Monday, October 19, 2009

Attorney Fees-Greed Heads-Part One

A number of years ago a lawyer friend of mine told a another lawyer to consult me about a child sex abuse case, an area of law I pioneered in Our State. This young lawyer, who I will call K asked me to meet with her, I did and I shared my insights into representing victims of child sex abuse. I provided K with the names of expert witnesses and I made other suggestions. That was the end of my dealings with her.

Years later I was approached by a young man, John, who provided me with convincing evidence that his step father had raped him for a period of years throughout his childhood. John had turned 18, nine months earlier (this is significant because it meant time was running to take legal action)—John was represented in a civil claim against his step father by attorney K. K had informed John that if she could not work out a settlement with John’s step father on John’s claim she would not file a lawsuit on John’s behalf. K obtained an offer of $45,000 payable in installments over ten years. John rejected the proposed settlement which also contained other unacceptable terms and conditions. He discharged K, and hired me.

John’s rights were about to expire, as I’ve said before Our State has a highly restrictive statute of limitations. John had to bring his lawsuit within 1 year of his 18th birthday. After John retained me I prepared a lawsuit and delivered it to step father's counsel with an indication that the lawsuit would be filed in two weeks. Within the two week period that I set out as a time frame I settled John’s lawsuit for $150,000 payable immediately.

After the case settled and the money received, John authorized me to pay K an attorney fee of $2,500; despite the fact that Our State law entitled her to nothing, since her contract with John was "contingent" on her reaching a settlement or other agreed outcome on his behalf.

Nearly two years to the date of this transaction, K sued me. K did not sue John, the former client that had a contract with K—no, K sued me.

Here’s the rub, K wanted to intimidate me, so instead of using traditional “service” of process methods like asking the court clerk to mail the lawsuit to me, she pulled shit like trying to serve me personally and multiple mailings none of which went to my actual mailing address—the result was that the Judge assigned to the case began to proceed against me under the impression that K’s complaint had actually been served on me as provided by law. Ultimately, the Judge entered a “default judgment” against me. Despite my efforts to file an answer, Judge B, refused to vacate the default judgment and over the course of six months held three separate “trials” on the question of damages. One of these trials was held on Christmas Eve of last year—Merry Christmas.

Judge B, is a menopausal nut—but, Judge B does respect the law. Despite Judge B’s enmity for me (Judge B and I have history going back to a pretty nasty dispute decades earlier involving neighbors who were trying to kill one another, when Judge B was a private practitioner), Judge B could not figure out how K was entitled to payment of anything . Judge B repeatedly demanded that K, or her associate produce one citation to authority (case law, statutory law, anything) entitling K to payment of attorney fees versus the lawyer who earned the fees in subsequent successful representation of a former client. Even for Judge B, this was a forehead slapper, D’oh! Judge B ultimately entered judgment for me.

Today, after delay and delay and delay, I received K’s appeal brief. Yes, K appealed. I just read K’s brief, it is pathetic. Since this is Year Two of K’s attempt to collect attorney fees from me I thought perhaps there was some change in the law (a pending court case that would have precedental import) coming down the pipe that would provide authority for the proposition that she was somehow entitled to payment of fees. Nah. K’s brief consists of the following arguments: “I got default judgment how come I didn’t get any money!”

Aaaarrrrrrggggghghhhhhhhhh!!

16 comments:

  1. http://amlawdaily.typepad.com/amlawdaily/2009/10/fees-and-more-fees-lehman-chrysler-updates.html--$200 million dollars in attorney fees for the theives, er bankruptcy attorneys in the Lehman Brother's case. That a buy a lot of silver service, and marble foyers.

    ReplyDelete
  2. Um, quantum meruit? Quasi-contract?

    ReplyDelete
  3. No. But nice try. Try Unjust Enrichment, no, not that either. Let's assume that either of those theories are applicable--who would K have to sue to be paid--in here case, for doing nothing? How about the person she had a contract with--her former client, John. Now that we are talking about it, do you see some other thorny issues: for instance in establishing facts of her case how does she get around questions of Lawyer-Client confidentiality; Lawyer-Client privilege?

    And bear in mind, these are special contracts regulated by Our State's disciplinary rules.

