Thursday, June 28, 2007
A law firm retained to prosecute a serious personal injury case obtained a settlement offer of $600,000. The firm advised the client to take the offer. The client was uncertain whether to accept the offer and sought a second opinion from Firm Two. The client then terminated Firm One and hired Firm Two, where the advice was to reject the offer. A month later, the case settled for $950,000. Firm One sought a share of the fees based on the offer it had obtained. The New York Supreme Court found that Firm One had been discharged for cause and denied any fees.
The First Department reversed. The finding that Firm One was discharged for cause was error. Firm One had declined to bring a consortium claim; there was substantial evidence that the client claimed to be single. Firm One had not improperly settled the case without authority; it was clear that the completed settlement was contingent on the client's approval. Finally, Firm One had failed to file a copy of the retainer agreement with the Office of Court Administration as required by New York rules; such a failure is not misconduct that establishes discharge for cause. Firm One had done all the heavy lifting in the case and was entitled to its share of the fee derived from the $600,000 offer. (Mike Frisch)