Friday, May 16, 2014
An Illinois Hearing Board has proposed a suspension of three years and until further order in a case involving misuse of entrusted funds.
The attorney's explanation?
His mother did it:
Although Respondent denied committing misconduct, he acknowledged using funds that had been improperly transferred from his IOLTA account into his business account. Respondent claimed his mother, who was 82 years of age at the time of the hearing, transferred the funds without his knowledge. Respondent also claimed his mother was responsible for fabricating the false bank statements he submitted to the ARDC.
The Hearing Board did not believe the testimony of Respondent and his mother and found Respondent committed all of the charged misconduct. Specifically, the Hearing Board found Respondent failed to promptly deliver to a client or third person funds that the client or third person is entitled to receive, engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, knowingly made a false statement of material fact to a third person, knowingly made false statements of material fact in connection with a disciplinary matter, and engaged in conduct prejudicial to the administration of justice.
The Hearing Board found a substantial amount of aggravation, including Respondent's false testimony in this proceeding, pattern of dishonesty, and failure to recognize his misconduct. There was minimal mitigation. After considering the proven misconduct and case law, the Hearing Board recommended that Respondent be suspended for three years and until further order of the court and that he be required to pay restitution within six months of the final order of discipline.
Thursday, April 3, 2014
The New York Court of Appeals has held favorably to an attorney in a case that presented this issue
This appeal concerns the appropriate treatment of statutory counsel fees awarded under the New York City Human Rights Law where the contingency fee agreement does not explicitly mention statutory fees. We hold that, absent a contract term expressly providing for a different distribution, an attorney is entitled to the greater of either the contingency fee or the statutory award.
The case involved former police officer two clients who retained counsel to sue New York but later became dissatisfied. The attorney sought declatatory relief when a dispute arose with the clients over her fees.
...in light of their unequivocal terms, the Appellate [Fee] Agreements should be enforced as written. Because the statutory appellate fees exceeded the contracted-for minimum of $20,000 per appellant, per appeal, [attorney] Dorman is entitled to receive those court-ordered fees in their entirety. As for compensation owed to Dorman for her representation at trial, she is entitled to collect either one third of the jury award, or the statutory trial fees, whichever is greater.
Saturday, February 22, 2014
The Alaska Supreme Court affirmed an arbitration award in a claim against an attorney brought by the girlfriend of a former client.
The court held that the former client's claim that the award was procured by fraud was not reviewable.
In doing so, I would respectfully suggest, the court gives cold comfort to former clients who invoke the Bar's arbitration procedures and expect a decent result.
The attorney was retained (through the girlfriend) to represent the defendant on federal drug charges.
At the arbitration, they testified that they understood the fee arrangement was $25,000 if the matter did not go to trial, $50,000 if there was a trial and $75,000 if the trial required experts.
The attorney was paid $75,000 in cash up front. The cash was wrapped in a grocery bag.
The client pleaded guilty on the morning of trial. He sought return of "at least" $50,000. The attorney refused, claiming that the arrangement was for a flat, non-refundable fee.
At the arbitration, the attorney produced a purported fee agreement to support his "non-refundable" claim. The client and girlfriend denied that the agreement was genuine and claimed fraud. The girlfriend asserted that she had not signed it.
The arbitration panel found the fee to be reasonable. While the arrangement may have violated ethical rules governing fees, the panel accepted the attorney' version of the fee arrangement and told the client that he could complain to the bar counsel about the potential ethics rule violations.
The court here found that the courts no authority to review the client's claim that the award was procured by fraud.
The attorney thus gets to keep the $75K (and presumably the grocery bag).
To put it mildly, the Bar's fee arbitration process worked very well from the point of view of the lawyer. For the client, not so much.
The court offered little recourse even where the fee may have violated Rule 1.5. (Mike Frisch)
Friday, November 8, 2013
A single retainer agreement sufficed to cover a second matter and entitled counsel to legal fees, according to a decision of the New York Appellate Division for the First Judicial Department:
The record establishes plaintiff's entitlement to recover the unpaid legal fees that arose from its representation of defendants in two underlying actions. Contrary to defendants' contention, the subject retainer agreement governs plaintiff's work on both underlying matters. In compliance with 22 NYCRR 1215.1, which mandates that retainer agreements contain an "explanation of the scope of the legal services to be provided" (22 NYCRR 1215.1[b]), the agreement specifies that plaintiff's services "will include legal representation and advice with respect to specific matters that you refer to the Firm." Although defendants initially sought plaintiff to represent them in only one of the underlying actions, it is undisputed that they requested plaintiff's services with respect to the other action, shortly thereafter. Plaintiff's representation of defendants in the latter matter therefore falls within the ambit of the retainer.
