Monday, February 13, 2012

Law Firm Prevails In Suit On Guarantee

The New York Appellate Division for the First Judicial Department affirmed the grant of summary judgment to a law firm that sued a third party who had agreed to pay the fees of the firm's client:

Pursuant to the written guarantee between the parties, defendant guaranteed payment to plaintiff-firm in accordance with the retainer agreement between plaintiff and defendant's former girlfriend. Defendant further guaranteed to make payments to plaintiff for services rendered according to a schedule specifying three monthly payments of $25,000 and, thereafter, "monthly payments of no less than $15,000 . . . until such time as all fees incurred by [defendant's former girlfriend] pursuant to the Retainer Agreement have been paid." Defendant made payments to plaintiff in the amount of $135,000, and then stopped making payments.

We reject defendant's contention that he was not required to make additional payments under the written guarantee because plaintiff failed to advise him of expenditures of time over and above the time covered by the retainer and provide him with periodic statements of account. Under the plain and unambiguous terms of the retainer agreement, plaintiff was required to advise and mail periodic statements of account to defendant's former girlfriend, not defendant. Accordingly, the court properly denied defendant's cross motion for summary judgment dismissing the complaint Given the unambiguous terms of the retainer agreement and guarantee, there was no basis for considering parol evidence. (citations mitted)

Plaintiff's allegations that, among other things, defendant owes it "the outstanding balance" on his former girlfriend's account were sufficient to state a cause of action for breach ofthe guarantee...

(Mike Frisch)

February 13, 2012 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, February 2, 2012

No Objections To Bill

The New York Appellate Division for the First Judicial Department affirmed an award of legal fees because the client had not timely objected to the invoices:

The record demonstrates that defendants failed to dispute that plaintiff sent them the subject invoices and that no objections were lodged thereto until after this action had been commenced (see Bartning v Bartning, 16 AD3d 249, 250 [2005]). Defendants' challenges to the reasonableness of plaintiff's fees fail. In the context of an account stated pertaining to legal fees, a firm does "not have to establish the reasonableness of its fee" (Thelen LLP v Omni Contr. Co., Inc., 79 AD3d 605, 606 [2010], lv denied 17 NY3d 713 [2011]), because "the client's act of holding the statement without objection will be construed as acquiescence as to its correctness" (Cohen Tauber Spievak & Wagner, LLP v Alnwick, 33 AD3d 562, 563 [2006], lv dismissed 8 NY3d 840 [2007] [internal quotation marks omitted]; see also Tunick v Shaw, 45 AD3d 145, 149 [2007], lv dismissed 10 NY3d 930 [2008]).

(Mike Frisch)

February 2, 2012 in Billable Hours | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 24, 2012

Customary But Improper Legal Fee Charges

In a decision reversing the Circuit Court and Court of Special Appeals, the Maryland Court of Appeals reached a decision with respect to legal fees charged in foreclosure sales:

We hold that , in the absence of specific authority in the contract of indebtedness or contained in statute or court rule, it is an impermissible abuse of discretion for trustees or the lenders who 'bid in' properties to include the demand for additional legal fees for the benefit of the Trustees in the advertisement of sale, or in any other way, in that it is contrary to the duty of trustees to maximize the proceeds of the sales, and, moreover, is not in conformance with state or local rules and... is against public policy.

The court noted that the practice of charging for such fees was, prior to its decision, the customary practice in Maryland foreclosure sales. (Mike Frisch)

January 24, 2012 in Billable Hours, Hot Topics | Permalink | Comments (1) | TrackBack (0)

Friday, December 9, 2011

One Out Of Three Doesn't Earn The Fee

The New York Appellate Division for the Second Judicial Department affirmed an award of damages to a former client who had sued his attorney for breach of contract:

Pursuant to a May 28, 2002, retainer agreement, the defendant was required to perform three tasks for the plaintiff in exchange for an attorney's fee in the sum of $20,000. The defendant failed to perform two of the three agreed-upon tasks, despite having been paid in full. The plaintiff informed the defendant by letter dated February 8, 2006, that he was discharging the defendant for cause, and sought the return of any unearned fees. The defendant denied the plaintiff's request for the return of any unearned fees, prompting the plaintiff to file a pro se complaint alleging breach of contract. Based on the evidence that the defendant had not performed all of the agreed upon tasks under the terms of the retainer agreement, the Supreme Court, inter alia, denied the defendant's motion for summary judgment dismissing the complaint and, upon searching the record, awarded summary judgment to the plaintiff on the issue of liability. Following an inquest on damages, the Supreme Court entered judgment in favor of the plaintiff and against the defendant in the principal sum of $13,333.34.