    ReplyDelete
  4. Well, she can't get around confidentiality or privilege, but John could waive it if he were so inclined. Unless you tortiously interfered with K's contract with John, I think K's pretty much out of luck. You weren't even an incidental beneficiary to K's contract with John.

    I assume you tried to file a 60(b) motion to vacate the default judgment for lack of personal jurisdiction based on failure of service. What was the reason that wasn't granted and why didn't you appeal?

    ReplyDelete
  5. Thank you for your post; correct I filed a motion for relief from judgment, the reason it was not granted related to something you will repeatedly as a lawyer--the court wants the matter off their docket. It was simply easier for all involved to say, ok if you are entitle to money under some theory, show me. I think the Judge assumed that there would be some glittering moment of clarity and the damn thing would be done. Didn't happen and now we are in the court of appeals.

    ReplyDelete
  6. Ha, I've been practicing law for 28 years and can count the glittering moments of clarity on one hand.

    ReplyDelete
  7. Fox and Associates, LPA v. Purdon (1989), 44 Ohio St. 3d 69 at syllabus - lawyer retained on contingent fee basis and terminated before fee vests entitled to quantum meruit of his services. Your case must have predated this?

    ReplyDelete
  8. Anon--

    Welcome ot my Blawg, I don't know if you've folowed but I appreciate your comment. Let me ask you a question, since you seem to be able to read caselaw, a lawyer who has rendered services is entitled to quantum meruit for what? From whom? How is the quantum of merit established, by what evidence?

    BL

    ReplyDelete
  9. Thank you for this great blog - I have spent hours reading through it today. I work not far from your offices, at least the office listed on Our State's court website. It is really fun to read your war stories.

    I do not have good answers to your questions other than to say that quantum meruit is easiest to demonstrate with contemporaneous time records and that the second lawyer should immediately be put on notice that the terminated lawyer will claim an entitlement to a portion of the fees. I don't have a survey of how these cases have come out around the country - I just dealt with this issue recently and got this far into it when a Federal Judge Weirdname granted my 12(B)(6).

    Some states, like Cali, have better fee arbitration systems in place to make the attorney fee dispute process better than we have. The old rule, that Fox overruled, was very harsh to clients who wanted to get rid of their first lawyer because that lawyer's fingerprint on the case made the whole fee his. I am a little curious why your opponent did not rely on that authority.

    ReplyDelete
  10. Anon. 6:20 I was just about to log off for the supper waiting below, when I saw that you followed up. You are correct on the law, in fact the only theory of entitlement for the discharged attorney is Quantum Meruit, but the discharged attorney's claim is vis-a-vis the client with whom she had a contract originally and since she had a contract. She had a remedy against the client that she chose not to pursue. She instead tried to argue that the subsequent attorney received the benefit fo the work she did for the client, without offering any evidence. Well, what might you expect that her evidence would be? How about, time records, how about reports that she had obtained or arranged, about a documentation--no, instead she offers that she obtained a minimal offer to be paid out over yearly installments--which the client rejects as woefully inadequate. She then tells him, he has to take the offer becasue she won't file a lawsuit.

    When he finally settles his claim for a larger amount of money, all in one lump sum--he sends her $2500. Two years later she sues me, not the client. What quantum of merit did she render to me? None. That is why she lost.

    ReplyDelete
  11. Happy New Year.

    I follow what you are saying, and also agree that on the facts you present it sounds like 2.5K was more than her quantum meruit.

    I do think there is a case to be made against the second lawyer directly in a similar hypothetical, though. Lawyer 1 works a case and puts 100 hours into it at which point the client decides to discharge that lawyer and hire Lawyer 2. Lawyer 1 transfers the file and tells Lawyer 2 that he expects to be compensated his quantum meruit out of the contingent fee. Fee is earned by Lawyer 2 after 50 hours of work, the client gets her money and disappears, and Lawyer 2 takes the whole fee. I know I could make a tortious interference with business expectancy case stick to Lawyer 2. Likely also conversion. Your thoughts on this greatly appreciated.

    In Our State we are required to mediate these issues through our local bar association, though, so I would expect a connected hack Lawyer 2 to prevail over a clear thinking but unknown Lawyer 1...