The client did not challenge the invoices when rendered and could thus not attack the reasonableness of the fees. (Mike Frisch)
Thursday, October 31, 2013
If you are a New York attorney and wish to be paid under a contingency fee agreement in a medical malpractice action, it is prudent to file the agreement with the Office of Court Administration in a timely manner --within 30 days.
That lesson emerges from a case decided yesterday by the New York Appellate Division for the Second Judicial Department.
Lawyer One retained Lawyer Two to assist in the litigation. When the case was resolved, Lawyer Two contended that Lawyer One had shortchanged him.
Lawyer Two had inadvertantly failed to file the required papers. Fortunately for him, the court excused the lapse:
In exercising its discretion to extend the time to file the subject retainer statement pursuant to CPLR 2004, a court may consider such factors as the length of the delay, the reason or excuse for the delay, and any prejudice to the person opposing the motion. Here, the reason for the delay, in effect, [Lawyer Two's law office failure, was an isolated, inadvertent mistake and there is no prejudice to [Lawyer One], as the remaining contractual contentions will be resolved in connection with any separate plenary action that may be commenced. Accordingly, the Supreme Court providently exercised its discretion in permitting the filing of a retainer statement nunc pro tunc by extending the time to do so for "good cause" shown (citations omitted)
Wednesday, October 23, 2013
The Washington State Court of Appeals, Division II has reversed and remanded a trial court order denying an attorney's motion to withdraw from the representation of the plaintiffs in a medical malpractice case.
The clients, after an initial payment, had failed to satisfy obligations under the fee agreement to pay costs. The attorney had advanced significant sums for experts and depositions in the litigation.
Further representation would result in an unreasonable financial burden on [the attorney] and that with their dispute over fees and the resulting professional conflict, the [clients] rendered [the attorney's] representation unreasonably difficult...This is not one of those rare cases where [the attorney's] withdrawal would have harmed the efficiency of the judicial system, and we do not see that her withdrawal would have had a materially adverse effect on the [clients'] interests. Trial had not been set and there were no dispositive motions before the court when [the attorney] moved to withdraw.
The attorney had given notice of her intent to withdraw with ample time to secure new counsel. In fact, successor counsel was eventually retained.
That fact did not moot the withdrawal issue, according to the court.
The court concluded that the trial court abused its discretion in denying the motion to withdraw and remanded for entry of an order granting withdrawal as of June 15, 2012. (Mike Frisch)
Thursday, September 5, 2013
The Illinois Administrator has filed a complaint alleging two counts of misconduct on the part of the accused attorney.
One count alleges that the attorney violated her duty of confidentiality by responding to a client's unfavorable review of her services:
On or about September 6, 2012, Respondent agreed to represent Richard Rinehart ("Rinehart") in matters related to Rinehart's securing unemployment benefits from his former employer, American Airlines. Shortly before hiring Respondent, American Airlines had terminated Rinehart's employment as a flight attendant because Rinehart allegedly assaulted a fellow flight attendant during a flight. At that time, Rinehart paid Respondent $1,500 towards her fee.
Between September 6, 2012 and January 16, 2013, Respondent met with Rinehart on at least two occasions and obtained information from Rinehart concerning his employment history at American Airlines and information concerning the alleged incident involving the other flight attendant. Respondent also reviewed Rinehart's personnel file, which she had obtained from American Airlines.
On or about January 16, 2013, Respondent represented Rinehart at a telephonic hearing before the Illinois Department of Employment Security ("IDES"), which resulted in the IDES denying Rinehart unemployment benefits. Shortly thereafter, Rinehart terminated Respondent's representation of him.