On appeal, the defendant provides no valid basis for reversing the judgment. It is clear that the defendant made a promise to perform, but there was no subsequent performance with respect to two of the three tasks that formed the basis for the $20,000 attorney's fee...

(Mike Frisch)

December 9, 2011 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 22, 2011

Takings Clause Applies To Appointed Counsel's Representation

A South Carolina attorney who had been appointed to represent an indigent defendant in a complex criminal case advised the judge that he would stop working on the matter in light of his concern that he would not be paid beyond the statutory maximum for the representation. The judge threatened contempt and the attorney retained counsel. Eventually, the attorney agreed to continue with the case.

He did not get paid over the statutory cap. The trial judge denied excess compensation as a result of the attorney's "unprofessional behavior." He appealed the fee decision.

The South Carolina Supreme Court held that the Takings Clause of the Fifth Amendment of the United States Constitution was implicated but that the trial court did not abuse its discretion in denying fees over the cap:

We...recognize the historic obligation of an attorney to honor court-ordered appointments for the representation of indigents, while also recognizing that the attorney's service constitutes property for Fifth Amendment purposes where there is a right to counsel.  We do not view these principles as mutually exclusive.  In harmonizing these positions, a trial court should be guided by Bailey's approach to just compensation assessed in light of the public service foundation associated with membership in the legal profession.

The court quoted with approval this statement from the Kansas Supreme Court:

Attorneys make their living through their services.  Their services are the means of their livelihood.  We do not expect architects to design public buildings, engineers to design highways, dikes, and bridges, or physicians to treat the indigent without compensation.  When attorneys' services are conscripted for the public good, such a taking is akin to the taking of food or clothing from a merchant or the taking of services from any other professional for the public good.  And certainly when attorneys are required to donate funds out-of-pocket to subsidize a defense for an indigent defendant, the attorneys are deprived of property in the form of money.  We conclude that attorneys' services are property, and are thus subject to Fifth Amendment protection.

A dissent by Justice Pleicones would find an abuse of discretion by the trial judge:

As noted by the majority, the sole basis for denying Appellant an award of fees in excess of the statutory limit was his unprofessional conduct.  In my opinion, the trial court abused its discretion in failing to consider, as required by the statute, whether the requested payment in excess of the limit was necessary to provide effective assistance of counsel or whether the services provided were reasonably and necessarily incurred.  In my opinion, the trial court should have allowed Appellant to submit evidence as to the reasonableness of his fees, and reviewed it accordingly.  Even in light of Appellant's undeniably petulant behavior, I would find the trial court abused its discretion and would remand the matter with instructions to evaluate the necessity for and worth of Appellant's services.

In South Carolina, the statutory cap is $3,500. (Mike Frisch)

June 22, 2011 in Billable Hours, Current Affairs | Permalink | Comments (0) | TrackBack (0)

Monday, April 11, 2011

A Question Of Fact

A case summary from the Kentucky Court of Appeals:

The Court reversed and remanded a summary judgment in favor of a lawyer and law firm on appellant’s claim for reimbursement of all or part of a $10,000 fee paid during representation of appellant in a criminal matter after he plead guilty in lieu of going to trial. The Court held that the written fee agreement between the parties for trial preparation and trial, consisting of letters between the parties, was ambiguous as to the question of whether appellant would be entitled to a partial reimbursement of the subject fee in the event that the case did not proceed to trial. In light of the ambiguous nature of the parties’ fee agreement, there were genuine issues of material fact that could not properly be resolved via summary judgment. Because the parties did not create a fee contract that addressed the issue of who was entitled to what in the event that a trial did not take place, the question would have to be resolved by a finder of fact.