    ReplyDelete
  12. Anoon. 10:59

    Thank you and Happy New Year to you. You are thinking deeply about the scenario and I appreciate your effort. I know you recognize that to some extent your are adding facts to the hypothetical, particularly when you theorize about he "tortious interference with business expectancy." Sometimes we can stick to first principles--which you also do, excellent. Here goes.

    The law business is regulated by the Supreme Court with delegation to the local bar associations. Efforts made during my career attempted to create and mediate fee disputes. Thus fee disputes between clients and lawyers are covered by this mechanism. In fact the Industrial Commission of Our State has a fee dispute mechanism for clients and attorneys, as well. Fee disputes arise under contracts, when there is no contract the dispute arises under an equity theory, but the fee is owed by the client to the lawyer. The other situation where fee disputes arise is where teh lawyers were co-counsel on a matter and an argument ensues; or, where a lawyer rendered the services at a firm, left the firm either taking the client to a new firm or feels that the old firm has an obligation for services rendered during the representation. You are incorrect in believing that the scenario presented int he "blawg" post is covered under the bar association mediation/arbitration provisions--it was not. The bar association told K that her claim was vis-a-vis the client and that her claim against the subsequent lawyer was beyond their purviews.

    First principles--a client has free choice of counsel. Always. A client owns their file and papers. A lawyer does not have a "lien" on papers and documents and absent out of pocket expenses advanced in the case has no right to expect to collect for "transfering the file." Likewise, absent some evidence that the second attorney was soliciting the client by disparaging the work fo the first attorney I don't follow how the dismissal of one attorney followed by the retention of hte second attorney creates any tortious claim between the two attorneys. Perhaps if we manufacture some compelling fact, not in this case.

    No what we are left with is the tale of two attorneys each with written contingency contracts to represent John Doe. The contigency entitling K to payment of fees did not occur, she was dismissed. The contingency entitling me to payment of fees did occur, I was paid. K's claim vis-a-vis me for payment of fees based on quantum meruit, or unjust enrichment was unsupported by any evidence that she rendered any quantum contribution to me in my services to John Doe; likewise, how am I "unjustly enriched" if I am paid pursuant to my written contingency contract when the contingency has occurred?

    ReplyDelete
  13. (continuation of comment)

    My career has been interesting since I have represented many individuals, but for many years I represented many corporations in defense of claims against them brought by persons injured at work. In that area of law on both sides (as we say) of the table, the competition is cutthroat. There is an expression, when one lawyer takes a claim away from another lawyer--it's called "top-carding," and insiders look askance at the practice. It happens on the claimant side all the time, because claimants become frustrated with delay, it also happens because a co-worker or bar buddy will say, "My laweyer, Joe Goldstein, got me $XXXX bucks for my claim." Of cousre, the new guy doesn't have the ability to assess the differences in claims and the many factors that might play in both delay or compensation outcomes--but, it is very commoon that they will fire existing lawyer "a" in order to hire lawyer "b." It gets even more complicated with corporations who not only get solicited by lawyers, but by insurance companies with relationships with attorneys, medical care organizations with relationships with counsel, and at seminars that lawyers speak at on a variety of labor and employment topics. Cut throat!

    Let me give you an example, the Super Lawyer that I co-habitate with represented a local steel company for 28 years. She provided excellent, drop of the hat service for the company 7 days a week. They had an employee who threatened to kill co-workers, the whole firm shut down to obtain court orders, serve notices at local law enforcemenet offices; and on and on. This last Novemeber a federal circuit court of appeal over a strongly worded dissent reversed a grant of summary judgment in a labor case that she had obtained for the company on a failure to hire sex discrimination case--the company moved it's business to a new firm. Tortious interference?

    Nah. Just life.

    ReplyDelete
  14. Today the court of appeals upheld the judgment of the trial court exonerating both my original attorney fee, and finding that K had zero entitlement to either a fee or any claim upon my fee for services. Having had precisely no legal "victories" in my ordeals of the last year apart from the trial court decision in this case, you can imagine my tiny bit of joy! I might add, that "victory" is an outcome.
    BL

    ReplyDelete
  15. Doesn't your state have some equivalent to
    F.R.C.P. 11? Wouldn't that have nipped this in the bud?

    ReplyDelete
  16. Este blog é uma representação exata de competências. Eu gosto da sua recomendação. Um grande conceito que reflete os pensamentos do escritor. Consultoria RH

    ReplyDelete