On or about February 5, 2013, Rinehart posted a client review of Respondent's services on the legal referral website AVVO, in which he discussed his dissatisfaction with Respondent's services. Rinehart stated in the posting that "She only wants your money, claims "always on your side" is a huge lie. Paid her to help me secure unemployment, she took my money knowing full well a certain law in Illinois would not let me collect unemployment. [N]ow is billing me for an additional $1500 for her time."
Between February 7, 2013 and February 8, 2013, Respondent contacted Rinehart by email and requested that Rinehart remove the February 5, 2013 posting about her on AVVO. Rinehart responded that he refused to remove the posting unless he received a copy of his files and a full refund of the $1,500 he had paid.
Sometime between February 5, 2013 and April 10, 2013, AVVO removed Rinehart's posting from its online client reviews of Respondent.
On or about April 10, 2013, Rinehart posted a second client review of Respondent on AVVO. In the April 10, 2013 posting, Rinehart stated that "I paid Ms. Tsamis $1500 to help me secure unemployment while she knew full well that a law in Illinois would prevent me from obtaining unemployment benefits."
On or about April 11, 2013, Respondent posted a reply to Rinehart's April 10, 2013 client review. In that reply Respondent stated that:
"This is simply false. The person did not reveal all the facts of his situation up front in our first and second meeting. [sic] When I received his personnel file, I discussed the contents of it with him and informed him that he would likely lose unless the employer chose not to contest the unemployment (employers sometimes do is [sic]). Despite knowing that he would likely lose, he chose to go forward with a hearing to try to obtain benefits. I dislike it very much when my clients lose but I cannot invent positive facts for clients when they are not there. I feel badly for him but his own actions in beating up a female coworker are what caused the consequences he is now so upset about."
By stating in her April 11, 2013 AVVO posting that Rinehart beat up a female coworker, Respondent revealed information that she had obtained from Rinehart about the termination of his employment. Respondent's statements in the posting were designed to intimidate and embarrass Rinehart and to keep him from posting additional information about her on the AVVO website.
Thursday, May 30, 2013
In a case dealing with a law firm's entitlement to fees in representing a divorce client, the New York Appellate Division for the First Judicial Department remanded in light of the non-compliance of the firm with with written retainer requirements:
Following arbitration, the law office commenced this action seeking unpaid legal fees in the amount of $83,775.69 and a trial was held on the claim. [Client] Blisko asserted that the retainer did not comply with 22 NYCRR 1400.3 because it did not state the "hourly rate of each person whose time" was charged to her, but rather only stated the hourly rate of [attorney] Eisenberger and made no mention of any other attorney working on the case. Blisko also contended that the retainer expressly stated that the law office's representation did not include being trial counsel. The trial court rejected Blisko's arguments and ordered her to pay $83,775.69 to the law office, in addition to the substantial amount she already had paid.
We modify because the law office should be denied any legal fees arising from representation of Blisko after the grounds trial commenced. The plain language of the retainer states that the law office's representation of Blisko includes work leading "up to" a trial, "but not including an actual trial." Indeed, the law office acknowledges that the retainer did not include representation at trial. Following the commencement of the trial on August 18, 2009, the retainer between the law office and Blisko terminated and plaintiff was representing Blisko without a written retainer.
The law office contends that, even if the retainer terminated when the trial began, it may still collect unpaid fees from Blisko because it substantially complied with the requirements of 22 NYCR 1400.3. The substantial compliance argument has no relevance to this issue because there was no trial retainer at all. If the law office wanted to be paid for representing Blisko at trial, it needed to have the client sign a new retainer. Moreover, there is no indication that the law office explained the limited nature of the retainer to the client, who then agreed to expand its scope to include the actual trial.
Although the law office cannot receive legal fees for any services completed after trial commenced, it may receive any outstanding unpaid fees for work completed prior to commencement of the actual trial. The law office substantially complied with the requirements of 22 NYCRR 1400.3 by giving the client the required statement of client rights and responsibilities and by listing the fee of the primary attorney. Blisko's testimony indicates that she was aware that more than one attorney was working on her case, and that she received bills reflecting the work of multiple attorneys.
Finally, as a general principle, the law office "need not return fees [it] properly earned." Although the retainer does not fully comply with 22 NYCRR 1400.3, the law office did complete work that was within the scope of the pretrial retainer, and therefore it is not required to return fees already paid to it for work completed before the trial. When a client is seeking the return of funds already paid to the attorney, the attorney does not need to show substantial compliance with 22 NYCRR 1400.3, but only that the fees paid were properly earned.