The opinion is linked here. (Mike Frisch)

April 11, 2011 in Billable Hours, Clients, Economics | Permalink | Comments (0) | TrackBack (0)

Friday, January 28, 2011

With Or Without Cause

The New York Appellate Division for the First Judicial Department reversed an order dismissing the claim of discharged counsel for a share of fees:

It appears that plaintiffs discharged appellants less than five months after the action was commenced. Whether or not appellant was investigating and conducting discovery as to other potential defendants, as appellant claims, cannot be discerned from the record. The parties submitted starkly contrasting versions of the events which led to appellant's discharge. The general rule is that a hearing is required to determine if an attorney was discharged for cause or without cause before the completion of his services (see Hawkins v Lenox Hill Hosp., 138 AD2d 572 [1988]). It is not clear from the record whether or not the motion court ever provided appellant with the opportunity to present and cross-examine witnesses. Accordingly, the matter is remanded for a hearing before the motion court to determine the issue of whether or not appellant was discharged for cause.

The fee entitlement claim was brought in the underlying civil case rather than as a separate action. (Mike Frisch)

January 28, 2011 in Billable Hours | Permalink | Comments (0) | TrackBack (0)

Friday, December 24, 2010

Withdrawal Granted For Substantial Fianancial Hardship

From the web page of the Rhode Island Supreme Court:

NAIAD Inflatables of Newport, Inc. (NAIAD), engaged the law firm of Duffy & Sweeney, Ltd. (D&S) to defend it in a civil lawsuit brought in 2005 by the plaintiff, Stafford J. King, III.  Soon, however, NAIAD became delinquent in its financial obligations to D&S.  Concerned with both a large receivable and a looming trial date, D&S filed a motion to withdraw from the case.  This motion was unopposed by the client or by opposing counsel.  A justice of the Superior Court denied the firm’s motion.  On the grounds of abuse of discretion by the hearing justice, the law firm timely appealed.

 D&S filed a motion to withdraw based upon NAIAD’s failure to fulfill its financial obligations under the engagement agreement.  Supported by an affidavit of counsel, the motion was properly certified and forwarded to all parties of interest in compliance with the Rules of Civil Procedure.  Providing its client with ample notice, D&S made numerous requests for payments, sent reminder invoices, and warned NAIAD that D&S—based on a signed engagement agreement between the parties—would seek to withdraw as counsel if the client failed to bring the balance current.  Further, D&S informed NAIAD that it would have the right to object before the Superior Court in the event that such a motion was filed.  Denying the unopposed motion, the hearing justice cited Article V, Rule 1.16 of the Supreme Court Rules of Professional Conduct, and ruled that granting the motion would have a “materially adverse effect” on the interests of the clients.

In reversing the Superior Court’s denial of counsel’s motion to withdraw, the Supreme Court said that the hearing justice did not accord adequate weight to the hardship and substantial financial burden that would befall D&S if the law firm were required to continue in its representation of a nonpaying client.  Moreover, the Court was of the opinion that the law firm’s request to withdraw was not presented at such a critical point in the litigation process that withdrawal would be detrimental to either the court or the client.

The opinion is linked here. (Mike Frisch)

December 24, 2010 in Billable Hours, Clients, Current Affairs, Economics | Permalink | Comments (0) | TrackBack (0)

Thursday, August 26, 2010

Pro Se Attorney Gets Paid

The Oregon Supreme Court has held that a prevailing pro se attotney in a case seeking disclosure of public records is entitled to reasonable attorney's fees:

...we agree with plaintiff that the term "attorney fees," as used in ORS 192.490(3), means the reasonable value of legal services provided by an attorney in seeking the disclosure of public records.  Plaintiff is a practicing attorney who performed legal services in pursuit of disclosure of public records, and plaintiff is therefore entitled to recover from defendant the reasonable value of those services, despite the fact that he acted pro se

(Mike Frisch)

August 26, 2010 in Billable Hours | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 28, 2010

A Private Matter

The Maryland Court of Appeals has held that fees awarded in debt collection matters are not determined by the lodestar method. Homeowners associations had sought review of fee awards arguing  that the method was appropriate. The court here disagreed, noting that the litigation was "strictly a private matter and does not address any broader public ills. " Thus, the starting point in determining an award in a fee-shifting situation is Rule 1.5 of the Rules of Professional Conduct. (Mike Frisch)

July 28, 2010 in Billable Hours, Economics, Law & Business | Permalink | Comments (0) | TrackBack (0)

Thursday, July 8, 2010

Flat Fees In D.C.

