Quantum Meruit Does Not Merit Reversal of Sanction
On appeal, the Vandenberg court first turned to the applicability of the doctrine of quantum meruit. The court held that, while “relatively uncommon,” the judge did not abuse his discretion when granting no fees to the plaintiff’s prior counsel, especially because counsel had “repeatedly breached its duty.”
The appellate court noted that it was not holding that “an attorney discharged for cause may never recover quantum meruit fees.” Instead, in this case, the fact that plaintiffs had “clear cause” for terminating their counsel “was certainly a factor that the circuit court was entitled to consider in awarding quantum meruit fees.”
Written Attorney Fee Agreement Provides Alternative Grounds to Affirm
The court of appeals also proceeded to examine the plaintiffs’ written fee agreement with prior counsel. While the fee agreement provided for payment of an hourly rate should the attorney withdraw, the plaintiffs’ prior counsel “failed to provide any evidence of how much time it spent working on this case.” Faced with its own failure to provide evidence of the time spent by counsel, plaintiffs’ prior counsel “suggested, for the first time at oral argument, that we should remand to give the firm an opportunity to document its hours in this case.”
The appellate court denied the appeal and held that the “firm had ample opportunity to provide this information to the circuit court in support of its fee request and chose not to.”
Section of Litigation Leaders Agree with Decision
“The court got it right,” opines John M. Barkett, Miami, FL, cochair of the ABA Section of Litigation’s Ethics & Professionalism Committee. “These guys were doomed either way. The lawyer obviously should not have talked to the clerk.”
“The die was cast at the trial court level. The decision, in fact, was restrained, all things considered. The court let the egregious facts speak for themselves. The misconduct here could fill volumes more,” agrees Laura K. Lin, San Francisco, CA, cochair of the Section of Litigation’s Ethics & Professionalism Committee.
Section leaders believe that there are a number of lessons to be learned from the opinion. First, “the lawyer should not have wasted any time when it came to the settlement. There is an obligation to be diligent. The lawyer should have talked to the client right away about the settlement offer,” counsels Barkett.
“The lessons are bountiful,” agrees Lin. “Do not engage in improper ex parte communications with the court, do not withhold nonprivileged information from opposing counsel, and disclose any potential conflicts to clients immediately,” she warns.
Section leaders agree that plaintiffs’ counsel could have avoided a complete loss of fees by tracking time. “Most courts will reward a lawyer’s efforts in quantum meruit, but the burden is on the party to demonstrate the value of their services,” notes Barkett.
“Plaintiffs’ counsel could have prepared appropriate time records, but those should not be submitted for the first time on appeal,” states Lin. “As an additional practical tip, this opinion suggests that attorneys working on contingency should include a provision, as these plaintiffs’ counsel did, expressly contemplating how fees should be paid even in the event of a termination for cause,” she counsels.
In the final analysis, “this precedent grants courts broad and considerable discretion to fashion an appropriate fee award—including down to nothing—following a client’s termination of their counsel,” contines Lin. “Breaches of fiduciary duty by an attorney may qualify as ‘unclean hands’ sufficient to bar any fee award, even following years of work and a successfully litigated trial. That’s a harsh outcome, but a just one,” she concludes.