(citations omitted throughout)
Friday, May 24, 2013
The New York Appellate Division for the First Judicial Department has remanded a matter involving legal fees charged to and gifts received from a wealthy widow in an estate matter:
Beginning in 1983, defendant law firm represented the family of Sylvan Lawrence in litigation concerning the administration of his estate. In 1998, Alice Lawrence, Sylvan's widow, paid three of the firm's partners, the individual defendants, a bonus or gift totaling $5.05 million and also paid the firm $400,000 as a bonus or gift. By the end of 2004, the widow had paid, approximately $22 million in legal fees on an hourly fee basis.
In the hope of reducing her anticipated legal fees in the ongoing litigation, the widow entered into a revised retainer agreement with the law firm in January 2005. The revised retainer agreement provided, inter alia, for a 40% contingency fee. In May 2005, the estate litigation settled with a payment to the estate of more than $111 million and, in accordance with the revised retainer agreement, the firm sought a fee of 40% of that amount. When the widow refused to pay the 40% contingency fee, this litigation resulted, in which, among other relief, the return of the gifts the widow made in 1998 is sought.
The court held
The revised retainer agreement is both procedurally and substantively unconscionable (Lawrence v Graubard Miller, 48 AD3d 1, 6 [1st Dept 2007], affd 11 NY3d 558 ). The evidence shows that the widow believed that under the contingency arrangement, she would receive the "lion's share" of any recovery. In fact, as it operated, the law firm obtained over 50% of the widow's share of proceeds. Thus, the law firm failed to show that the widow fully knew and understood the terms of the retainer agreement — an agreement she entered into in an effort to reduce her legal fees...
In considering the substantive unconscionability of the revised retainer agreement, the Referee correctly considered such factors as the proportionality of the fee to the value of the professional services rendered, the sheer amount of the fee, and the risks and rewards to the attorney upon entering into the contingency agreement. With regard to the last factor, the law firm had internally assessed the estate's claims to be worth approximately $47 million so that the contingency fee provision in the revised retainer would have meant a fee of about $19 million. Contrary to the law firm's assertion, on this record it seems highly unlikely that the firm undertook a significant risk of losing a substantial amount of fees as a result of the revised retainer agreement's contingency provision. Rather, the Referee accurately characterized this attempt by the law firm to justify its action as "nothing but a self-serving afterthought."(citations omitted)
The amount the law firm seeks ($44 million) is also disproportionate to the value of the services rendered (approximately $1.7 million) (see Lawrence v Graubard Miller, 11 NY3d at 596). The record shows that the law firm spent a total of 3,795 hours on the litigation after the revised retainer agreement became effective, resulting in an hourly rate of $11,000, which, as the Referee stated, is "an astounding rate of return for legal services."
However, the remedy recommended by the Referee and adopted by the Surrogate — namely, a new "reasonable" fee arrangement for the parties — was improper. Where, as here, there is a preexisting, valid retainer agreement, the proper remedy is to revert to the original agreement. For the reasons found by the Referee, we reject the firm's suggestion that it receive a reduced contingency fee. Accordingly, the matter is remanded for the determination of the fees due the law firm under the original retainer agreement. Given that the firm is entitled to fees under the original retainer agreement, it is also entitled to prejudgment interest from the date of the breach. (citations omitted)
Because the individual defendants acted alone, and in secret from the rest of the law firm, with respect to the gifts, we decline to rule that such conduct by the individual defendants results in the firm's forfeiture of its lawful fees from the date the individual defendants received the gifts.
The Surrogate's Court (opinion linked here) had awarded the law firm fees in the amount of $15,837,374.02 but found that the gifts solicted by the attorneys (concealed from their law firm and the widow's children) emanated an "odor of overreaching too potent to be ignored." (Mike Frisch)
Monday, May 6, 2013
In a lawsuit involving a dispute between lawyers over the legal fees in a complex medical malpractice case, the Maryland Court of Special Appeals has held that
...we will apply the general rule that the termination of a contingency fee agreement terminates the fee-sharing agreement predicated on it. Because PGA [the law firm of Orioles owner Peter Angelos] is not entitled to a contingency fee, there is no contingency fee for Mr. Brault to share. Accordingly, to the extent the circuit court factored in the fee-sharing agreement, the circuit court's ruling must be vacated and remanded for further proceedings.