The Legal Ethics Committee of the District of Columbia Bar has issued an opinion explaining the proper handling of flat fees. the opinion considers the impact of a recent opinion of the D.C. Court of Appeals on the subject. The summary:

In its decision in In re Mance, 980 A.2d 1196 (D.C. 2009), the District of Columbia Court of Appeals held that, absent informed consent from the client to a different arrangement, a lawyer must deposit a flat or fixed fee paid in advance of legal services in the lawyer’s trust account. Under Mance, such funds must remain in the lawyer’s trust account until earned unless the client gives informed consent to a different arrangement. This Opinion provides guidance for the Bar concerning these rulings. 

The lawyer and client may agree on how and when the attorney is deemed to have earned some, or all, of the flat fee and thereby entitled to transfer trust funds into the lawyer’s operating account. Such an agreement must bear a reasonable relationship to the anticipated course of the representation and must avoid excessive “front–loading.” A written agreement or a writing evidencing the agreement is strongly recommended but not mandatory. In the absence of any agreement with the client regarding milestones by which the lawyer will have earned portions of the fixed fee, the lawyer will have the burden to establish that whatever funds that have been transferred to the lawyer’s operating account have been earned. 

Alternatively, a lawyer may place unearned funds in an operating account provided that the lawyer obtains informed consent from the client as provided in Rule 1.15(e). In order to obtain such consent, the lawyer must explain to the client that the funds may also be placed and kept in a trust account until earned and that placement in an operating account does not affect a lawyer’s obligation to refund unearned funds if the client terminates the representation. The lawyer should also explain the additional protection offered by a trust account. For the lawyer’s and client’s protection, these disclosures should be in writing, but the Rules do not mandate a writing.

The Mance opinion is linked here. (Mike Frisch)

July 8, 2010 in Billable Hours, The Practice | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 14, 2010

"Neither Tortious Nor Criminal" To Bad Mouth Co-Counsel

The dismissal of a suit involving a dispute between attorneys who had jointly represented a client was affirmed by the New York Appellate Division for the First Judicial Department. The court described the claims:

At issue is the propriety of the motion court's dismissal of an attorney's claims under the theories of quantum meruit, as well as tortious interference with advantageous economic relationships. Both plaintiff Robert Steinberg and defendant Stanley Schnapp are attorneys admitted to practice in New York. Non-party Leon Baer Borstein also is an attorney, and was the preliminary executor of the estate of Isi Fischzang.

At least three documents relevant to this appeal appear in the record. In an undated and unsigned writing, Borstein advised that he had retained both Steinberg and Schnapp "as my attorneys with respect to all legal proceedings and asset administration concerning the wills, assets and estate of the late Isi Fischzang." Borstein also prepared a document dated September 2007, and entitled "Contract of Employment of Attorneys at Law." It provided that Steinberg was to serve as "trial counsel for all litigation issues," while Schnapp was designated as "the general counsel for the fiduciary and estate, with respect to all litigation proceedings concerning the wills, assets and estate of the late Isi Fischzang." There is also a June 2007 document, offered in reply papers from Schnapp, and signed by Borstein, in which Borstein also advises that he retained both Schnapp and Steinberg. In none of these documents, or in any other contained in the record, is there any suggestion of privity between Schnapp and Steinberg.

The arrangement among the attorneys did not last long, and on March 12, 2008 Steinberg instituted the action which gives rise to this appeal. He asserted two causes of action against Schnapp for quantum meruit and interference with advantageous economic relationships. In the quantum meruit cause of action he alleged that he had performed professional legal services for Schnapp at Schnapp's "special instance and request," but in connection with the Fischzang estate. He further alleged that he was orally retained by Schnapp, and that Borstein had confirmed the retainer in a writing. The services for which he seeks payment were services performed in conjunction with the estate, including two appearances in Surrogate's Court and negotiations with lawyers representing the decedent's widow.

