict for the client.
- The Municipal Court of Appeals reversed and held the first judgment precluded the client from denying liability on the remaining notes.
- The client appealed to the United States Court of Appeals for the District of Columbia Circuit.

## Issues

1. Whether a prior judgment for an attorney on one promissory note for legal fees precludes, under res judicata or collateral estoppel, a client from litigating liability and defenses in a later suit on other notes from the same series.
2. Whether public-policy concerns in attorney–client fee arrangements justify limiting ordinary claim- and issue-preclusion rules in successive suits on related notes.

## Decision

- The D.C. Circuit reversed the Municipal Court of Appeals.
- The court held that the prior judgment on note no. 2 did not preclude the client from asserting defenses to liability on the later-maturing notes.
- The court recognized that ordinary preclusion rules often bar relitigation of liability across successive suits on a series of notes, but it applied an exception for notes exchanged between attorney and client for legal fees.
- The court concluded that public policy requires the issue of liability to remain open to litigation in each action involving such attorney–client notes.

## Legal Principles

- A final judgment on the merits can ordinarily bar relitigation of issues or claims in later suits involving the same transaction or series of instruments.
- Agreements and transactions between attorney and client are subject to closer judicial scrutiny than ordinary commercial agreements because of the fiduciary nature of the relationship.
- Public policy may limit the preclusive effect of a prior judgment where rigid application of res judicata would impair judicial review of the fairness and validity of attorney–client fee arrangements.
- Collateral estoppel is applied with discretion in later actions presenting distinct causes of action, particularly where additional factors may warrant reexamination of the issue.

## Conclusion

The D.C. Circuit held that a client is not barred by res judicata from raising defenses in a later suit on additional promissory notes given to an attorney for legal fees, because attorney–client fee transactions warrant repeated judicial scrutiny and public policy requires liability to be litigated in each action.


Spilker v. Hankin, 188 F.2d 35 (D.C. Cir. 1951)