We stress that our decision in this case does not mean that Mr. Brault is not entitled to compensation for his work while the contingency arrangement was in effect. Like PGA, howver, his claim would be for the reasonable value of his services.
The case involved an attorney (Mr. Gately) who while with PGA undertook the representation of the client with assistance from other firm attorneys. Mr. Brault was brought in as co-counsel and a favorable verdict was obtained. The verdict was overturned on appeal.
Mr. Gately was then discharged from PGA. The client followed him and Mr. Brault. The case later settled for an undisclosed amount. PGA sued to enforce its lien. The disputed funds remained in escrow.
Mr. Gately acknowledged that no post-verdict effort had contributed to the settlement, which he attributed to an act of God.
The court here held that PGA had behaved ethically and was not deprived of it entitlement to fees.
The court also held that the discharged attorneys may properly sue successor counsel. (Mike Frisch)
Tuesday, March 26, 2013
The New York Court of Appeals has affirmed without discussion a judgment dismissing a claim for legal fees.
ThomsonReuters had this report on the decision of the Appellate Division:
Kasowitz Benson Torres & Friedman is not entitled to a multimillion-dollar fee stemming from its successful representation of drugstore chain Duane Reade, a divided New York state appeals court ruled Tuesday.
Kasowitz had claimed it was owed approximately $7 million for litigation over automated teller machine fees owed to Duane Reade.
In a 3-2 ruling, the Appellate Division, First Department, found that the two parties had negotiated a "precise" fee arrangement via email that did not permit Kasowitz to recover fees beyond a flat $1 million payment.
Alternative fee arrangements, rather than hourly fee structures, have become increasingly common in corporate litigation. But they can also lead to disagreements about interpretation.
The negotiations between Kasowitz and Duane Reade on the fee structure occurred with a simple email exchange, rather than a with formal contract, eventually leading to a dispute over the meaning of the emails.
Thursday, February 21, 2013
The Rhode Island Supreme Court affirmed the grant of summary judgment to an attorney in a suit for fees against a former client.
The attorney had represented the client in actions against her late father's estate for a 15% contingency fee.
After the claim was reduced to settlement, the attorney collected his fees as payments were recovered. The client later discharged the attorney and claimed no obligation to continue to pay.
The court found that the attorney's rights under the contingent fee agreement had fully vested when the underlying claim was settled. Although the client was free to discharge the attorney, such action "does not alter his entitlement to fees already earned." (Mike Frisch)
Saturday, February 2, 2013
An Alaskan Native corporation entered into a fee agreement with a law firm in connection with litigation over "its certification of and title to certain lands" under the Native Claims Settlement Act.
The contingent fee agreement gave the law firm an interest in the lands at issue.
After the client had prevailed, a bar arbitration panel found that the firm could not take the land, but was entitled to a fee payment equal to the land's value. A 1995 court judgment enforced the arbitration award. The client paid the law firm for several years.
The client eventually was unable to continue the payments and litigation ensued.
The Alaska Supreme Court held that the contingency agreement violated provisions of the Act and that the arbitration award was improper. The court noted tht the case presented "complex" issues as to whether the 1995 judgment was void or voidable.
The court ordered the law firm to return $643,760 in paid fees.
The firm may now establish its entitlement for fees under quantum meruit. (Mike Frisch)
Monday, January 28, 2013
The Wyoming Supreme Court has affirmed a district court judge's order reducing by half the payment to an attorney appointed to represent an indigent parent in a parental rights matter.
The court agreed with the district court that some of the attorney's billings were "patently excessive." For instance, the attorney had billed 47.57 hours for a Friday through Sunday.
In order to properly charge the claimed time, he would have to have not eaten, relieved himself or done anything else during the blocked time (citing an earlier case where that point was made).
On this record, we cannot escape the judgment that [the attorney's] litigation efforts became overkill.