In the claim for tortious interference Steinberg alleges that he was fired because the "underlying client" (Borstein) had become dissatisfied with the delays in the probate of the estate, but that Schnapp fired Steinberg to shift the blame for the delays to Steinberg. Notably, Steinberg acknowledges that the "underlying client" could have requested his discharge "whimsically or capriciously or for any reason or for no reason, but the discharge would remain without cause.'" His concern that there is an intimation that his termination was "for cause" apparently provides much of the impetus for this litigation.

As an at-will employee of the client, the attorney has no cause of action against co-counsel:

Steinberg intimates in his complaint that Schnapp failed to communicate certain problems concerning the probate of the estate to Borstein, but left Steinberg to incur the client's dissatisfaction. His concerns are amplified in his affidavit in opposition to the motion for summary judgment, in which he suggests that any fees he earned are being withheld as a result of allegations made by Schnapp concerning the quality of his work. The specifics are not offered. At best, Steinberg is suggesting that Schnapp made an inaccurate statement about the quality of Steinberg's work, which statement led Borstein to terminate the attorney relationship, a relationship that is terminable at will, in any event. Such statements would be neither tortious nor criminal.

(Mike Frisch)

 

April 14, 2010 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, March 18, 2010

Fee Sharing Agreement Does Not Create Joint Venture

The Maryland Court of Appeals addressed the implications of a fee sharing agreement between two attorneys pursuing a medical malpractice case. Attorney One referred the matter to Attorney Two early in the prosecution of the case. They entered into an arrangement by which the division of fees was based on the "anticipated division of services to be rendered." Attorney Two had primary responsibility and Attorney One was to assist as requested by Attorney Two.

While the claim was in negotiations, Attorney Two advised the clients that they might have a legal malpractice case against Attorney One.  The underlying medical malpractice case then settled for $225,000. Attorney Two paid Attorney One one-half of the fee.

Attorney One then sued Attorney Two on a variety of contract and tort theories alleging breach of good faith, fair dealing and disclosure duties. The circuit court granted summary judgment to Attorney Two. The Court of Special Appeals affirmed. Here, the Court of Appeals agreed, concluding that Attorney Two fulfilled her covenant of good faith and fair dealing by delivering to Attorney One his proportionate share of the fee.

The court held that the fee sharing agreement did not establish a joint venture with the resulting fiduciary obligations that would apply to such ventures. The court agreed that the tort claims failed because, among other things, Attorney Two "could not tortiously interfere with an economic relationship to which she was a party." (Mike Frisch)

March 18, 2010 in Billable Hours, Law & Business | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 9, 2010

Claims Against Referring Firm Reinstated

A law firm that had represented a client sued the client for unpaid fees. The plaintiff firm also sued the law firm that had referred the client, claiming that the defendant law firm had represented that their clients (the Nassers) guaranteed payment of their fees. Plaintiff appealed the dismissal of claims against the referring law firm.

The New York Appellate Division for the First Judicial Department held that the claims were viable:

The complaint alleges that defendants-respondents represented to plaintiff law firm that they had authority from the Nassers to promise payment of $75,000 of the legal fees incurred by plaintiff's client when, in fact, they lacked the authority to bind the Nassers. Thus, the complaint alleges a viable claim for breach of the implied warranty of authority. The complaint also alleges that defendants-respondents falsely represented to plaintiff law firm that they specifically discussed the subject matter of their authority and representations with the Nassers. Thus, the complaint alleges a viable clam for tortious misrepresentation of authority and assurances of payment.

To the extent the motion court relied on the principle of apparent authority, lack of consideration and the statute of frauds to dismiss these causes of action, such was error. The doctrine of apparent authority is irrelevant because the fourth and fifth causes of action are not seeking to hold the principals (the Nassers) liable on the ground that defendants-respondents had apparent authority from the Nassers to make promises of payment. Rather, these causes of action are seeking to hold the agents, defendants-respondents, liable for contracts or representations they purported to make on behalf of the principal (the Nassers) while acting without authority from the principal. Therefore, the fact that the Nassers never manifested to plaintiff law firm that defendants-respondents were authorized to act on the Nassers' behalf has no bearing on the viability of the fourth and fifth causes of action. Moreover, regardless of whether or not there was consideration running to the Nassers, defendants-respondents can still be held liable for their own tortious conduct in making deliberate misrepresentations of fact that they had authority to make the promises that the Nassers would pay $75,000 of the legal fees incurred by plaintiff's client (see Restatement (Third) of Agency §§ 6.10, 7.01 [2006]). In addition, the statute of frauds does not come into play since the fourth and fifth causes of action are not seeking to enforce the unwritten agreement by the Nassers to pay plaintiff's client's legal fees against the Nassers. These causes of action state a claim against the defendants-respondents regardless of whether there is an enforceable contract with the Nassers.

