No Written Retainer Agreement, With Quantum Meruit Jury Verdict Overturned And Reduced To $1.8 Million Plus Some Other Deductions.
This is a doozy of a case involving well known Los Angeles attorney Hillel Chodos, who happened to not have had a written hourly or contingency retainer agreement with an ex-client, a wife involved in an imbroglio of divorce cases (including a Marvin suit). Mr. Chodos charged $1,000 an hour for his time but had to sue ex-client for quantum meruit recovery based on the absence of a retainer and had a jury award him $7.8 million, his lodestar of 1,800 hour for the divorce work plus a multiplier of five—meaning the jury increased his hourly rate to $5,000. Such a result came after a trial where Mr. Chodos and his ex-client put on very conflicting testimony about the value of his services, the time he spent (or should have spent), and the results obtained in the divorce cases (although the results appeared to be quite extraordinary).
The appellate court determined that it was erroneous for the lower court to have instructed the jury on the availability of a multiplier in these circumstances. In this instance, Mr. Chodos did not bear true contingency risk because there was an hourly arrangement even under a quantum meruit theory. Because quantum meruit theory is fundamentally equitable in application (although legal for purposes of the right to a jury trial), the reviewing panel simply found it would be unfair to allow Mr. Chodos to obtain a recovery in excess of the lodestar.
This result was buttressed by the panel’s belief that Mr. Chodos would be rewarded for violating Business and Professions Code provisions requiring a written retainer agreement. “Therefore, to reward attorney for not complying with the laws requiring written fee agreements would be inequitable and contrary to public policy.” (Slip Opn., p. 28.)
Although not said in the opinion, we believe the appellate court actually took matters in its own hands to avoid further litigation. Based on Mr. Chodos’ testimony about 1,800 hours and a $1,000 hourly rate, it reduced the judgment from $7.8 million down to $1.8 million, with further deductions of about $132,000 to the $1.8 million figure (remanding to the lower court with instructions to enter this judgment).
BLOG OBSERVATION—Especially in the punitive damages area, California appellate courts often will simply reduce an excessive award and direct the trial court to enter judgment based on such a reduction—doing this frequently in cases where it divines that the parties will only litigate for years more if a completely new trial is granted. For an example, see a case co-contributor Mike was involved with many years ago, Las Palmas Associates v. Las Palmas Center Associates, 235 Cal.App.3d 1220 (1991).