CALIFORNIA ATTORNEY'S FEES

Retainer Agreements: Quantum Meruit Award of $22,670.24 To Discharged Contingency Fee Attorney, After Offsets, Is Affirmed On Appeal

Fourth District, Division 2 Construes “Recovery” Fee Retainer Language Against Drafting Attorney.

     The next decision demonstrates that practitioners need to be careful how they draft retainer agreements. Because the drafter is usually an attorney, any ambiguity will likely be construed in favor of the client. That is what occurred in the next case, involving a discharged contingency fee attorney hoping to get more than a quantum meruit award under a contingency fee agreement. It did not happen.

     In Strickland v. Mason, Case No. E044910 (4^th Dist., Div. 2 Apr. 10, 2009) (unpublished), attorney entered into a contingency fee arrangement with client to recover loans client had made to her daughter and daughter’s boyfriend between a 5 year period of time. Client agreed to certain contingency arrangements “of any money recovered” at various points of the legal proceedings, with attorney granted a lien on “any recovery [client] may obtain in the court action ….” In the discharge and withdrawal provisions of the retainer agreement, client could discharge attorney at any time, with attorney entitled to the reasonable value of her services at a $200 hourly rate “payable upon any collection of funds in this matter.”

Retainer Agreements: Unhappy Lawyer Loses Potential $2 Million Contingency Fee Award Based On Noncompliance With Business and Professions Code Section 6147

Fourth District, Division 3 Affirms Trial Court’s Quantum Meruit Award of $364,110 to Attorney Instead.

     For attorneys entering into contingency fee arrangements with clients, it is essential to comply with Business and Professions Code section 6147, which requires that contingency fee agreements specify (1) the agreed-upon contingency fee rate, (2) the manner in which disbursements and costs will impact the contingency fee and the client’s recovery, (3) the manner in which the client would have to pay compensation for related matters not directly covered by the contingency arrangement, (4) the fee is not set by law but negotiable between attorney and client, and (5) the MICRA limits for health care provider cases. The penalty for noncompliance is that the client can void the contingency fee arrangement, which relegates the attorney to collecting a reasonable fee. (Bus. & Prof. Code, sec. 6147(b).) The next case illustrates how noncompliance can cause bitter resentment and financial setback for even a contingency attorney successfully representing the client in “long shot” litigation.

Ellen Peck's January 2009 Article In California Bar Journal Has Nice Tips For Recovering Fees in Contingency, Limited Partner, Executor, and Client Fee Sharing Representations

 

Ms. Peck Reviews Stroud, Shimko, Miller, and Strong Decisions.

     Ellen R. Peck, a former State Bar Court judge and Encino solo practitioner, has written a fine article in the January 2009 edition of the California Bar Journal with astute tips of upfront, prophylactic actions that can be taken for successfully recovering fees in diverse client representation situations. We summarize them here:

QUANTUM MERUIT AWARD TO UNPAID ATTORNEY GOVERNED UNDER SIMILAR TEST USED IN AWARDING REASONABLE ATTORNEYS’ FEES

Fourth District, Division One Affirms Award of Fees to a Very Forbearing Attorney, Some Under a Quantum Meruit Theory of Recovery.

            Farina v. Wedbush, Case No. D050926 (4^th Dist., Div. 1 June 16, 2008) (unpublished) is must reading for those that think that the “no good deed goes unpunished” adage always happens to materialize.  Not in this case.

            Boiling down the facts, Former Attorney took on a case by Former Clients to relocate above-ground utility lines against well known phone and gas Utilities.  Fee letters and amendments were sent as the matter expanded from mere investigation into a formal lawsuit. The litigation was hard fought, with Former Attorney defeating Utilities’ summary judgment motions.  However, after a nine-day bench trial, the trial judge found in Utilities’ favor.  Former Attorney helped Former Client find appellate counsel and worked on the appeal, which resulted in a reversal of the judgment for Phone Utility.  Former Clients did not pay the balance of Former Attorneys’ billings, resulting in a lawsuit by Former Attorney to collect the unpaid receivable.  The trial judge awarded Former Attorney almost $106,000, a recovery affirmed on appeal except for a minor reduction for a clerical error. 

            Former Attorney rebuffed Former Client’s challenges on appeal.  They were:

·       Former Attorney’s “estimate” of the fees to be incurred was not the equivalent of a “cap” such that $105,000 more was recovered based on the twists and turns in the litigation and Former Clients’ awareness of the changing circumstances.

·       Former Clients did not submit any expert testimony to back up their allegation that Former Attorney performed below the standard of care, a fatal omission.

·       Former Attorney’s fees were not unconscionable, because she agreed to a reduced rate, testified to the complex nature of the litigation, and often wrote off items to reduce the amount of the bills.

·       Former Attorney’s agreement to defer some of her fees depending on the appellate result did not bar recovery when she correctly predicted that the appellate court would reverse—this type of bargain was fully enforceable by its terms.

·       Former Attorney was allowed quantum meruit for certain work, valuing her time at $300 per hour.  Citing Mardirossian & Associates, Inc. v. Ersoff, 153 Cal.App.4^th 257, 272 (2007), the Fourth District in Farina set forth the nonexhaustive factors for evaluating the reasonableness of attorney’s fees for purposes of quantum meruit recovery:  (1) the nature of the litigation; (2) the difficulty of the litigation; (3) the amount involved; (4) the skilled required in its handling; (5) the actual skill employed; (6) the attention given; (7) the success or failure of the attorney’s efforts; and (8) the attorney’s skill and learning, including his/her age and experience in the particular type of work demanded.  Former Attorney’s hourly rate was deemed reasonable under this test.

Except for a typographical correction of a small amount, Former Attorney—by having good records and showing a willingness to take the stand for purposes of explaining the overall litigation efforts—won a substantial fee award from Former Clients who, while disgruntled, apparently did not rebut that the performed services should be paid.