Define That Term #25
How to Avoid Legal Malpractice

The Winds of Change

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And now, on to the topic of this post.  For those of you who are plaintiff's personal injury attorneys, the issues discussed in Byrne v. Leblond may be of interest.  At issue was the division of legal fees between incoming and outgoing attorneys.  The plaintiffs had signed standard 1/3 contingency contracts with each firm.

The plaintiffs, in a decision that would later turn out to work in their favor, decided to change attorneys after the lawsuit had been commenced.  The case eventually settled for $200,000, which was $85,000 more than the the settlement amount negotiated by the plaintiffs' first attorneys.

After the case settled, the law firms became involved in a fee dispute.  The Second Department noted that as to the former client, a discharged attorney is entitled to recover fees in quantum meruit for the reasonable value of services rendered if not discharged for cause. But if the outgoing firm is discharged for cause, it is entitled to recover nothing.

The Court then turned to the issue of the monetary dispute between the law firms and stated that:

But when the dispute is between attorneys, as here, the rules are somewhat different. The discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case.

The Court noted that if there is a dispute regarding whether the outgoing attorney was discharged with cause, then a hearing is required on that issue. 

Finally, the Court noted that the appropriate standard to apply when determining the amount of the contingency fee for the discharged firm is to take into account "the proportionate share of the work performed by the (first) firm on the whole case taking into consideration the relative contributions of the lawyers thereto."

Good stuff to know should you ever find yourself in a similar situation.

Comments

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slickdpdx

Would the first lawyer have been any better off with a provision in the fee agreement for in quantum meruit compensation in the event client terminated?

Nicole Black

I'm not sure, but that's something to think about when drafting letters of engagement.

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