The sixth cause of action against defendants-respondents for tortious interference with defendant Jacques Nasser's contract with plaintiff law firm to pay $37,500 of the legal fees incurred by plaintiff's client was also improperly dismissed by the motion court. In order for there to be a viable claim there must be a valid contract between Jacques Nasser and plaintiff law firm. Pursuant to General Obligations Law § 5-701(a)(2), every agreement, promise or undertaking which is a special promise to answer for the debt of another is void unless it is in writing. Under a long-standing exception to the statute of frauds, however, the promise need not be in writing if it is supported by new consideration moving to the promisor and beneficial to him, and the promisor has become in the intention of the parties a principal debtor primarily [*3]liable (see Martin Roofing v Goldstein, 60 NY2d 262, 264 [1983], cert denied 466 US 905 [1984]; Carey & Assoc. v Ernst, 27 AD3d 261 [2006]). At the very least, the allegations in the complaint raise an issue of fact concerning whether Jacques Nasser agreed to act as a guarantor in the event plaintiff's client did not pay her legal fees, in which case there was no enforceable contract, or whether in seeking to secure the benefit of the cooperation of plaintiff's client in connection with the lawsuit against him by her employer, Jacques Nasser offered to lift the burden of the obligation to pay legal fees from plaintiff's client and pay the law firm directly, in which case the contract would not be barred by the statute of frauds (see Rowan v Brady, 98 AD2d 638, 639 [1983]). Therefore, the sixth cause of action for tortious interference with contract is reinstated.

Finally, the motion court erroneously dismissed the seventh cause of action against defendants-respondents which alleges tortious interference by defendants-respondents with the attorney-client relationship between plaintiff law firm and its client, defendant Srour. Insofar as the complaint alleges that defendants-respondents, knowing that Srour was represented by plaintiff law firm, met with Srour alone, without informing plaintiff law firm of the meeting, and approximately three days later, Srour discharged plaintiff law firm, it is sufficient at this stage of the proceedings, to state a viable claim, and therefore the seventh cause of action is reinstated.

(Mike Frisch)

March 9, 2010 in Billable Hours, Law & Business, Law Firms | Permalink | Comments (0) | TrackBack (0)

Thursday, March 4, 2010

Termination, Not Hints, Triggers Wrongful Discharge Claim

The District of Columbia Court of Appeals affirmed the dismissal of a former law firm associate's claim of failure to accommodate a disability on grounds that the claim was time-barred. However, the court reversed the dismissal of a related claim of wrongful discharge and remanded that claim for trial on the merits.

The associate was hired by the law firm in 2000. While attending a firm trial training program in April 2001, her dominant hand was burned. She suffered extreme pain and medical limits on her activities and took a month leave of absence for treatment. She requested a number of accommodations on her return and alleges that she was told by her supervisor "that if she was still injured, she was 'of no use to anyone.' " After a second leave of several months, she claimed that she was told not to seek substantive billable work until she could work without restrictions. There were further requests for accommodations and performance reviews. The associate attorney received notice of discharge from the firm in late October 2002.

The court here concludes that the statute of limitations for wrongful discharge began to run with the formal termination. Earlier threats or hints of poor performance do not trigger the statute. (Mike Frisch)

March 4, 2010 in Billable Hours, Law & Business, Law Firms | Permalink | Comments (0) | TrackBack (0)

Friday, February 26, 2010

Incoming 93, Outgoing 7

In an action between two attorneys fighting over the division of a contingent fee, the New York Appellate Division for the First Judicial Department affirmed the lower court's 93-7% split:

The client was injured while a passenger in a car that was involved in a one-car, out-of-state accident. Outgoing counsel argues that having performed the work necessary to obtain the $25,000 offer under the driver's policy, which exhausted the limits of the driver's policy, it performed all the preparatory work that was necessary for incoming counsel's $1,470,000 settlement of the underinsured claim under the client's policy. We reject that argument and find ample support in the record for the Special Referee's implicit finding that outgoing counsel's work contributed very little to the underinsured settlement...