The district court's 50% cut was an appropriately "practical means of trimming fat" from the fee application. (Mike Frisch)
Tuesday, September 25, 2012
The Tennessee Court of Appeals affirmed a trial court award of quantum meruit fees to a law firm discharged after being retained to pursue a damage claim against the Tennessee Valley Authority arising from a coal ash spill.
The clients followed a firm lawyer who left and set up her own practice. The underlying case was resolved and the attorney was paid her fee.
The clients then sued the law firm, seeking a judgment holding that they owed no fee to their former firm. The firm counterclaimed and contended that they were entitled to the full contingent fee.
The court found that the law firm was only entitled to payment for the work performed prior to the departure of the attorney and clients. (Mike Frisch)
Tuesday, August 7, 2012
The New York Appellate Division for the First Judicial Department affirmed the dismissal of a suit for legal fees:
This is a dispute over whether plaintiff Kasowitz law firm is entitled to a success fee in addition to the flat $1 million fee it has already received in connection with its representation of defendant Duane Reade. The issues are whether the parties' e-mails established a binding fee agreement, and whether the fee was to be limited to the moneys Duane Reade received in settlement of the underlying Cardtronics litigation, or was to encompass all of the benefits Duane Reade received from the termination of its ATM placement contract with Cardtronics, including increased revenues from Duane Reade's new ATM contract with JP Morgan Chase (Chase)...
...three e-mails constitute an integrated fee agreement (see Nolfi Masonry Corp. v Lasker-Goldman Corp., 160 AD2d 186, 187  ["a binding agreement may be assembled from more than one writing"]). By the plain language employed, they demonstrate that Kasowitz made an offer to represent Duane Reade in the Cardtronics case for a flat $1 million, plus a success fee equal to 20% of the amounts recovered above $4 million in that litigation, and that Duane Reade accepted that offer. Kasowitz is not entitled to a success fee under the terms of the fee agreement, since Duane Reade received total compensation of approximately $1.75 million — well below the $4 million threshold — as a result of the settlement of the Cardtronics action.
The dissent believes that the fee agreement is ambiguous as to the scope of the fee. The dissent reasons that the term "recover," as used in the September 8, 2006 e-mail, may reasonably be interpreted to encompass noncash resolutions, i.e. any value received as a result of the settlement of the Cardtronics action. However, in adopting this position, the dissent fails to consider the term "recovered" or "recovery" in the context of the e-mail as a whole, and improperly relies on extrinsic evidence, including Bergman's affidavits, in order to find ambiguity where none exists.
Tuesday, July 31, 2012
An award of fees to an attorney who sued his client in a matrimonial case was affirmed by the New York Appellate Division for the First Judicial Department:
"Where there has been substantial compliance' with the matrimonial rules, an attorney will be allowed to recover the fees owed for services rendered, but not yet paid for" (Edelman v Poster, 72 AD3d 182, 184 , quoting Flanagan v Flanagan, 267 AD2d 80, 81 ). The applicable rule, 22 NYCRR 1400.3, mandates that an attorney in a matrimonial matter file a copy of the signed retainer agreement with the court, along with the statement of net worth. Here, the record shows that a copy of the executed retainer was filed with the court on May 14, 2004, along with the updated statement of net worth. Even if plaintiff, as substituted counsel, should have filed the retainer within 10 days of its execution, he substantially complied with the requirements by filing the executed copy with the updated statement of net worth. Although it would have been better practice for plaintiff to have put proof of the filing in evidence on his direct case, his failure to do so does not change the fact that he substantially complied with the rule (see Kurtz v Kurtz, 1 AD3d 214, 215 ).
Defendant also argues that plaintiff's billing practices and willful spoliation of evidence should result in sanctions, and dismissal of his claims. Specifically, defendant argues that block billing was improper and that "task billing," which lists the time for each separate task and is an enhanced level of billing, should have been used. However, block billing is common practice among law firms and neither 22 NYCRR 1400.3 nor the retainer agreement calls for task based billing. Regarding the spoliation of evidence allegation, defendant contends that plaintiff intentionally destroyed a particular attorney's individual time sheets, thereby preventing her from using those records to impeach plaintiff. Plaintiff testified at trial that the information from that attorney's individual time sheets was entered into the firm's time entry system, then reviewed by him and incorporated into the firm's bills to defendant. In any event, the time sheets were not key evidence, and thus their alleged destruction did not deprive defendant of the ability to defend against plaintiff's claim for fees(Coleman v Putman Hops. Center, 74 AD3d 1009 , lv dismissed 16 NY3d 884 ). Accordingly, a spoliation sanction is not warranted.
