Sunday, October 14, 2007
A law firm represented clients in a construction contract dispute with the federal government. The fee agreement combined a low hourly rate ($150) and a contingent fee. The clients terminated the litigation in the face of criminal charges. Thereafter, shortly before the statute of limitations for refiling the case expired, the law firm reinstated the case. The firm had attempted but been unable to obtain instructions from the client prior to refiling. The case was dismissed and the law firm sued the former clients under theories of quantum meruit and tortious interference with the contingent fee contract.
The United States Court of Appeals for the District of Columbia Circuit held that the clients could not be sued for tortious interference of contract because a party to the contract cannot be sued for interfering with it. Further, the claim of quantum meruit failed because the suit had been terminated based on the client's reasonable assessment that they would not prevail on the underlying claim. The court concluded that dropping the case was the legal equivalent of discharge for good cause, which defeats a quantum meruit claim: "a contingent-fee client, convinced had had no chance of success, would have to continue his case just to avoid quantum meruit liability." The policies that grant client authority to control his case trump the attorney's claim for compensation. (Mike Frisch)