While outgoing counsel prepared a summons and complaint against the driver and sent it to a process server, the next day, after the driver's carrier offered its $25,000 policy and confirmed that there was no excess coverage, outgoing counsel instructed the process server not to serve the driver, and advised the client that the offer should not be accepted without first obtaining the underinsured carrier's consent so as not to jeopardize the underinsured claim that outgoing counsel intended to make. It was incoming counsel, however, that contacted the underinsured carrier's adjuster, who had the authority to give such consent, unlike outgoing counsel, that merely contacted the driver's broker. And it was incoming counsel that resolved the adjuster's concern with underinsured coverage issues, such as whether the driver was a member of the client's household and whether there was additional coverage on other vehicles owned by the driver's family, both conditions to obtaining the underinsured carrier's consent to settlement of the claim against the driver.

Furthermore, unlike outgoing counsel's requests for medical records, incoming counsel's requests were effective, and unlike outgoing counsel, incoming counsel substantiated its investigation of the possibility of a products liability case. Although the action commenced by incoming counsel against the driver may not have been necessary, and although incoming counsel initially sought the wrong type of arbitration against the wrong insurer, these do not appear to have involved undue expenditures of time. We note the parties' stipulation that incoming counsel was to have no claim to the one-third contingency fee on the $25,000 offer.

(Mike Frisch)

February 26, 2010 in Billable Hours | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 9, 2010

Equitable Considerations

The New York Appellate Division for the First Judicial Department held that a law firm was not entitled to interest on an arbitration award and had acted in contravention of duties regarding entrusted funds. The law firm was awarded $30,000 less than it had claimed but did not disburse the balance to the client. The court concluded that the law firm should not benefit from its conduct:

..[law firm] petitioner is not entitled to post-award, pre-judgment interest since it was holding the $310,000 at issue in escrow and chose not to avail itself of the funds when the arbitrators' award of $280,000 became final. Although petitioner asserts that it could not pay itself from the escrowed funds without respondent's consent and also asserts that appellant never gave its consent, the relevant [ethics] rule...does not require client consent under these circumstances. To the contrary, it provides that the lawyer may withdraw the funds being held upon final resolution of the dispute. Nonetheless, when the award became final, petitioner did not pay itself the amount of the award and transmit the balance (approximately $35,000) to respondent. Rather, in addition to seeking respondent's written authorization for payment of the award from the escrow account, petitioner improperly sought to obtain a benefit from its former client by refusing to transmit the balance unless respondent and its principal executed releases. The balance belonged to respondent and petitioner had no legal claim to it. Accordingly, petitioner was required to "promptly pay" to respondent the funds to which it was entitled after the arbitrators' award became final...

In short, petitioner both deprived itself of the use of the funds awarded to it and deprived respondent of the use of the balance of the funds being held in escrow. Under settled law, petitioner's statutory right to interest is far from absolute. To the contrary, as then Justice Bergan stated for a panel of this Court, "[t]he holder of the judgment may be estopped by equitable considerations, or by his own acts, from enforcing the interest which the statute gives him" ...Given the "special and unique duties" petitioner owed to respondent, including "safeguarding client property and honoring the client['s] interests over [its own]"... we think it would be particularly inequitable to require respondent to pay statutory interest to petitioner and thus recompense petitioner for its own failure to pay itself. (citations omitted)

Because petitioner was holding more than the $280,000 it was awarded by the arbitrators on the date the award became payable, March 13, 2007, respondent is entitled to the balance that would have remained in the escrow account after payment of the award on that date, with interest on such balance from that date. In addition, because Supreme Court erred in awarding interest to petitioner and respondent was thereby required to pay an additional sum to petitioner to satisfy the judgment, respondent is entitled to the amount it paid over $280,000 to satisfy the judgment with interest from the date the sum was paid.