Wednesday, June 13, 2012
The New York Appellate Division for the First Judicial Department affirmed the denial a former client's motion to dismiss to suit for legal fees, other than a claim of fraudulent inducement. The court also affirmed the denial of a motion to disqualify the plaintiff law firm from representing itself in the litigation.
The majority concluded:
It is well settled that "[t]he public policy of New York which permits a
client to terminate the attorney-client relationship freely at any time,
notwithstanding the existence of a particularized retainer agreement between the
parties, would be easily undermined if an attorney could hold a client liable
for fraud on the theory that the client misrepresented his or her true intent
when the retainer was executed" (Demov, Morris, Levin & Shein v
Glantz, 53 NY2d 553, 557 ). Accordingly, the motion court erred in
failing to dismiss plaintiff's cause of action for fraudulent inducement against
both the corporate and the individual defendant (Kaplan v. Heinfling, 136
AD2d 34, 39 , lv denied 72 NY2d 810 ).
The court correctly declined to dismiss the complaint pursuant to CPLR
3211(a)(4), because "[t]he three remedies of an attorney discharged without
cause — the retaining lien, the charging lien, and the plenary action in quantum
meruit — are not exclusive but cumulative" (see Levy v Laing, 43 AD3d 713, 715 ), and the attorney "does not waive her right to commence an immediate plenary action for a
judgment against her client by commencing a proceeding to fix the amount of her
charging lien" (Butler, Fitzgerald & Potter v Gelmin, 235 AD2d 218, 219 ). Moreover, "an attorney may enforce his lien in a court other than that before which his services were rendered" (see Nickel Rim Mines Ltd. v Universal-Cyclops Steel Corp., 202 F Supp 170, 176 [D NJ 1962]).
Contrary to the dissent's contention, the court also correctly declined to
dismiss plaintiff's cause of action for quantum meruit pursuant to CPLR
3211(a)(7). Plaintiff alleges that it was terminated without cause by
defendants, and received no compensation whatsoever for the three years of work
it performed on the case and the value it brought to the case. Specifically,
within its complaint, plaintiff pleaded that it "fully and faithfully performed
legal services for BanxCorp and Mehl," that when it "performed those legal
services for BanxCorp and Mehl, it reasonably expected to be compensated for
those services," that "BanxCorp and Mehl encouraged the [plaintiff] to provide them with legal services, participated in the [plaintiff's] provision of such services, and accepted the
benefits of the legal services the [plaintiff] provided to them," and that the
services "were rendered under circumstances in which BanxCorp and Mehl knew that
the [plaintiff] expected to be compensated for those services." Since a
plaintiff pleads a cause of action for quantum meruit when he alleges that (1)
services were performed in good faith, (2) the acceptance of the services by the
person to whom they were rendered, (3) an expectation of compensation therefor,
and (4) the reasonable value of the services (Fulbright & Jaworski, LLP v Carucci, 63 AD3d 487,
489 ; Nabi v Sells, 70 AD3d 252, 252 ; Soumayah v Minnelli, 41 AD3d 390, 391 ), based on the foregoing, plaintiff has adequately pleaded a cause of action for quantum
meruit against all the defendants. Fulbright doesn't avail Mehl since
there we dismissed plaintiff's cause of action for quantum meruit against the
corporate defendant's president insofar as plaintiff in that case failed to
allege three elements critical to a cause of action for quantum meruit
(Fulbright at 489).
From the dissent in part:
Plaintiff, a law firm, seeks to recover the reasonable value of services it
rendered while representing defendant BanxCorp, the plaintiff in BanxCorp v
Bankrate, Inc., an antitrust action that was filed in the United States
District Court for the District of New Jersey (Civil Action No. 07-3398).
Plaintiff rendered its services pursuant to a written contingency fee agreement
that was executed on behalf of BanxCorp by Mehl, its principal. The motion court
declined to dismiss the complaint as against Mehl on the sole ground that "a
corporate officer who participates in the commission of a tort can be held
personally liable even if the participation is for the corporation's benefit." Although it might have applied to the now dismissed fraud cause of action, the motion court's reasoning
has no application to the quantum meruit claim, the only remaining cause of
action. This is because quantum meruit is not a theory of tort liability.