(Mike Frisch)

February 9, 2010 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 15, 2009

No Agreement To Arbitrate

An attorney was hired as "of counsel" of another attorney under a one-year employment contract on November 1, 2005. The contract authorized discharge for cause and had an arbitration clause. The employment relationship had "issues" but extended past the fixed term. Eventually, the employed lawyer was discharged with notice given in August 2007. The parties disagree as to the reasons. The employed lawyer sued the employing lawyer on claims that included wrongful discharge. The employing lawyer moved to dismiss, invoking the arbitration clause.

The Washington State Court of Appeals, Division I held that the there was no basis to conclude that the lawyers agreed to extend the arbitration provision beyond the fixed term:

Where a fixed-term employment contract expires and the employee continues to render the same services provided under the previous agreement, a court will presume that the employee is serving under a new, implied contract having the same terms and conditions as contained in the expired contract. However, where it is clear that the implied contract does not have the same terms and conditions as the earlier agreement, there is no basis
to presume that the contracting parties necessarily renewed any specific term of
the prior agreement. Because the evidence in the record and the pleadings
herein establish that Judith Lonnquist and Reba Weiss did not completely renew
the terms of Weiss's written, fixed-term employment contract after Lonnquist
terminated it, there is no basis to presume that the parties subsequently entered
into an implied agreement to arbitrate Weiss's employment-related claims as was provided for in the terminated contract. Inasmuch as a court cannot compel litigants to arbitrate claims unless they agreed to do so, the trial court correctly denied Lonnquist's motion to compel arbitration. Accordingly, we affirm.

(Mike Frisch)

December 15, 2009 in Associates, Billable Hours, Law Firms | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 24, 2009

Bedrock Of Lawyer-Client Relationship

The New Jersey Appellate Division affirmed in part and reversed in part a judgment awarding the plaintiff law firm for reasonable attorneys' fees and expenses arising out of the representation of the defendant former client. The amount of the awrd was remanded to determine which fees and expenses were incurred pursuant to a retention letter exclusive of sums due under a master retainer agreement. The court sets the stage for its decision:

This case focuses on the attorney-client relationship, especially its bedrock, the retainer agreement. It is a unique and extraordinary association. The attorney-client relationship has been a fertile source for authors over the years. It has spawned books, poems, plays, and movies. Literature on this topic includes fiction and non-fiction, tragedies and comedies. To resolve this case, we are obligated to review the long-established statements and principles of law concerning the attorney-client relationship and to analyse, in particular, the attorney's obligation to his potential client in finalizing the retainer agreement.

The law firm was initially contacted by the client for advice about possible ethics violations of opposing counsel, who represented the Bank of America in litigation against the client. The client signed a retainer agreement that made reference to, but did not append, the firm's master retainer agreement. The client did not see that agreement until seven months after signing the retention latter. The terms imposed by the master retainer agreement were at issue here.

The court held that the master retainer agreement was unenforceable and that fees associated with the law firm's pro se representation of itself may not be recoverable. (Mike Frisch)

November 24, 2009 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Saturday, November 14, 2009

Modified Fee Agreement Upheld

The Alaska Supreme Court affirmed the grant of summary judgment to a law firm in a dispute over the modification of a fee agreement. The clients were injured when the stairs to their rooms at a resort collapsed. They entered into a contingent fee agreement with the law firm. The agreement provided for a 25% fee if the matter was resolved before a complaint was filed, 33% after the complaint and 40% after the filing of an appeal.

The case was complicated by the bankruptcy of the defendant. The clients and law firm entered into a modified fee agreement and the case eventually settled for slightly over $1.231 million. The clients and law firm had a substantial disagreement over the computation of the fee. As required by ethics rules, the law firm paid the undisputed portion of the client's share and retained the disputed amount in a trust account. The trial court found for the law firm.

Here, the court rejected claims that the amended agreement was improper and violated the rules of professional conduct. The trial court had properly resolved any contract ambiguities against the law firm in awarding judgment and was not clearly erroneous in its interpretation of the phrase "further substantial litigation" in the modified agreement. (Mike Frisch)

November 14, 2009 in Billable Hours | Permalink | Comments (1) | TrackBack (0)