Plaintiff's rationale for piercing BanxCorp's corporate veil is equally
unavailing. "The party seeking to pierce the corporate veil must establish that
the owners, through their dominion, abused the privilege of doing business in
the corporate form to perpetrate a wrong or injustice against that party such
that a court in equity will intervene" (Matter of Morris v New York State
Dept. of Taxation & Fin., 82 NY2d 135, 142 ). An inference of
abuse, however, does not arise "where a corporation was formed for legal
purposes or is engaged in legitimate business" (Credit Suisse First Boston v Utrecht-America Fin. Co., 80 AD3d 485, 488  [citation omitted]). Here, plaintiff makes no claim of
such illegality or illegitimacy with respect to BanxCorp's formation or
business. In fact, it is alleged in the antitrust complaint, drafted by
plaintiff, that BanxCorp is in the business of providing bank rate tables
listing interest rates for financial institutions (see BanxCorp v Bankrate,
US Dist Ct, D NJ, 07 Civ 3398, Wigenton, J., 2008). Plaintiff seeks to
pierce the corporate veil on the basis of assertions that Mehl dominated
BanxCorp and used its credit lines for his personal needs. These allegations do
not amount to anything that can be construed as the use of BanxCorp's corporate
form to perpetrate a wrong against plaintiff. This case is similar to Fulbright & Jaworski, LLP v
Carucci (63 AD3d 487 ), in which this Court found that a quantum meruit claim against its corporate client's president was not stated. Here, as in Fulbright, there is no allegation of facts from which it can be inferred that Mehl, as an individual, accepted services from plaintiff or that plaintiff had a reasonable expectation of compensation by Mehl. Without doubt, Mehl himself could not collect on any judgment that might be entered in favor of BanxCorp in the antitrust action as a result of plaintiff's services.
Wednesday, June 6, 2012
From the web page of the Ohio Supreme Court:
The Supreme Court of Ohio today suspended the law license of [a] Cincinnati attorney...for six months for violating the Rules of Professional Conduct in his dealings with a client who reneged on an agreement to pay [his] bill for legal services in a divorce case.
[The attorney] admitted that after the client received a distribution from her former spouse’s 401(k) account but failed to make a promised payment to him from the proceeds, then failed to return his phone calls and changed her cell phone number to avoid him, [he] went to the client’s apartment to demand payment. In the confrontation that ensued, [he] admitted that in front of the client’s six-year-old daughter he angrily threatened to file criminal charges against her unless she immediately went to her bank and withdrew funds to pay his bill. The client went to the bank but was so visibly upset that bank employees called police. [He] subsequently agreed to accept payment of a reduced amount.
In a 6-1 per curiam opinion, the court adopted findings by the Board of Commissioners on Grievances and Discipline that [his] actions violated the state disciplinary rules that prohibit an attorney from filing or threatening to file criminal charges to gain an advantage in a civil dispute, and from engaging in conduct that adversely reflects on the attorney’s fitness to practice law.
In rejecting the disciplinary board’s recommendation of a stayed license suspension as the appropriate sanction for [the] misconduct, the court found that [the attorney's] prior suspension for a previous disciplinary infraction, the vulnerability of his client, and the emotional harm she suffered outweighed mitigating factors in the case and merited an actual six-month suspension from practice.
The court’s opinion was joined by Chief Justice Maureen O’Connor and Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Terrence O’Donnell, Robert R. Cupp and Yvette McGee Brown. Justice Judith Ann Lanzinger dissented, stating that she would impose a six-month suspension with all six months stayed on conditions.
The opinion is linked here. (Mike Frisch)
Monday, June 4, 2012
The Maine Supreme Judicial Court affirmed a fee arbitration award to a law firm that had sued a client for unpaid bills.
The client had asked for arbitration and had not initially raised a statute of limitations (six years) defense. The court here found that the client had sought the arbitration, Bar Counsel had properly referred the matter to a panel, and the client was bound by the unfavorable result.
Any defense under the statute of limitations was waived. (Mike Frisch)